Rules to prevent another statewide blackout means higher power bills

YOUR power bills will rise even further — this time because of tough new rules aimed at preventing another catastrophic statewide blackout.

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SOUTH Australian households and businesses face further increases to their electricity bills — this time to secure the grid and prevent another catastrophic statewide blackout.

The Australian Energy Market Commission will on Tuesday release tough draft rules for the national energy market aimed at reducing the risk of widespread blackouts as a result of increasing use of wind and solar power.

Some of the rules add new costs into the grid and the report conceded there would be flow-on to consumers but the AEMC has tried to minimise the hip pocket pain.

It comes as retailers prepare to impose huge bill increases of almost 20 per cent from Saturday, adding hundreds of dollars to household bills.

In its review of system security, the AEMC found the effects of changes in the energy market were most acute in SA, where there was less time to recover from sudden equipment failures before blackouts occur.

“The shift in our generation fleet being driven by climate change policies and technological advances is changing our energy landscape,” the report states.

“It is transitioning from one dominated by conventional generation powered by coal, gas and hydro to one powered by renewable sources, such as wind and solar.

“Many of the system services needed for power system security were provided as a matter of course by conventional generation when producing energy.”

Because of this shift, the AEMC wants all transmission businesses to be required to meet new benchmarks to ensure the power system is maintained in a secure operating state.

This would require these businesses to contract services they have not had to pay for in the past.

Transmission network charges make up about 10 per cent of power bills. The businesses recoup costs from consumers through a process reviewed by the independent regulator.

But, in drafting the new requirement, the AEMC report says under network regulation arrangements transmission businesses had financial incentives to minimise the costs.

These services would also be contracted using a market-based mechanism to help keep the cost down. Another rule would set minimum levels for system strength and require all new generators connecting to the grid to “do no harm”.

It means that when a new generator negotiates its connection to the grid, it would have to provide or fund any services needed to maintain existing system strength.

The report states this would help “maintain system strength while minimising the costs that will flow through to consumers”.

The AEMC will do further work on the draft rules and recommendations in the report. Most changes to the energy market will be finalised by the end of the year.

The report notes the recommendations were “in large part” consistent with the Independent Review into the Future Security of the National Electricity Market, which was chaired by Dr Alan Finkel.