Prime Minister Anthony Albanese has accused energy generators of “gaming” the system and taking advantage of the ongoing crisis that is expected to be a hot topic at Friday’s national cabinet meeting.
The Australian Energy Market Operator this week for the first time took control of directing supplies from energy generators to the east coast power grid until further notice.
It came after some generators withdrew from the market this week, after AEMO capped soaring power prices. The operators were then ordered to pump power into the network, and compensated for that.
Mr Albanese said disincentives were built into the power market for generators.
“There was a bit of gaming going on of the system, which is why AEMO used its tools at its disposal to intervene, so we do have these short-term issues,” he said.
He has already flagged that he will seek to rewrite the rules on how the energy market operates to prevent a repeat of this week’s brinksmanship when energy generators held back on supply while they waited for the compensation trigger.
Consumers are still being told to brace for more challenges in coming weeks, as AEMO’s intervention continues.
Mr Albanese said the AEMO action would last as long as needed, but collaboration between jurisdictions would be essential in lessening the impacts of the power shortages.
“The states and territories, of course, all have a role to play,” he told Sky News on Friday.
“Gas will continue to play a role in the future as we transition, gas will be important in providing that security for the system.”
Meanwhile, after days of threatened blackouts in NSW, state Treasurer Matt Kean has been granted emergency “precautionary” powers to ensure energy supply in the state.
The risk of outages, as well as routine power plant maintenance, have repeatedly strained NSW energy supplies this week. On Wednesday, Mr Kean urged residents to reduce use, stoking fears of shortages.
Queensland, the ACT, Victoria and South Australia have also faced blackout threats.
NSW Premier Dominic Perrottet confirmed on Friday that Mr Kean now had more power to intervene in the market to shore up state energy supplies.
The powers will reportedly give the Perrottet government the ability to force coal companies to supply power generators with fuel.
“These are steps that we’ve taken just as a precautionary approach,” Mr Perrottet said in Canberra ahead of Friday’s meeting of state and territory leaders with Mr Albanese.
“These aren’t new approaches, we’ve done that in the past and the advice we have at the moment is that … he can direct if he needs to.”
The latest advice to the NSW government is that the state’s power system is stable and reserve conditions will improve through Friday. The are also stable forecasts for other states.
Asked about Canberra’s role in solving the crisis, Mr Perrottet said each state faced energy challenges but the federal government should coordinate responses nationally.
“The national cabinet certainly has a role to play,” he said.
Western Australian Premier Mark McGowan told the ABC the east coast should follow his state’s lead to introduce laws to force companies to retain some supply for domestic use.
WA introduced a mechanism in 2006 that required future gas projects to keep at least 15 per cent of what they produced for local use.
Mr McGowan said similar laws would have averted this week’s crisis if they were available on the east coast.
Victoria has also backed a domestic reserve, with the state’s Energy Minister, Lily D’Ambrosio, insisting this week’s crisis was not a supply issue.
“AEMO have advised that we continue to have sufficient energy reserves,” she said.
“It is disappointing energy generators were potentially gaming the system … this behaviour is unacceptable and will be investigated.”
Pressure on the grid is expected to ease from Friday and through the weekend, as more power units come back online.
Mr Kean warned of another pinch point for NSW on Thursday, but said he remained cautiously optimistic. A major generator was due back online late on Thursday.
“Supply conditions will ease,” he said.
“At this stage, we have confidence there’s enough reserve capacity in the system to ensure that we don’t have to ask people to be considerate of their options tonight.”
Federal Energy Minister Chris Bowen has said AEMO’s decision to take control of the market was the best option for households.