Black outs averted for now, but more power price rises coming

Queenslanders’ power bills risk a second price hike this year while some smaller electricity retailers face closure if government and industry cannot resolve the energy crisis driving wholesale prices through the roof.

Queenslanders’ power bills risk a second price hike this year while some smaller electricity retailers face closure if government and industry cannot resolve the energy crisis driving wholesale prices through the roof.

The risk of blackouts in Queensland on Monday night was averted, but there could be challenging days ahead, the energy regulator and federal energy minister warned.

In an extraordinary situation, the energy regulator was forced to cap skyrocketing Queensland wholesale prices and warn there was a risk of blackouts on Monday night.

The risk of blackouts in Queensland was averted on Monday night. Picture: NCA NewsWire / Andrew Henshaw

Powerlink urged its 4 million customers to cut power use including turning off unnecessary airconditions or second fridges to take pressure off the system.

A perfect storm of unseasonably cold weather driving demand, the war in Europe driving global gas prices, some coal-fired power generators coming offline and flooding in coal mines which supply generators have contributed to extremely high wholesale prices.

The Australian Energy Market Operator (AEMO) enforced a wholesale price cap on power generators about 7pm on Sunday night and sustained it throughout Monday, after prices reached the threshold of an average $674/MWh over seven days.

This is six to 12 times more “normal” prices of $50-100/MWh, while the cap is set at $300/MWh.

Generators essentially reduced supply from the market in response to the price cap, lead to forecasts energy use would outstrip the supply during the peak times of 5.30pm to 8pm and create the risk of blackouts.

AEMO last night confirmed it used its powers to order electricity generators to produce enough supply to meet consumer demand on Monday night.

“At this stage, these efforts have provided sufficient generation to cover the lack of reserve 3 shortfall,” an AEMO spokesman said.

But it is expecting challenging days ahead, with the wholesale price threshold still in place, along with generators offline to deal with maintenance and faults.

“AEMO will continue to monitor reserve conditions closely in Queensland, and more broadly across the (national energy market), providing further updates should conditions change,” the spokesman said.

Grattan Institute energy and climate director Tony Wood said it was an “unprecedented and unpredictable” situation unfolding.

Retail power bills were already predicted to rise by about 12.5 per cent in July, due to already high wholesale prices.

Mr Wood said the high wholesale prices, which account for about 25 per cent of a household’s power bill, would likely be passed on about this time next year.

“You’re looking at significant increases this time next year,” he said.

“If it gets really nasty, they could act more quickly and act sooner.

“We will only see those higher prices if government and industry can’t sort it out.”

Energy Minister Mick de Brenni. Picture: Steve Pohlner

Mr Wood said some small electricity retailers could be driven broke by the extraordinarily high prices, but not to the scale as seen in the UK recently where up to 30 smaller retailers closed.

He said there would be difficult decisions for state and federal government energy ministers as they seek to deal with the crisis, but there were potential good outcomes particularly if more coal supply can be brought into the market quickly.

“If we get this more or less right, there’s a pretty good chance we won’t see alarmingly high prices passing through to homes and businesses,” Mr Wood said.

Springfield Lakes resident Jenny Davis was anxious about the impact prices and blackouts could have on her family.

“We have two daughters in high school, so their extra curricular things along with grocery prices increasing and electricity and gas price increases it all just adds to the pressure,” she said.

State Energy Minister Mick de Brenni said he would continue to monitor the situation closely, as he backed calls from Powerlink for Queenslanders to take steps like turning off unused appliances.

“Queenslanders have conserved energy in situations like this before as recently as last year and I’m confident Queenslanders will be able to do it again,” he said.

A spokesman for Federal Energy Minister Chris Bowen said the Minister had been in contact with AEMO and Mr de Brenni throughout the day.

“This is a challenging situation for the (national energy market) and will need to continue to be actively managed over coming days,” he said.

The Queensland crunchpoint yesterday is part of the broader energy crisis hitting the east coast of Australia, which saw an urgent meeting of the state and federal energy ministers last week.