Electricity Price Disinformation Creates Market Confusion

In a significant challenge to recent claims by BHP’s chief executive, energy market analysts are questioning assertions that Australia’s electricity prices are substantially higher than those of its trading competitors, highlighting the need for better data transparency in global energy markets.

Last month, BHP CEO Mike Henry claimed that “Australia has electricity costs that are two to three times higher than countries that we are competing with and 50 to 100% higher than the US” during a shareholder forum, later reiterating similar points at an Australian Financial Review energy conference.

These statements from one of Australia’s most prominent business leaders have raised concerns among industry experts who argue the claims may be misleading and potentially harmful to Australia’s industrial policy discussions.

Independent analysis of global electricity pricing suggests a different reality. Data compiled from various sources, including the UK Government and international energy agencies, indicates that Australian wholesale electricity prices are broadly competitive with many of its trading partners and competitors.

Particularly notable is Indonesia – a resource-rich nation increasingly capturing market share in mineral processing – where generator-received prices appear almost identical to Australia’s. This comparison is especially relevant as Indonesia represents direct competition for Australia in several resource-intensive industries.

The analysis suggests that only certain regions of the United States, particularly Texas, might offer significantly lower electricity costs than Australia. However, even these advantages may be temporary, as Texas faces unprecedented demand growth with an estimated 200 gigawatts of new load requests that would likely drive prices upward if fulfilled.

The controversy highlights a critical gap in Australia’s energy policy framework: the absence of comprehensive, accessible data on comparative international electricity costs. Energy market observers are now calling for the federal government to collect and publish standardized information showing average spot prices and industrial electricity costs globally.

“By making the actual facts available, all parties, including the BHP chief executive, will be better informed,” noted one industry analyst. “At the moment, because of the information vacuum, it’s hard for the industry and the media to quickly establish the facts. Good information leads to better decisions.”

The dispute extends beyond electricity to natural gas markets, where similar claims about international price disparities have been contested. Stephen Harty, GLNG’s chief executive, recently pointed out in an AFR piece that manufacturers citing $3/GJ gas prices in the US are using outdated or selective data. According to Harty, the Henry Hub price was recently equivalent to $4.90/GJ, with industrial customers in manufacturing-heavy states like Ohio paying over $17/GJ – higher than Australia’s gas price cap of $12/GJ.

East Coast gas prices in Australia remain elevated primarily due to the linkage between domestic and international markets created through the development of LNG export facilities. Major Asian trading partners such as China, Japan, Singapore, and South Korea typically pay more than Australian customers when accounting for regasification and transportation costs.

The broader context of this debate carries significant implications for Australia’s resource and manufacturing industries. Companies like BHP, with extensive operations in mineral extraction and processing, have legitimate concerns about energy costs impacting their global competitiveness. However, the accuracy of claims regarding relative pricing is crucial for informed policy decisions.

Energy market analysts emphasize that continued investment in energy supply infrastructure remains the only viable path to maintaining competitive electricity prices. They point to Australia’s successful deployment of rooftop solar – currently exceeding 2 gigawatts annually – as evidence that distributed generation is outpacing centralized utility investments.

“Growing supply faster than demand is the only way to keep prices down. And keeping prices down is the only way to grow demand and stay competitive,” one expert noted.

As Australia continues its energy transition, the call for better data transparency highlights how essential accurate information is to making sound national energy policy decisions that balance competitiveness, sustainability, and security objectives.