‘Reckless’: Power generators had ‘no regard’ for blackout warnings, regulator says

Some power generators “had little to no regard” for how their actions were impacting the electricity system during the crisis in June this year which saw frequent threats of blackouts.

Some power generators acted “recklessly” and “had little to no regard” for how their actions were impacting the electricity system during the crisis in June this year which saw frequent threats of blackouts and rare price caps enforced.

The Australian Energy Regulator published its report on Thursday morning with a scathing assessment of how power generators acted during the crisis.

An extraordinary market failure saw the regulator cap skyrocketing wholesale prices, leading to generators reducing the supply they were pumping into the system and creating the risk of blackouts.

Australian Energy Regulator chair Clare Savage. Picture: Australian Energy Regulator

Despite a scathing assessment of generators actions, the AER indicated few directly breached the rules.

But it is continuing to investigate the actions of one, unnamed generator.

The investigation looked at whether generators made misleading bids into the energy market, but did not uncover any evidence of this.

It stated that there was recklessness by the generators which contributed to the regulator having to take its unprecedented level of intervention into the energy market.

“The evidence we obtained appears to indicate that several generators had little to no regard about the effect of their actions on the broader system,” the report stated.

It found that, during the June crisis, some generators were ignoring forecast supply shortfalls and warnings that brownouts were possible.

There were concerns from generators that the wholesale energy price cap enforced meant they would be forced to sell at a loss, despite the fact that there is a compensation scheme in place for when the regulator is forced to intervene.

“The existence of a compensation scheme designed to incentivise generators to supply and to avoid challenges to system security appears to be insufficient to overcome this challenge,” it stated.

“Despite the behaviour of generators being unhelpful in the first instance in withdrawing capacity, we otherwise found that (the Australian Energy Market Operator) and generators worked closely together in difficult circumstances to avoid load shedding and to maintain power system security and reliability.”

But it warned there would be challenging and volatile conditions ahead in the electricity market, amid tight coal and gas supply, generators closing and the energy transition.