Dec 15 2022

Statement on June Energy Crisis

The Australian Energy Council’s Chief Executive, Sarah McNamara, said the Australian Energy Regulator’s (AER)  report reflects the extraordinary circumstances electricity generators and the market operator were attempting to navigate during the winter supply crisis.

“We were dealing with a set of extreme conditions that had not been encountered before and which led to the first ever suspension of the market.

“What’s clear is that generators were trying to deal in real time with a black swan event. They had reasonable cause to withdraw capacity at times given those unprecedented circumstances. Those included limited fuel availability, as well as when the NEM Dispatch Engine was unable to dispatch effectively.

“The market conditions at the time led to the automatic imposition of a wholesale price cap on 15 June which was shown to be counter-productive, because it seriously interfered with the market’s functioning.

“When the cap was applied, generators were faced with difficult decisions on how to operate.

“In recognition of this, the price cap has since been doubled, which should help avoid a repeat of this situation. This reform is supported by both the market operator and industry.”

“Generators have cooperated fully with the regulator in this review. The AER also found that the market operator and generators worked closely in difficult circumstances and that there was good transparency and communication during the crisis.

“This acknowledgment is welcome.”

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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