Energy regulator to investigate NSW generators

The federal government has asked the Australian Energy Regulator (AER) to examine the bidding practices of New South Wales generators to ensure consumers aren’t getting ripped off.

The request comes on the back of reports that NSW power generators have been bidding and selling their electricity, adding an estimated $30 to $35 per MWh to spot prices.

Federal Energy Minister Josh Frydenberg said in light of the reports, it’s important to make sure electricity generators are playing by the rules.

“Spot prices mainly affect big business, but if inappropriate bidding practices are repeated over an extended period of time it can also have an effect on household bills,” Mr Frydenberg said.

“The request to look into the practices of generators in NSW is an extension of the work already underway with the AER examining generator bidding behaviour across the National Electricity Market (NEM) following the closure of the Hazelwood power station in March this year.”

The AER has also been asked to provide advice to the COAG Energy Council on factors impacting on the efficient functioning of the market by November this year.

Australian Energy Council chief executive Matthew Warren said the investigation would “help shed light on the complexities of supplying energy into Australia’s competitive national electricity market”.

He said the closure of the Hazelwood power station in Victoria had increased demand on all generators, including those operating in NSW, which had increased wholesale electricity prices.

“This in turn has required a number of NSW coal fired power stations to source extra supplies of coal,” Mr Warren said.

“Coal supplies in NSW are constrained as around 80 per cent of the state’s output is already contracted for export, as well as constraints on the rail network to get the extra coal to some power stations.

“Many of these generators would like to run flat out, but they can’t because they don’t have enough fuel. This rationing of fuel creates scarcity which has pushed up wholesale prices.

“Generators are doing everything they can to solve these constraints and increase output, but we are running the system harder than normal and this creates its own challenges.”