The Australian Energy Regulator (AER) today published a report into energy prices exceeding $5,000 per megawatt hour (MWh) in the National Electricity Market (NEM) and Frequency Control Ancillary Services (FCAS) markets in New South Wales, Queensland and Tasmania during April, May, and June 2024.
During the quarter, 30-minute wholesale energy prices exceeded $5,000 per MWh 19 times, compared to 16 during the same period last year.
Most of these occurred in New South Wales in May; 15 of them occurred on 7 and 8 May. These prices in New South Wales led to the cumulative price threshold being breached and the Australian Energy Market Operator applying an administered price cap.
There were also 15 high FCAS prices in Queensland on 7 and 8 May. An additional high price occurred in Tasmania on 25 June.
The high prices and FCAS events in April, May, and June 2024 included:
- 2 May in New South Wales for one 30-minute period
- 3 May in New South Wales for one 30-minute period
- 7 May in New South Wales for three 30-minute periods
- 8 May in New South Wales for 12 30-minute periods
- 20 May in New South Wales for one 30-minute period
- 7 May FCAS in Queensland for three consecutive 30-minute periods
- 8 May in Queensland for 12 30-minute periods
- 25 June in Tasmania for one 30-minute period
The high prices were driven by a variety of factors including generator and network outages and rebidding.
- Multiple scheduled network outages impacted NSW’s ability to access low priced generation from neighbouring regions and from southern NSW. This was compounded by significant baseload generation outages and plant issues (mostly unplanned), at Eraring and Vales Point power stations.
- These factors created the opportunity for some market participants to profit maximise. Participants were able to contribute to and increase the number of high prices by reducing the amount of low-priced capacity even further. They did this by rebidding some of their capacity from low to high prices. While this is permissible under the National Electricity Rules, the behaviour may not have been in the best interests of energy consumers. Further analysis of participant behaviour and its effect on the efficient functioning of the market will be undertaken in the Wholesale Electricity Market Performance Report 2024.
Background
The AER is required to report into significant price outcomes in the NEM.
A high price may occur due to a variety of factors, including outages that adversely affect supply-demand conditions in the wholesale market.
The AER’s role in monitoring wholesale energy markets and reporting on high price events helps to enhance market transparency and compliance.
Our analysis provides a foundation to detect non-compliance, market irregularities, inefficiencies, and consumer harm. We draw on this work to advise stakeholders and market bodies on wholesale market issues.
The AER has published a Guideline for how we report into significant price outcomes.