The price of keeping the lights on

This only exacerbated the market chaos with politicians, including Anthony Albanese, accusing generators of “gaming” the system – meaning another new review is underway, this time by the Australian Competition and Consumer Commission.

AEMO’s CEO Daniel Westerman says a step-by-step approach to relinquish regulator control minimizes the risk of the “dysfunctional behavior” that led to the market’s suspension last week.

“We know that a well-functioning national electricity market is key to ensuring the cheapest energy for Australian homes and businesses,” he said on Wednesday.

But the lowest cost for consumers still translates into an annoying sticker shock for all consumers. Households and small businesses on Australia’s east coast will have to get used to this as early as July 1, when the new rates for standard market offers come into effect.

Energy Secretary Chris Bowen is right that the stability of the electricity system requires more renewables, more storage and more transmission.

The Australian Energy Regulator sets the maximum allowable increase for this offering in NSW, South East Queensland and South Australia for the following fiscal year. While only about 10 percent of retail retail customers and 20 percent of small businesses are on an actual safety net, the increases are normally a measure of retail prices in general.

Price increases for homes allowed for this standard offer range from 7.2 percent in South Australia to 11.3 percent in South East Queensland to between 8.5 and 14.1 percent in NSW, depending on where people live.

For most small business customers, the news is even worse, with increases from 10 per cent to 19.8 per cent in NSW and 12.8 per cent in south east Queensland. Another agency has a similar role in Victoria, where the average increase will be 5 percent. No wonder consumers are confused.

The rationale for such a complicated system is to “protect customers from unjustifiably high prices, while giving retailers sufficient margin to recover costs and bring new products and customer innovations to the market”.

But even with these increases, the collapse of some smaller energy stores and profit warnings and delay in setting new subscription prices by the larger one is another indication of the ongoing conflict between higher wholesale costs and what businesses can charge the most customers.

Energy Secretary Chris Bowen is right that the stability of the electricity system requires more renewables, more storage and more transmission.

build enough extra capacity at scale will take several more years instead of months, despite the government’s new fund to boost transmission.

Outdated equipment in coal-fired power plants will continue to break down, as will the economy of that type of generation.

That creates a need for alternative “strengthening” energy to support renewables. That’s why the Energy Security Board is trying to design a new “capacity mechanism” that would pay generators to have power like gas, pumped hydro, and battery storage available when solar and wind power aren’t.

Lack of private investment

The ESB also pointed this week to the alarming lack of private sector investment in such a strengthening generation. The report noted that companies had provided 11.6 GW of investment since the inception of the national electricity market in 1998, but only 900 MW of it took place in the last decade. Instead, most of the investments have been made in wind and solar energy.

A much-hyped $1 billion scheme by the Morrison government to secure new energy generation has come to absolutely nothing. The shortlist of 12 hydro, gas and coal projects for 2019 have all been abandoned or have yet to go on† Smaller players could not pile up the investments.

While the threat of power outages and a new Labor government have encouraged much more urgent cooperation between regulators, industry and state and federal energy ministers, there is no quick response to this problem.

also not Australia alone in its energy problems. But Albanian still blames the “decade of delay and denial” for the disaster in an energy-rich country. The market has spoken, he stresses, to say that renewables are the future — and that’s why investments are being guided that way.

“What has not happened is that the network has not been repaired,” said the prime minister. “One of the things we know is that a media release doesn’t give you new energy or power. What companies say is that they want policy certainty in order to be able to invest. That’s what we offer them.”

Yes, it’s a race now.

#price #keeping #lights

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