Victorian customers of electricity retailer Powershop can expect to pay around $70 less a year for their electricity costs starting this month, after the company announced a price cut it said was “all thanks to renewable energy.”
The upstart retailer, that is owned by New Zealand utility Meridian Energy, said on Thursday the March 1 decrease of around 5 per cent amounted to savings of $70 a year for an average customer.
In a video explaining the price cut, Powershop Australia boss Ed McManus points to the three hydro power stations the company had recently bought, and the long-term power purchase agreements it had signed new wind and solar farms in Victoria and New South Wales.
As we reported, those wind and solar contracts were part of a huge deal Powershop secured in February, after being “stunned” by the low prices offered in the time since it went to market for proposals last year.
As well as helping Powershop to reduce its prices, the deal has meant that Victoria’s biggest solar project, the 200MW Kiamal Solar Farm near Ouyen, can be built by Total Eren, a joint venture that combines the French oil giant and a renewable energy developer.
Powershop will also take the output from the 54MW Salt Creek wind farm, currently under construction near Woorndoo, around 250km west of Melbourne, and part of the output from CWP’s 135MW Crudine Ridge wind farm, to be built south of Mudgee in NSW.
“The price that we get the energy from these new wind and solar farms is cheaper than the energy we can get from the normal wholesale market day to day,” McManus said this week.
“What that means is, we take the benefits of those lower costs and pass that on to our customer in terms of cheaper rates.”
McManus also noted that the two wind farms the company already owned and operated had helped it to manage customers’ risk of exposure to high wholesale prices.
“In future we can do that more effectively and cheaper because we’ll have access to a diverse set of renewable generation; hydro and the new wind and solar.
“So all of that means doing that more effectively, and at lower cost, and we’re passing that on to you our customers, in the form of lower costs.
(Today’s) price drop is around 5 per cent, which means for the average customer it’s about $70 a year, and all of that is thanks to renewable energy.”
As for Powershop customers in other states, McManus said that NSW and Queensland would have have a price change in the middle of the year, that would coincides with when the retailer would start to get energy from Crudine Ridge winds farm.
“So we’ll be taking that into account, of course, at that time,” he said.