Special report - Market outcomes in South Australia during April and May 2013

The AER has released a special report on market outcomes in South Australia during April and May 2013. South Australia saw the tightest supply conditions in the region since the summer of 2009, leading to unusually high spot price outcomes for this time of year. The report examines what factors contributed to these market outcomes.  The AER considers the major contributing factor was the three largest generators in the state reducing the amount of capacity available to the market. This created tight supply demand conditions, with South Australia importing energy at the highest levels for six years. In these circumstances, issues which are relatively minor in the overall scheme of the market can trigger high price outcomes.  The AER considers that these types of market outcomes may become more frequent as conventional merchant generators react to tough wholesale market conditions. The AER does, however, consider the market will continue to deliver a reliable supply of electricity to meet demand.