Latest news with #energyreform
Yahoo
22-07-2025
- Business
- Yahoo
CUB STATEMENT: CAPACITY AUCTION LEADS TO RECORD PRICE SPIKE FOR SECOND STRAIGHT YEAR, THREATENS EVEN HIGHER COM ED BILLS IN 2026-27
CUB says record-high capacity price points to urgent need to reform PJM policy, pass comprehensive energy legislation in Illinois CHICAGO, July 22, 2025 /PRNewswire/ -- While we are relieved that the negotiated price cap prevented capacity costs from soaring even higher, this record price spike is unacceptable. CUB is deeply concerned that ComEd customers will continue to bear painfully high costs for another year, largely because of policy shortcomings from PJM. The power grid operator's policy decisions too often favor outdated, expensive power plants and needlessly block low-cost clean energy resources and battery projects from connecting to the grid and bringing down prices. This extended price spike was preventable. It ramps up the urgency of implementing long-term reforms at PJM and comprehensive energy legislation in Illinois, such as the Clean and Reliable Grid Affordability Act, to protect customers from price spikes that serve only to give power generators windfall profits. –CUB Executive Director Sarah Moskowitz Background: On Tuesday, July 22, PJM Interconnection, a "Regional Transmission Organization," announced the results of an auction that determines the price for reserve power, or "capacity." Capacity costs are a key component of the price Commonwealth Edison customers pay for electricity. PJM is the largest grid operator in the country, serving 67 million customers across all or parts of 13 states and the District of Columbia (including Commonwealth Edison's 4.2 million customers). The auction (technically referred to as the "Base Residual Auction") was held July 9-15. It set a record-high capacity price of $329.17 per Megawatt-day from June 1, 2026 through May 31, 2027. The capacity cost hit a cap negotiated by Pennsylvania Gov. Josh Shapiro and is about 22 percent higher than the price that was set last year for ComEd territory and about 11 times higher than what the price was two years ago. Capacity costs are payments consumers make to power generators–the companies that own power plants–and they have a key impact on the supply price ComEd customers pay. ComEd has not yet announced what the supply price will be in June of 2026. The 2024 capacity auction set a price of about $269.92 per MW-day, about 830 percent higher than the $28.92 per MW-day capacity price set in the auction the year before. The prices in the 2024 auction were even higher in two eastern sections of PJM: The Baltimore Gas and Electric (BGE) zone in Maryland ($466.35 per MW-day) and in the Dominion zone in Virginia and North Carolina ($444.26 per MW-day). Following the price spike in the last auction, consumer and environmental advocates pushed for several changes: RMR reform: Environmental advocates successfully pushed for changes in the way PJM handles Reliability Must Run (RMR) arrangements. RMRs allow PJM to funnel extra consumer money to an otherwise retiring plant to keep it open past its closure date. Under previous PJM policy, the electric capacity of an RMR plant was NOT included in the capacity auction. Consumers thus ended up paying double: first for the price of the RMR contract, and then again because of the high capacity prices that result from not counting the RMR plant. For example, the Independent Market Monitor estimated that not including Brandon Shores and Wagner--two RMR fossil fuel plants near Baltimore, Maryland--in the last capacity auction increased the cost by as much as 40 percent. Changes made since the last auction mean that coal-fired units for the Brandon Shores plant and oil-fired units for the H.A. Wagner plant will be included in the latest capacity auction and the next one after that. (Note: PJM stakeholders are still developing a long-term solution. CUB opposes keeping expensive, outdated power plants open past their closure date–but agrees that RMRs should be included in the capacity auction, since they are operating anyway at ratepayer expense.) More renewable, battery resources will participate in the auction. After the last auction, consumer advocates flagged that there was an existing source of supply that wasn't necessarily being counted in the auction: renewable resources. PJM then removed an exemption that had previously left many renewable and energy storage facilities out of the capacity auction. For the first time, this required wind, solar and battery generations with Capacity Interconnection Rights (CIRs) to participate in the auction. Capacity Price Collar: Pennsylvania Gov. Josh Shapiro, concerned about the impact future capacity auctions would have on consumers, filed a complaint at the Federal Energy Regulatory Commission (FERC) asking for a price cap on the capacity auction until PJM's interconnection queue delay was sorted out. He and PJM subsequently entered into negotiations and agreed to a $329.17 per MW-day cap on capacity prices for the next two auctions. Unfortunately, PJM, while consulting with select unnamed generators, successfully pushed for a first-ever floor of $177.24 per MW-day on the capacity price. In filings with FERC, CUB has expressed deep concern about the floor, and joined other watchdogs in questioning why no consumer advocates were at the negotiating table. For more than 40 years the Citizens Utility Board (CUB) has been Illinois' leading nonprofit utility watchdog group. Created by the Illinois Legislature, CUB opened its doors in 1984 to represent the interests of residential and small-business utility customers. Since then, CUB has saved consumers more than $20 billion by helping to block rate hikes and secure refunds. For more information, call CUB's Consumer Hotline at 1-800-669-5556 or visit CUB's website, View original content to download multimedia: SOURCE Citizens Utility Board
News.com.au
25-06-2025
- Business
- News.com.au
Victoria eases gas ban but keeps reforms that ‘will save lives'
Victoria has softened its gas phase-out plan, allowing owner-occupiers to continue using gas heaters and confirming that businesses can keep gas running in existing commercial buildings. The state will still push ahead with reforms that will make all new homes and most new commercial buildings electric only from 2027. Premier Jacinta Allan said the updated plan will help households save on energy bills, protect local jobs and secure gas supplies for industries that still rely on it. 'Families will pay less on their energy bills, industry will get the gas it needs – and Victorian jobs are protected,' she said. 'It's good for industry, workers, renters and families – we're on their side.' The Victorian government introduced a range of measures in 2023 aimed at phasing out gas.' Ms Allan said the revised approach was shaped by consultation with industry and other stakeholders. Under the revised rules, gas heating remains allowed for owner-occupiers, and gas hot water systems can still be repaired if they break down or reinstalled during renovations. But from March 2027, when a gas hot water system reaches the end of its life, it must be replaced with an electric version. Gas cooking in existing homes is also staying for now. From January 2027, all new residential and most commercial buildings will be required to go electric, including granny flats, sheds and other structures that previously didn't need a planning permit. Buildings used for industrial, manufacturing or agricultural purposes will be exempt. Victoria's plan is also targeting rental homes, which have some of the state's worst energy efficiency. New minimum standards will require landlords to install reverse-cycle air conditioners to replace broken gas heaters, upgrade ceiling insulation where it's missing, seal draughts and install water efficient showerheads. Consumer Affairs Minister Nick Staikos said the changes will make rental homes safer and cheaper to run. 'This is an important step towards making rental properties safer, more comfortable and more energy efficient – giving renters peace of mind for both winter and summer and driving down their bills,' he said. The Victorian Council of Social Service welcomed the announcement, saying it would bring relief to renters facing high energy costs. 'This is a major win for renters in Victoria at a time when they really need it,' said VCOSS CEO Juanita Pope. 'We know that the rental market includes some of the worst quality homes in Victoria, which compounds the effects of other challenges faced by renters during a cost-of-living crisis,' 'We also know there is a direct connection between poor quality rental properties and poor health outcomes,' 'These standards will literally save lives.' Climate groups also praised the move away from gas, pointing to both cost and health benefits. 'Gas is enormously expensive and polluting,' said Climate Council CEO Amanda McKenzie. 'This policy showcases sensible leadership from the Victorian government to both cut Victorian household's energy bills and tackle climate pollution. 'Victorian houses will become cleaner and healthier under this policy.' McKenzie said the decision confirmed that 'gas is on the way out in Victoria' and urged other states to follow suit. She also acknowledged the Victorian Greens role in supporting the reforms. The Energy Users' Association of Australia, which represents commercial and industrial energy users, said the announcement reflected a more realistic path to net zero. 'Navigating the road to net zero is proving to be harder and more expensive than initially thought,' said EUAA CEO Andrew Richards. 'We thank the Victorian government for listening to stakeholders and being responsive to the challenges being faced by energy users that have led to today's pragmatic announcement.'
SBS Australia
19-06-2025
- Business
- SBS Australia
Energy price rules for electricity retailers are changing soon. Here's what to know
Energy retailers will be barred from raising bills more than once a year and will be forced to remove unfair fees for vulnerable customers under new rules announced by the energy market rule maker. The move will help reduce the complexity and opacity of the poorly understood electricity system, and prevent customers from being ripped off, Energy Minister Chris Bowen said. The changes announced by the Australian Energy Market Commission include: Preventing retailers from increasing prices more than once a year Banning excessive fees for late payments, and Prohibiting fees for vulnerable customers Retailers must also ensure vulnerable Australians are receiving their best available plan. The commission's rule changes will be phased in over the course of next year, with the first tranche coming into effect on 1 July 2026 and the remaining changes applying from 30 December 2026. The changes are intended to clamp down on retailers who lure customers in with cheap deals, only to move them onto higher cost plans or impose hidden fees and charges. "I'm not going to pretend that they're a silver bullet, but clearly, the situation hasn't been working," Bowen told ABC Radio National on Thursday. "There are many, many Australians, either in hardship or not in hardship, who aren't on their best possible plan. That's not their fault. We need to make it as easy as possible for them to change." Research has found about 40 per cent of Australians don't read their energy bill. More needs to be done to ensure busy consumers receive their best offer, Bowen said. But it's only part of a broader reform process to make the energy system simpler and fairer, he said. On Wednesday, Bowen flagged changes to so-called Default Market Offer rules in a bid to force energy companies to compete harder for customer dollars and prevent unfair price hikes. The regulations were intended to establish a benchmark price to limit price gouging and put downward pressure on prices through competition between energy companies, but were not working as planned, Bowen told the Australian Energy Week conference in Melbourne. Bowen flagged reforms to the Australian Energy Regulator's price-setting mechanism for NSW, South Australia and Queensland to better align with Victoria's rules.
News.com.au
19-06-2025
- Business
- News.com.au
‘Could be so much simpler': Energy Minister Chris Bowen announces energy price cap overhaul
Energy Minister Chris Bowen has announced a raft of proposed reforms designed to save Australian households from soaring power prices. Speaking at Australian Energy Week in Melbourne on Wednesday, Mr Bowen said reform to the way the energy price cap mechanism worked outside of Victoria was needed in order to make price caps effective. 'Currently, the independent Australian Energy Regulator (AER) sets the default market offer (DMO) as a benchmark for residential and small business electricity bills in NSW, South East Queensland and South Australia, while here the Victorian default offer is set by the Essential Services Commission,' he said. 'The DMO was intended to act as a benchmark price to stop the worst forms of price gouging while leaving the job of putting downward pressure on prices to competition. 'However, I'll be frank. I don't think it's working that way and reform is needed.' Mr Bowen said the vast majority of bill payers, 'some 80 per cent', could be getting a better deal. 'It's difficult to defend the DMO when the customer is required to do the deal hunting,' he said. 'We know it could be so much simpler.' Mr Bowen announced that in 2026 the federal government would be delivering a 'reformed pricing mechanism' designed 'to get the best deal for consumers and act as the maximum price retailers can charge for standing offers in DMO regions'. 'The reformed pricing mechanism will bring DMO states closer in line with other jurisdictions like here in Victoria, which this year has seen significantly smaller bill increases compared to DMO regions,' he said. The Victorian default offer (VDO) rose by less than 1 per cent in 2024–25, while the DMO varied much more widely; in NSW some residential customers experienced a decrease of about 1 per cent, while in South East Queensland prices increased by about 4 per cent. The announcement has drawn criticism from energy providers who say they're surviving on razor-thin profit margins as it is and the planned overhaul could put small energy providers out of business. One of Australia's biggest energy providers AGL issued a statement in response, saying it would look forward to engaging with the government on the review but 'to reduce energy bills, we need to look at the whole picture'. 'The government and industry are actively working on measures to reduce wholesale electricity costs. At 40 per cent of an average bill, network costs are a big component of bills and are continuing to grow quickly,' the statement read. 'A focus on improving network productivity is essential to keep these costs in check. Retail costs only represent around 10 per cent of an average bill and we need to carefully consider any moves that could lessen competition in the retail market, particularly if smaller retailers were no longer able to operate.'
Yahoo
17-06-2025
- Business
- Yahoo
Major electricity price crackdown confirmed ahead of $200 bill hike: ‘Reform is needed'
Australian households could soon be spared from soaring power prices following a crackdown by the federal government. Energy Minister Chris Bowen is set to announce a review of the Default Market Offer (DMO) system as it looks to stamp out overcharging and price gouging. The DMO sets the maximum price electricity retailers can charge customers on default contracts in NSW, southeast Queensland and South Australia. It also acts as a benchmark to help consumers compare plans, and retailers often adjust the rates of their market contracts in line with the default prices. Bowen will tell an energy industry conference today that the DMO system is not working and will be changed next year. RELATED Aussie mum's $1,200 electricity bill shock sparks warning for millions $1,000 ATO school fees tax deduction that Aussies don't realise they can claim Centrelink age pension changes coming into effect from July 1 'The DMO was intended to act as a benchmark price to stop the worst forms of price gouging, while leaving the job of putting downward pressure on prices to competition between energy companies,' he will say, according to his speech notes, The Sydney Morning Herald reported. 'However, I'll be frank. I don't think it's working that way and reform is needed.' Bowen says the reforms will be designed to 'get the best deal for consumers' and will bring the system more in line with that used in Victoria, where households will be hit with smaller hikes next customers on standing offer plans will see an increase of between 8.3 and 9.7 per cent in NSW, 0.5 and 3.7 per cent in southeast Queensland, and 2.3 to 3.2 per cent in South Australia from July 1. According to Canstar, this will translate to an average increase of up to $228 for NSW households, $77 for Queensland households and $71 for South Australian households. Victoria, in comparison, will see an average increase of 1 per cent, with some consumers expected to see a price drop. Maximum prices are set by the state's Essential Services Commission. Price changes range from a drop of $26 to an increase of $90 across the five electricity zones operating in Victoria. Households will be receiving letters from the energy providers over the next few weeks to update them on changes to energy pricing. The government will consult on the reforms, which would come into effect before the next round of annual bill setting. 'Changes could include stripping out the default market offer's competition allowance and putting further restraints on what retailers can claim back from customers in their bills,' Bowen will say. 'The vast majority of billpayers, some 80 per cent, could be getting a better deal. It's difficult to defend the DMO, when the customer is required to do the deal hunting.' Advocacy body Energy Consumers Australia agreed the system was not working and noted it included costs that people should not have to pay. 'It's clear consumers need greater protections from unjustifiably high prices, and we would very much welcome a review,' said Energy Consumers Australia chief executive Brendan French. 'Consumers who don't choose a competitive offer by definition should not have to pay competition costs, nor should they fund customer acquisition costs.'Error in retrieving data Sign in to access your portfolio Error in retrieving data
