Electricity prices set to drop as European links come into play Relief in sight: Electricity prices are forecasted to decline an average 5.9 per cent from mid-2015. After years of pain from surging power prices, relief is in sight thanks to the decision to link the carbon price to the European market, with the pricing regulator - the Independent Pricing and Regulatory Tribunal - forecasting electricity prices could decline an average 5.9 per cent from mid-2015. And if last week's collapse in the carbon price in Europe is sustained, this could result in prices falling even further. The main driver of the decline in 2015-16 is linking the carbon price with the European price. On Tuesday, IPART estimated electricity prices will rise an average of just 3 per cent from July 1. Households in rural NSW will be the main beneficiaries with virtually no price rise expected after they suffered substantial increases over the past few years. Prices through much of central Sydney rose to a higher 4.3 per cent. The forecast declines follow rises of more than 60 per cent in electricity prices in some parts of the state over the past three years. After the modest 3 per cent average increase from July 1, IPART said it expects prices to rise an average of just 0.9 per cent from mid-2015, before falling 5.9 per cent the following year. "The main driver of the decline in 2015-16 is linking the carbon price with the European price, which will lower the [Australian] price of carbon," IPART chairman Dr Peter Boxall said. At a price of $22 a tonne, plus inflation, it is likely to be in substantial decline in 2015-16. The IPART price forecast was made before the recent European decline in the price of carbon. If ... that collapse is sustained, this could put further pressure on prices. The IPART expectation of an average 3 per cent rise could prove to be "mythical" for many households, Gavin Dufty, policy officer with the St Vincent de Paul Society, said. IPART is talking of a 3 per cent average increase, but with late fees it would be higher. This is not factored in. Energy retailers typically levy a flat $12 late payment fee for electricity and gas bills and more than double that if a payment is dishonoured. An estimated 40 per cent of small electricity users and 30 per cent of gas customers are on tariffs which are regulated by the government. The government has committed to raising price controls in the future. "With the policy environment [of full deregulation], people need to be vigilant," Mr Dufty said. Once prices are fully flexible, significant variations can emerge as power retailers seek to raise prices to cover higher levels of services, such as energy management systems and time variant pricing. "We remain concerned by the consequences" of full market deregulation, Michael O'Neill, the chief executive of National Seniors, said. From July, gas prices are to rise an average of 9.2 per cent throughout much of the state, which is less than the 10.7 per cent rise sought by AGL, the main gas retailer, IPART said. With electricity, regulated customers of EnergyAustralia face rises averaging 3.1 per cent from July. Origin Energy's customers in western Sydney and Wollongong face a 3.1 per cent increase.