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Jul 29 2022

Fresh claims about generators unsubstantiated

The peak body for energy retailers and generators, the Australian Energy Council, has rejected fresh, unsubstantiated claims of power generators seeking to profiteer from recent market conditions.

A spokesman for the Australian Energy Council said claims of hydro and coal generators causing higher wholesale prices is not supported by the market operator’s latest analysis of what occurred in the National Electricity Market.

“The Australian Energy Market Operator (AEMO) makes clear that physical fuel supply and hydro constraints at a number of thermal and hydro generators limited their ability to operate flexibly during the period. The market operator also notes that shifts in some hydro offers to the market stemmed from changes in thermal plant availability and the need to manage water storage levels.

“Output from hydro generators at times was also restricted by downstream flooding and extreme wet weather, according to AEMO.

“The cause of high prices has been an energy shortage, and this appears to have been ignored in these latest claims,” the spokesman said.

The conduct of generators and market participants are closely monitored by the market regulator and are subject to rigorous market regulations. Any claims of market breaches should be backed with evidence and provided to the regulator for proper investigation, not aired baselessly in the media.

The extreme international and domestic conditions experienced in the National Electricity Market, which led to the automatic imposition of an Administered Price Cap (APC) of $300/MWh, were unprecedented.

“When the cap was applied generators dealing with limited fuel supply, or high input costs, were faced with difficult decisions on how to operate. Some withdrew their capacity from the normal dispatch process but remained available to be directed back into the market by AEMO.

“While there is a widespread view that generator conduct related to profiteering, the AEC rejects that view.”

Whilst the cap was in place, generation with limited fuel or water stocks and large-scale batteries with limited energy reserves were being dispatched in such a way that their stocks or energy reserves would quickly exhaust. To prevent this, some generation and large-scale batteries had to be removed from the normal dispatch process.

As a result of concerns about the level of the APC, which has not been revised for over two  decades, the Australian Energy Market Commission, has expedited consideration of a change to the cap’s level.

About the Australian Energy Council

The Australian Energy Council is the peak industry body for electricity and downstream natural gas businesses operating in the competitive wholesale and retail energy markets. AEC members generate and sell energy to 10 million homes and businesses and are major investors in renewable energy generation. The AEC supports reaching net-zero by 2050 as well as a 55 per cent emissions reduction target by 2035 and is committed to delivering the energy transition for the benefit of consumers.

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