Wholesale Electricity Prices

Asking a group of people to define ‘the cost of electricity’ is a bit like asking a group of blind men to describe an elephant. Some people will refer to the ‘delivered’ cost (refer to Understanding Your Electricity Bill) while others will refer to the commodity cost i.e. the raw cost of the actual electricity before network costs, environmental levies and retailer margins are added. And even then everybody will have their own view of the commodity cost.

An understanding of the commodity cost is a key component to the negotiation of an electricity contract. It provides an understanding of when a contract should be settled and helps set target prices for the final retail rates.

Up-to-date price information is available from our client login area.

Pool Price

All electricity in the National Electricity Market (NEM) is traded via a gross pool which is settled on a half hourly basis. Each jurisdiction or state settles its own pool price so there are actually 48 prices per day for each of the five participating states (NSW, Queensland, SA, Tasmania and Victoria). These prices, known as the Pool Price or Regional Reference Price (RRP), can go as high as $12,500 per MWh (known as VoLL - Value of Lost Load) but frequently track closer to about $50 per MWh. Our National Electricity Market is anecdotally known as the most volatile commodity market in the world.

Pool Price

WEPI - Wholesale Electricity Price Index

The WEPI provides a good indication of how wholesale electricity prices are tracking. This index, published on a daily basis by ASX Energy, is a function of pool price and publicly available contract prices as settled on the Sydney Futures Exchange.

EFI - Electricity Futures Index

Both the WEPI and the RRP are indications of current and historical wholesale electricity prices. In many cases, we are more interested in an indication of future electricity prices and how future prices are tracking. To this end, Key Energy & Resources has developed the Electricity Futures Index which is based on data from the Sydney Futures Exchange, and tracks the price of electricity for a three year period ahead of any given date. Thus, the EFI for year n is an indication of electricity prices for year n+1, n+2 and n+3.

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