Energy crisis: Australian energy regulator accuses electricity producers of capitalizing on loophole

The Australian Energy Regulator has accused electricity producers of intensifying the current power crisis through a major loophole.

The Australian Energy Regulator has accused electricity producers of intensifying the current power crisis by taking advantage of higher compensation payments.

In a letter written Tuesday, AER chairman Clare Savage suggested that some generators were withholding supplies to access the higher payments, and warned them to provide capacity to the market despite a $300 MWh cap being imposed by the government. Australian energy market operator was established.

On Wednesday, AEMO said it believed 2,000 megawatts of power in both NSW and Queensland had not been marketed.

The situation has now widened the power supply problem in five states.

“Recently, the AER has found that, following the application of regulated pricing in the NEM, producers are withdrawing available capacity from the market,” Savage said.

“This behavior may be motivated by generators who want to avoid the regulated price compensation process in favor of the AEMO Directions compensation process.

“As you know, no act or omission of any kind, intentional or reckless, shall allow economic operators to cause or contribute significantly to the circumstances which give rise to an indication of trouble without reasonable cause.”

There is currently no law prohibiting energy companies from taking their electricity generation off the market.

In the past two days, available volume has decreased by two gigawatts in Victoria, 1.5 gigawatts in Queensland and three gigawatts in NSW.

Energy expert at the University of Melbourne, Dylan McConnell, said that while there were legitimate reasons for power companies to refuse power, the situation was “unreasonable”.

“It is not good faith and fairly unscrupulous conduct. Yes, there’s some kind of justification for it, but it’s the wrong thing to do,” McConnell said via the… Sydney Morning Herald

Federal Energy Secretary Chris Bowen said the energy compliance regulator is currently monitoring the situation “very, very closely”, but reassured ministers that he believes there is still enough power available for the net.

“Australian energy regulator reminded that” [power companies] of their legal obligations this morning,” Bowen said.

“I had contact with [AEMO] and they are confident that the situation can and will be avoided in NSW and Victoria in particular in the coming days.

“No one should turn off the power consumption they need for their comfort or their safety…no one is asking for that to happen.”

Five states at risk

An update published on the AEMO website warned of maximum power cuts in Queensland, New South Wales, Victoria, South Australia and Tasmania.

The alerts were initially sent off the east coast of Queensland and NSW, but have now spread to hundreds of thousands of additional households across the country.

On Monday, AEMO ordered electricity generators online in a bid to avoid widespread power outages, although there were outages across entire Sydney suburbs.

But now AEMO is warning of more pain in the future thanks to a predicted energy shortage in Queensland and NSW tonight due to falling temperatures and skyrocketing energy prices.

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Millions will have to deal with blackouts on Tuesday evening

Queensland is bracing for a serious problem tonight, between 5pm and 9pm.

In NSW, the situation peaks tonight between 5.30pm and 8.30pm.

Power outages are forecast for Tasmania, South Australia and Victoria on Wednesday evening.

Sarah McNamara, chief executive of the Australian Energy Council, said the growing power problem would eventually subside, but there was no immediate solution in sight.

“One of the problems in the market is that a number of coal-fired power stations on the east coast of Australia are shutting down due to unscheduled maintenance,” said Ms McNamara.

“If they come back online in the coming months, that should improve the offerings somewhat.”

AEMO will use its powers to instruct operators to produce more energy during those crucial time periods, tipping supply reserve shortfalls to reach levels 2 and 3.

In the worst case scenario, this means that the shortfall in the supply/demand balance could take away all reserve electricity.

“AEMO will take further steps to improve electricity reserves, including the commercialization of generators, which yesterday helped to overcome electricity shortages in Queensland and New South Wales,” AEMO said in a statement Tuesday morning.

Residents of both states have therefore also been urged to conserve energy during those peak hours.

“By carefully managing electricity consumption at home and in your workplace, the community can ensure that the security of the Queensland electricity system is maintained,” Paul Simshauser, CEO of Powerlink Queensland, told 9 News.

“Community safety and well-being are important, so only manage energy consumption if it’s safe to do so.”

‘Bumpy period’ approaching

Newly installed Climate Change and Energy Secretary Chris Bowen told Sunrise this morning it was “more important than ever to manage the transition and get more energy into the system and more storage and transmission”.

He also assured Australians that the crisis is “very actively managed” by both the state governments and AEMO, helping Queensland avoid all power outages on Monday night.

“That was avoided because the operator could instruct the generators to put more power into the system. It also told me they believe we can prevent tax shedding and blackouts in NSW and other states today,” said Mr Bowen.

“Of course they continue to work very hard and actively monitor the system.

“The system is actively managed and we have avoided the shedding of the payload … I believe and I have been advised that we should be able to avoid that in the next 24 hours.”

But as we’re only two weeks into a colder than usual winter, Mr. Bowen warned that we’re having a…

The market regulator has

“bumpy period” ahead.

“… there’s no doubt about that. I have consistently said that. Our system is under pressure. We have a lot of coal-fired power plant outages,” he said.

“Much of the coal-fired power is out of action in Queensland. That has led to higher prices.”

Bowen said the war in Ukraine, flooding and colder-than-usual temperatures had exacerbated the problem and “stressed the system more”, but insisted things were under control.

“We can have confidence in our operators, regulators, working with the states. There is a real spirit of cooperation in the state and the federal table,” he said.

“It doesn’t matter which political party, it doesn’t matter which state, we work together to keep the situation under control and I think this will result in a better situation for the energy consumers and prevent blackouts and certainly the risk of any load shedding activities. †

“There can be unexpected outages of coal-fired power…that nobody expects. They will be managed. I’m not here to give a magical guarantee, but I’m here to say that anything that can be done is done very actively.”

Power crisis a ‘national disgrace’

Meanwhile, Senator Matt Canavan has described the energy crisis as a “national disgrace” as the threat of winter blackout continues.

Canavan told 2GB’s Ben Fordham that the nation must “eat humble pie” and return to coal-based power.

“What is the argument against building a coal-fired power station? Just build one — it won’t blow up the planet,” he said.

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