Electricity Market Update
June 23, 2022
What are the recent events causing price increases?
In addition to the high demand from the start of the colder winter months, there has been an unprecedented blend of worldwide and domestic events influencing electricity markets These events include:
• The Russian invasion of Ukraine having a long lasting effect on worldwide energy supply and commodity prices
• The significance of planned and unplanned coal plant outages,
• Reduction of coal stockpiles and issues with coal supply and delivery due to flooding of mines and associated operational issues, and
• Reduced generation of renewables because of the weather.
What events occurred in the energy market?
A threshold was triggered first in Queensland on 12 June 2022 and then in the other states in the National Electricity Market (NEM). This threshold was triggered following a period of significant volatility in prices in the wholesale electricity spot market and has resulted in the wholesale price for electricity being capped at $300/MWh.
The wholesale electricity spot market is where generators sell electricity and retailers buy it to on-sell to consumers. This market is overseen by Australian Energy Market Operator (AEMO).
On 15 June 2022, AEMO suspended the wholesale electricity spot market which was the first time since the National Energy Market has been in operation since 1998. AEMO has stepped in to suspend the market in all regions and said they took this action to ensure a reliable supply of electricity and to simplify operations.
What does this mean for your Body Corporate?
A potential outcome in the current market is that AEMO will pass on the additional costs it incurs to all retailers. This could mean you will see extra charges in the regulated charges’ section on your electricity invoice. We will find out more these charges through updates from AEMO and will keep you updated with any affects.
This article was contributed by Adam Ford, General Manager ARC Utilities Management