Industry welcomes latest investigation into competitive electricity markets

A new Federal Government investigation into the bidding of NSW generators will help shed light on the complexities of supplying energy into Australia’s competitive national electricity market, the energy industry said today.

The latest Federal Government inquiry into electricity markets appears to be based on a three page briefing note prepared by an energy services business to its customers which flagged concern about changing bidding behaviour by NSW generators in recent months, resulting in an increase in wholesale prices.

Australian Energy Council Chief Executive, Matthew Warren, said the NSW generators operated in transparent and competitive markets which were already subject to the ongoing scrutiny of a dedicated national energy regulator.

“The closure of the Hazelwood power station in Victoria has increased demand on all generators, including those operating in NSW.  This has increased wholesale electricity prices,” Mr Warren said.

“This in turn has required a number of NSW coal fired power stations to source extra supplies of coal.  Coal supplies in NSW are constrained as around 80 per cent of the state’s output is already contracted for export, as well as constraints on the rail network to get the extra coal to some power stations.

“Many of these generators would like to run flat out, but they can’t because they don’t have enough fuel.  This rationing of fuel creates scarcity which has pushed up wholesale prices.

“Generators are doing everything they can to solve these constraints and increase output, but we are running the system harder than normal and this creates its own challenges.

“The Australian Energy Regulator already closely scrutinises the behaviour of all generators in the system.  Generators couldn’t control prices in competitive markets when they were low at the start of the decade, and they can’t control them now.”

 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.