Accusations Fly Against Power Companies as Energy Tariffs Spike

Welfare groups have accused electricity generators of using a wind failure as a smokescreen for a wholesale electricity price spike that will increase electricity bills.

The incident happened last week when the price increased from the average below $100 per MwH to $12,199 MwH.

An investigation by the Federal Government’s Australian Energy Market Operator has found a number of the reasons can be traced back to electricity generators. Welfare agencies have renewed calls for electricity generators to be banned from deliberately taking their power offline to create a spike in wholesale prices on the spot market.

“It is of great concern for SA’s electricity supply that Osborne and Torrens Island Power Stations as well as Pelican Point and Port Augusta can all be operating at reduced or zero output, when the interconnector is also down,” Uniting Communities spokesman Mark Henley said.

“Consumers are asking who benefits and who loses when wholesale electricity costs go sky high, because we know that consumers are the losers.

“South Australian energy policymakers and the regulator need to be certain that market power is not being exercised in this state and that it is not possible for generator market power to be exercised.” AGL owns Torrens Island power station, as well as about 25 per cent of the state’s wind power. The price blowout began last week when AGL’s wind generation capacity dropped to zero. Between Saturday June 1 and Monday June 3, all wind generation in SA dropped from 900 MW to zero because of weather conditions. AEMO has told Adelaide now other generation units were also offline, causing the price spike.

“The reduced thermal generation capacity included plant at Osborne and Torrens Island,” an AEMO spokeswoman said.

“The Murraylink interconnector (which brings electricity from Victoria) was out of service due to a cable fault.” A spokeswoman for AGL said there had been planned maintenance at Torrens Island and then and an “incident” at the power station on 31 May, prior to the wind failure.

“A 200 MW generating unit at the gas-fired power station tripped following a switchboard fault. Two other 200 MW generating units subsequently tripped,” she said.

“A full investigation into the cause of the incident which resulted in the units losing generation capacity is currently being conducted.”

The Federal Government Australian Energy Market Commission has been criticised by welfare groups for not taking action against so-called “gaming” by electricity generators, despite accepting the circumstances exist for it happening because of the small number of generators in the SA market. Household bills are partly based on the wholesale price retailers must pay generators to onsell their electricity to customers, meaning the $12,199 MwH spike will flow on to consumers.