"The Australian Energy Market Operator's intention to re-boot the electricity market signals the easing of recent acute electricity sector chaos, but is far from a return to normal conditions," Innes Willox, Chief Executive of the national employer association Ai Group, said today.
Today's announcement is the first step on the road out of energy hell – and in to purgatory. We could be there for a very long time.
"The typical power market became inoperable when vast unexpected outages at coal generators combined with high gas prices that put the cost of running backup gas peakers well above the price cap prescribed by the rules. AEMO has done what was necessary to keep the physical electricity system functioning. We should be grateful to them and everyone else who has helped – including suppliers who have restored four gigawatts of the previously unavailable generation, and energy users large and small who curtailed demand or shifted it.
"However we are not back to normal and there is no basis for relaxation.
"Firstly it is quite possible that fresh unexpected events will worsen our situation. More generators could break. Winter has a long way to run. The war in Ukraine and the confrontation with Russia could cause even more intense problems for global energy markets. We need to stay ready for anything.
"Secondly the bill for the recent acute crisis still needs to be paid. Very few energy users have been directly exposed so far, but sooner or later all of us will pay our share of the very large costs that AEMO has had to incur to keep the lights on. Clear communication and justification from AEMO and energy suppliers will be essential as those costs start to show up on customer bills.
"Finally we face the grim reality that on the other side of acute chaos lies a chronic crisis of energy affordability. Wholesale electricity futures are more than double their level of a year ago. Gas contracts are being offered to manufacturers for the next year that are three times the level of a year ago. International fuel markets suggest high prices for years to come, especially for natural gas. With Europe seeking to escape dependence on Russian gas, global gas markets are likely tight for much of this decade.
"That is why all levels of government need to remain focussed on developing a strategy to help energy users in the near term, including through financial assistance for the most vulnerable; and to accelerate supply- and demand-side transitions that will reduce our exposure to high cost fuels," Mr Willox said.
