Hold onto your wallets, Victorians – the cost of keeping your lights on is about to get a whole lot more unpredictable. Victoria’s energy department has just released forecasts predicting a dramatic spike in wholesale electricity prices, a move that’s sure to send shockwaves through households already grappling with rising living costs. But here’s where it gets controversial: these new estimates come on the heels of the State Electricity Commission (SEC) stepping back into the game as a ‘market player,’ raising questions about how this revived entity will influence the state’s energy landscape.
The Department of Environment, Energy and Climate Action (DEECA) now expects wholesale electricity prices to soar anywhere from $44.57 to a staggering $257.13 per megawatt-hour in the coming year. To put that in perspective, last year’s report predicted a much milder range of $17.15 to $155.02. This isn’t just a minor adjustment – it’s a complete overhaul of expectations, and it’s leaving many to wonder: What’s really driving these numbers?
And this is the part most people miss: while wholesale prices are a big chunk of your bill, they’re not the only factor. Transmission costs and retailer margins also play a role, meaning the actual impact on your monthly statement could be even more complex. The department claims it’s aligning its forecasts more closely with the private sector, thanks to the SEC’s renewed involvement. But is this a step toward stability, or a recipe for further volatility?
Adding fuel to the fire, Infrastructure Victoria recently warned that wholesale energy costs could double by 2030. This grim prediction is largely tied to the looming closure of coal-fired power plants, which could force the state to import more energy from neighboring regions. However, there’s a silver lining: prices are expected to drop from 2035 onward, as renewable energy projects and storage solutions come online. But will Victorians be able to weather the storm until then?
Victoria’s energy costs have historically been lower than those in other states, thanks in part to its connections with three neighboring states that can bolster supply during crunch times. But the sheer volatility of the current market – with prices swinging from nearly zero on sunny, windy days to sky-high during poor weather or unexpected outages – is a stark reminder of the challenges ahead.
The Allan government remains optimistic, insisting that Victoria’s costs will stay below those of other states through 2026 and 2027. ‘We’re fast-tracking renewable energy projects to drive down power bills,’ a spokesperson assured. But Opposition energy spokesman David Davis isn’t buying it. He argues that the government is failing to deliver on its promises, pointing to the latest consumer price data showing electricity and gas prices climbing by 3.8% and 8%, respectively, in the September quarter.
Here’s where it gets even more contentious: DEECA’s revised forecasts have dramatically inflated the value of its energy contracts with renewable projects, from $68.9 million in 2024 to a whopping $525 million in 2025. This suggests the government expects to profit handsomely from these deals, but at what cost to taxpayers? And will these gains offset the pain of rising bills for everyday Victorians?
Grattan Institute energy program director Tony Wood warns that extreme weather, coal plant outages, and grid connectivity issues pose significant risks. While Victoria recovered from the closure of the Hazelwood power station, the impending shutdown of Yallourn in 2028 could be a different story. ‘It all depends on whether renewables can scale up in time,’ Wood notes, ‘and so far, that’s not looking as smooth as hoped.’
So, what’s the bottom line? Victoria’s energy future is at a crossroads, with the SEC’s return and skyrocketing price forecasts raising more questions than answers. Is this the beginning of a more stable, renewable-driven era, or a costly gamble that could leave households in the dark? We want to hear from you – do these forecasts make you more hopeful or more worried? Let us know in the comments below.
