The Australian Energy Regulator has been investigating more than half a dozen “high priced” events on the National Electricity Market, and some of the reports it has already completed make astonishing reading.
Take the events of last November 18 in New South Wales, when the spot price of electricity jumped to more than $11,700/MWh in the mid afternoon, and bids of more than $13,700 were recorded over seven different trading intervals over the course of the afternoon.
These are the sort of levels that have caused conservatives in politics and many in the media to hyper-ventilate about the level of renewable energy in South Australia, and the proposed state-based renewable energy targets in Victoria, Queensland, and even the Northern Territory.
But here’s the irony. The number of high-priced events in Queensland so far this year are 40 (yes, forty) times more common than in renewables-strong South Australia. Did we hear a peep of protest from the Coalition about this? No.
The importance of the November pricing event in NSW is that – like so many other similar events – it shouldn’t have happened; but it did, because two players in the market – Origin Energy and Snowy Hydro – without breaking the rules, were able to game the market and eradicate competition.
This goes to a fundamental point in the debate about electricity prices. This has nothing – nothing –to do with renewable energy, its costs or its variability.
It is solely about the pricing power of the fossil fuel generators, most of them owned by the retailers who insist they are acting at all times in the best interests of their consumers.
There is no doubt that more renewables, and more competition, will reduce that pricing power. That is a given. But the Coalition and many in the mainstream media simply don’t want to know: politics and ideology are at play.