The Australian Energy Regulator (AER) monitors and reports on wholesale electricity markets and is required to report on events that result in wholesale electricity spot prices exceeding $5,000 per megawatt (MWh) hour and average frequency control ancillary service (FCAS) prices above $5,000 per MW over consecutive trading intervals.
Most customers are not directly exposed to wholesale electricity prices. Energy retailers are the main purchasers in the wholesale electricity market. Retailers bundle electricity with network services for sale to their residential, commercial and industrial customers. Generators and retailers can manage their exposure to price variations in the wholesale market by entering hedge contracts that lock in firm prices for the electricity they intend to produce or buy.
On 17 December 2020, the energy price in New South Wales went above $5,000 per MWh three times during the 4 pm to 6 pm trading intervals reaching $10,034 per MWh for the 4.30 PM trading interval. We will publish a report into these high prices by the end of February 2021.
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