Similarly, if electricity retailers buy at the wholesale electricity price and then sell it to residential consumers, wouldn't it make sense that residential consumers would get it cheaper if they buy directly at the wholesale electricity price?
The markup in price by the electricity retailers is basically to compensate them for the risk they take. They buy at volatile prices and sell at fixed prices. Residential consumers are therefore paying for price certainty a.k.a peace of mind. But is this peace of mind really worth it?
Below is the comparison of the 3 different electricity plans without GST.
This SP Wholesale Electricity Plan is the most complicated of the 3 as it comprises of additional charges on top of the wholesale electricity price (WEP). These additional charges are as follows:
|Updated 3 november 2021|
Only the Vesting Contract Debit/Credit is variable but it is usually a few cents per month and sometimes $0. The rest of the charges are available online and known beforehand. Peak period is between 7am to 11pm. For simplicity, i took the average of the peak and off peak rates. These additional charges are under the column "charges" which is added to WEP.
This table can also be found here which is updated monthly.
No wonder so many electricity retailers have chosen to throw in the towel recently!
From Jan 2020 to June 2021, there is a significant price difference between the WEP prices ( blue column) and electricity retailer prices( green column), with the WEP prices always being lower. It is only in July 2021 onwards where the price differences is very low with July 2021 being the only month where the WEP price exceeded the electricity retailer price.
It seems that a switch to the SP wholesale electricity plan is a no-brainer...or is it really?
The table above shows average prices and so neglects the volatility of prices of the WEP prices. It depends on one's usage of electricity at home. To be more specific, it depends on when we usually turn on the big guzzlers of electricity like the air conditioners, the water heaters and the washing machines. With WFH, our routines can be quite messed up unlike the Pre-covid times when most of us are in the office between 9am to 6pm.
So when are electricity prices usually more expensive?
I have charted the average WEP and Maximum WEP against the period of the day for the months of July, August and September 2021. The SP regulated tariff and electricity retailer prices are shown in red and green
I would focus more on the Max WEP charts on the right as avoiding these periods of the day where the maximum electricity prices occur would most certainly result in lowering the average wholesale electricity prices even further as seen in the comparison table above. These are generally periods 19 to 45. ( 9.30 am to 10.30 pm) which corresponds well to most workers during pre-covid times as they will not be at home for a majority of this period. So, it really depends on one's routines.
So in general, if one is out of home or do not have to use energy guzzlers during 9.30 am to 10.30pm, one should prefer the SP wholesale plan?
To illustrate how volatile prices can be, the chart below shows the WEP for a single day on a Saturday, 16 October 2021. One would rationalize that periods when prices are high are when factories, schools and offices are running which falls on during weekdays. However, on this fateful Saturday, the prices were amazingly high even at night when people are sleeping from 11 pm to 1am( periods 46- 48 and periods 0 to 2). Prices average $1.3/kWh during the day, with Max price at $2/kWh at 11.30 am and Min price at $0.27/kWh at 5 am. Even at 1am when most people are asleep, the price hit $1.97/kWh! Remember that additional charges of $0.061/kWh will still have to be added to these prices to get the final price we pay.