Independent assessment will confirm market operating effectively

Independent analysis of generator bidding behaviours will confirm that the market is operating appropriately and will highlight the complexities of supplying energy into Australia’s competitive national electricity market, the energy industry said today.

Minister Frydenberg has asked the energy regulator to confirm that there are no inappropriate bidding practices occurring in the wholesale energy market.  This is in response to assumptions made in the Grattan Institute report about the operation of the wholesale electricity market.

The Australian Energy Council’s General Manager Corporate Affairs, Sarah McNamara, said that while the report’s call for market interventions is based on a simplified analysis of market bidding, there needs to be confidence in the workings of the market.

“The Australian Energy Regulator already closely scrutinises the behaviour of all generators in the system and there are strict rules in place to govern them.  Its recent investigations of price spikes has not found any opportunistic bidding or abuse of market power. The wholesale market has functioned well.

“We know that there are a range of complex factors behind price volatility in the wholesale energy spot market, and each price event is unique. As the Grattan Report notes, generators need to be able to rebid when generation capacity is suddenly not available, such as when unexpected outages occur. This is a legitimate market practice – rebidding does not constitute gaming of the market.

“Given the focus on energy policy at the moment, it is critical that confidence in the market is maintained. Reforms to the market are already underway, and any further interventions would need thorough consideration,” Ms McNamara said.

About the Australian Energy Council

The Council represents 21 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.

Media contact             Carl Kitchen                0401 691 342