Gas and power outages to sweep Australia as cold snap deepens energy crisis

Australians are being warned of gas and power shortages over the next 24 hours as the east coast cold snap pushes the country’s energy supplies to the limit.

Millions of Australians in multiple states are being warned of gas and power shortages over the next 24 hours as the east coast cold snap pushes the country’s energy supplies to the limit.

In an emergency phone conference on Wednesday, the energy regulator warned that Victoria, South Australia and Tasmania are facing gas shortages, while power supplies in NSW and Queensland will be stretched, The Australian reported.

The Australian Energy Market Operator (AEMO) told more than 100 industry players they may be forced to cut gas use. AEMO has also invoked an emergency supply guarantee mechanism on gas producers for the first time.

“This is the biggest energy crisis in 50 years,” Energy Users Association of Australia (EUAA) chief executive Andrew Richards told 2GB.

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Millions of Australians in multiple states could be hit with blackouts and gas shortages over the next 24 hours.

Industry experts have warned the UK-style energy crisis could crash Australia’s economy.

Wholesale electricity prices have soared by more than 140 per cent in 2022 alone, driven by surging gas prices even as 70 per cent of Australia’s gas is exported overseas.

Australian gas prices are typically around $3 per gigajoule (Gj), but that skyrocketed to more than $380/Gj this week as the energy market failed, forcing the regulator to intervene and place caps of $40/Gj in Sydney, Melbourne and Brisbane for the first time.

Treasurer Jim Chalmers has described the situation as a “perfect storm” of challenges in energy. Speaking to Nine’s Today on Thursday morning, Mr Chalmers warned there was “not one measure that can fix this overnight”.

“This is a big problem,” he said.

“There is no use beating around the bush. We have got spiking gas prices, spiking electricity prices and spiking prices for petrol as well.”

Jim Chalmers says Australia faces a ‘perfect storm’. Picture: Andrew Taylor/NCA NewsWire

He blamed the former government for the “cost-of-living crisis that we have inherited”.

“It extends beyond energy into building supplies and all the rest of it,” he said.

“It is a consequence of a perfect storm of international and domestic factors but it is also the cost and consequences of almost a decade now of energy policy chaos.”

Mr Chalmers said Labor wanted to “get cleaner and cheaper energy into the grid” but “that will take a little bit of time”.

“The more immediate options will obviously be part of a discussion with the companies and with the relevant Ministers as well, and I don’t really want to pre-empt those discussions,” he said.

The Treasurer said triggering the local gas supply guarantee “brings its own challenges as well and it is not immediate”.

“There is a series of processes that we would need to go through,” he said.

“We know the manufacturers and others would like us to pull that trigger. We will engage with them as well but we need to be upfront and recognise that there is not one thing that we can do to fix this overnight. It is a problem that has been developing for a long time.”

EnergyQuest CEO Graeme Bethune agreed with Mr Chalmers, claiming there are a number of factors that contributed.

“There has been a lot of pressure to shut down coal-fired powered stations so there’s just less margin of error,” he told the ABC.

“No one was expecting the huge accelaration or huge jump in international prices so to that extent what Jim Chalmers says is accurate, that you’ve both got these domestic factors and international factors.”

Origin Energy on Wednesday issued a profit warning, withdrawing its guidance for the 2022-23 financial year as it could no longer see how the crisis would end.

The company called on the Government to restart the ailing coal sector in order to bring prices down.

“The key matter which I think industry and governments need to work through is how they actually lift the output of the coal generation capacity here,” Origin chief executive Frank Calabria told The Australian.

Mr Calabria warned Australia could see a similar situation to the UK, where soaring wholesale energy prices caused 30 smaller retailers to collapse.

One such retailer in Australia, ReAmped Energy, took the extraordinary step this week of telling its 70,000 customers they should consider switching.

“With the state of the Australian electricity market, the best thing you can do is leave ReAmped Energy and find another retailer,” chief executive Luke Blincoe said in a video message on Tuesday.

“Prices are going to go up and they are going to keep going up and we simply don’t want to be passing those sort of costs on to our customers.”

A polar blast arrives in Melbourne for the first day of winter. Picture: Alex Coppel

AI Group said on Tuesday the “apocalyptic” energy price rises threatened “chaos for industry and pain for households”.

“The immediate pressures are from outages at old coal plants, consequent high gas demand for power, and the collapse of a mid-size gas retailer [Weston Energy],” said AI Group chief executive Innes Willox.

“But beyond these acute pressures lies the pull of international coal and gas prices, which are unprecedentedly high in the wake of the invasion of Ukraine. With Europe announcing further steps today to wean itself from Russian energy, we can expect international factors to sustain high energy price pressures for years to come – especially in natural gas.”

The EUAA has called on the gas industry to do more to minimise the damage being caused to the economy.

Mr Richards said gas companies must “play a significant role in bringing gas prices back to a level that allows manufacturing to survive and for families not to be terrified to turn on the heater in the dead of winter”.

“The gas industry won’t go broke if they drop their prices but manufacturers will go out of business if they don’t,” he said.

While he said it was “true that global events are having a significant impact on global energy prices”, the cost of extracting the resources “has not materially changed and domestic customers find themselves on the wrong end of prices approaching – or even exceeding – international benchmarks”.

“At current prices it is hard not to conclude that some are profiteering from the misfortune of others,” he said.

“In these desperate times, desperate measures such as gas reservation and price caps may be required to preserve the industries that we have, reduce cost of living pressures on families and ensure the most vulnerable in society don’t suffer this winter.”

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Originally published as Gas and power outages to sweep Australia as cold snap deepens energy crisis