ACCC rejects request from Australian Energy Market Operator to keep grid stability powers

Electricity generators are more likely to game the system than work together to prevent blackouts if current rules allowing information sharing persist, the ACCC has ruled.

The Australian Consumer and Competition Commission has rejected a request from the country’s energy market regulator to keep the power to coordinate and share information about generator and transmission outages and new connections that it has used to prevent blackouts, ruling antitrust concerns outweighed the benefits of ensuring grid stability.

The preliminary ruling, which the ACCC could yet overturn, comes as Australian officials heighten their scrutiny of the country’s energy industry amid allegations electricity generators have gamed the system but it threatens to heighten Australian Energy Market Operator’s task of preventing blackouts and price rises during what is expected to be a hot summer.

AEMO has since 2020 had powers to coordinate and share information to other market participants around the scheduling of repairs, maintenance, upgrades and new connections.

The powers have allowed AEMO to coordinate transmission and generators to ensure sufficient electricity supplies to meet demand from households and businesses. If demand outstrips supply, there is a heightened threat of blackouts.

The ACCC acknowledged the benefits of the information, but said sharing that with others in the market increased the threat of anti competitive behaviours.

ACCC acting chair Mick Keogh said the energy market operator has or will have imminently sufficient powers and allowing the emergency authorisation to continue posed a risk of market abuse.

“While there are challenges arising from the transition towards renewable electricity, currently we do not consider that the proposed coordination would significantly increase AEMO’s ability to manage the scheduling of outages,” Mr Keogh said.

“We are not currently satisfied that the proposed coordination is likely to result in public benefits that would outweigh the likely harm to competition, given AEMO’s existing powers.”

The ACCC did not provide any details of suspected anti competitive behaviours by generators or transmission providers, but it comes at a time of widespread public unrest about electricity bills.

Australian households and businesses have endured two years of annual price increases of more than 20 per cent. The soaring bills have coincided with a cost of living crisis that sees a record number of Australians unable to pay their electricity bills.

Under mounting pressure, the ACCC has heightened its scrutiny of electricity companies. But the ruling threatens to exacerbate the job facing AEMO as temperatures soar.

A spokesman for AEMO said the purpose of the information sharing was to ensure grid stability, noting the prospect of a difficult summer.

“The purpose of the forums is to share information about, and coordinate, outages of generation, transmission and distribution for repairs and maintenance – in order to minimise the risk of disruptions to electricity supply,” the AEMO spokesman said.

“As we move into a difficult summer, AEMO will continue to look for ways to minimise the potential for disruptions to electricity for Australian homes and businesses.”

AEMO will keep the powers until the ACCC makes a final decision following consultation with the market, and the energy market operator is likely to hope it can keep authorisation until at least Autumn as it grapples with what it expects to be a difficult summer.

AEMO in August warned of a significant risk of blackouts in Victoria and South Australia this summer as it called for urgent investment or face a decade when electricity supplies could not be guaranteed.

Australia is expected to endure a El Nino weather event this summer that will bring hot, dry conditions across the country’s east coast that will increase demand for cooling.

The increased demand will strain Australia’s ageing coal power generators, and unplanned outages will push the National Electricity Market to the brink.

Some of Australia’s coal power generators - still the dominant source of electricity for Australia - are approaching the end of their technical lifespan and heightened demand is expected to be a significant strain.

Australia’s ageing coal power stations suffered a spate of unplanned outages in 2022 during periods of high demand, though generators have moved in recent months to service units to ensure reliability.