SA winter power crisis ‘structural not behavioural’

South Australia’s recently high electricity prices were caused by market conditions at the time and not by power operators ‘gaming’ the market according to the Australian Energy Regulator (AER).

The AER investigates any anomalies or spikes in prices over $5000MWh, including the price spikes in July this year.

Australian Energy Council spokesman Matthew Warren said the AER confirmed the price hikes were the normal market response to market conditions.

“At the time, South Australia’s 1200MW of wind generation was producing only 20MW of power. Because of constraints on the interconnector to Victoria, the remaining operating gas generators had to find gas in a tight supply and transport market, to bring on extra capacity quickly,” Mr Warren said.

“The problem of higher electricity costs in South Australia is structural, not behavioural.

“There was no abuse of market power, lack of competition or gaming the market.”

Mr Warren said generators did what they could to bring on power quickly, but into the future, the structural issues facing energy generation will need to be addressed.

“We need to find smart solutions to integrating high levels of intermittent generation that maintain security of supply at the lowest possible cost,” he said.