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Shining a light on why our energy-rich nation is living in the dark ages

Opinion

What a debacle. How did our energy system fall into such a shambolic mess?

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Queensland Energy Minister Mick de Brenni yesterday declared the system was working and had a sly dig at commentators who had somehow surmised that threats of east coast black out had indicated something entirely different.

What I think he meant was that the market’s emergency measures were working … so far.

But how did we get into this mess when Queensland is fundamentally an energy-rich state?

Why are electricity prices going through the roof when the stuff used to make it is so abundant?

De Brenni has pointed the finger at Canberra which, to be fair, has made a complete dog’s breakfast of energy for the past decade. By de Brenni’s count there has been 20 energy policies in the past nine years. None of them seemed to work.

But two things happened yesterday that shed light on the mess that could have only been created by politics.

First, Federal Energy Minister Chris Bowen detailed why generators were failing and the Australian Energy Market Operator pointed out that some generators were playing the market.

“Discussions with scheduled generators indicates an estimate of approximately 2000 megawatts (MWs) of generation in each of Queensland and New South Wales, which hasn’t bid into the market, can be directed by AEMO to be available to help meet forecast electricity shortfalls this evening.

“In addition, AEMO continues to encourage generators to bid their availability into the market with forecast Lack of Reserve (LOR3) conditions (tonight) in all regions of the National Electricity Market (NEM).”

According to Bowen, the reason the generators are sitting on the sidelines is because of the bizarre system that has been set up.

First of all, prices skyrocketed in the wholesale market so AEMO stepped in and put a cap on it, which still exists. But for some generators that was not enough – so they benched themselves, meaning there was a big shortfall in scheduled supply.

AEMO then directed them to come back – an action which triggers compensation for the generators – who therefore came back into the market.

It’s like a game.

A major factor is also the eight generator units out of action in Queensland, which seems poor timing, but the state usually enjoys a mild winter and very rarely needs all of the supply that gets cranked up in summer. The cold snap put demand on the market that wasn’t expected.

The result of all this is that the Queensland Government now wants to detach itself from the global price shocks that are the cause of the mess we are in.

It intends to do that through its renewables investments. If you thought that was a good idea, wait until you see the bill.

Amid all this mess there are suggestions of price gouging by some retailers with the Australian Energy Regulator and the Australian Competition and Consumer Commission issuing a warning.

“In current circumstances, we would be particularly concerned by any conduct that attempts to take advantage of the current market conditions to mislead consumers about the need for, or extent of, any energy price increases or to achieve other financial gains,” they said in a letter to the market yesterday.

“Any arrangement to transfer customers and/or contracts or that co-ordinates market conduct, risks being a serious contravention of Part IV of the CCA. If you are contemplating any such conduct you are urged to urgently notify the ACCC and engage in the appropriate review or authorisation process.”

 

 

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