Fears about blackouts due to a shortage of energy did not eventuate last night but Queenslanders are warned the threat has not passed.
The cost of power has been rising so rapidly the Australian Energy Market Operator (AEMO) stepped in on Sunday to cap prices for the first time in a decade.
People have also been told to limit their consumption during peak periods.
So how did it get to this?
Here is what we know about the price cap, the strain on the energy grid and how you can keep your bill and energy consumption as low as possible.
Do I still need to worry about blackouts and limiting energy use?
Possible blackouts were avoided yesterday when the AEMO directed electricity generators to avoid shortfalls.
Paul Simshauser, the CEO of state-owned electricity transmission system operator Powerlink, said Queenslanders still needed to be conscious of their energy consumption during peak periods.
“The combination of directions that are in play at the moment I expect will ensure that demand is actually satisfied,” he said.
“What we would ask customers to do though … [is ] just to be thoughtful about your electricity use.”
— Powerlink Queensland (@powerlinkqld) June 13, 2022
The AEMO said it was concerned about energy supply because “wholesale electricity prices in Queensland reached the cumulative high price threshold”.
This triggered the $300 a megawatt hour administered price cap.
“As a consequence, some generators revised their market availability, contributing to a forecast supply shortfall,” it said.
“Supply reserve shortfalls are currently forecast in Queensland and NSW in the coming days. However, this may change with the administered price caps in other states.”
Why has the regulator instituted a cap?
Associate professor of energy economics at the University of Adelaide Liam Wagner said it was to rein in extreme price volatility in the market.
“The price cap is there to ensure that there’s not excessive profit-taking and also, I guess, deliberate withdrawal of supply to increase prices,” Dr Wagner said.
“So they put a cap on when there has been a significant shift in price for a number of hours in a day.
“[Price volatility] doesn’t always result in higher retail prices, but in this case with extreme volatility and a price cap being implemented, I think we could see prices going up again in the short term, certainly for consumers going onto a new contract.”
What effect should that have on your bills?
It should prevent them from getting wildly out of control.
But you can still expect to be paying a lot more on your next power bill.
While the cap limits the surge in power prices, the cost of energy at the moment is still high.
Tim Buckley from Climate Energy Finance said it’s a necessary intervention but $300 is still a lot.
“[That’s] about four or five times what the average wholesale price of electricity [was] 12 months ago … which is extreme inflation but we were seeing periods where the price of electricity was triple that price cap,” he said.
“I am hoping that AEMO is going to do this consistently.”
He said we are at “the start of a domestic energy crisis”.
“It’s great that AEMO has used this long-dormant rule to try and bring some sanity into the market.”
How long will this go on for?
Mr Buckley said the lag time in being able to build new cheap power supply means prices are expected to be high for up to two years.
“Until the federal government brings in a permanent or even a medium-term solution, we are going to see extreme gas prices and extreme electricity prices as a result, probably for the next 12 to 24 months,” he said.
“I say that because it takes you 12 to 24 months to build new solar and wind and battery projects.”
So what can you do to rein in your power bills?
Energy Consumers Australia (ECA), which represents residential and small business energy users, offers a number of tips to keep usage and prices down.
While it says that a big power bill adds to existing cost-of-living pressures, its CEO Lynne Gallagher said consumers shouldn’t feel powerless.
In a statement, she offered some tips.
“There are five pretty simple things that all Australians can and should do to make sure they keep their energy costs as low as possible,” Ms Gallagher said.
The ECA website breaks these down:
1. Contact your retailer
ECA says “don’t be shy”, contact your retailer as soon as possible and ask if you are on the best deal available.
“Many Australians are not,” it said.
A spokeswoman for the consumer group Choice, Katelyn Cameron, agrees that asking for a better deal is a good place to start.
“Ask what they’ll offer you to stay with them, so tell them you’re looking for a better deal and see what they can do for you,” Ms Cameron said
2. Request help
If you need assistance paying a bill, let your retailer know.
ECA says they are legally obliged to offer you options to make payment easier.
But don’t wait until you have a big debt, get onto it early.
3. Use smarter
ECA says changing when and how you use some appliances can greatly reduce your energy bill, like a shorter shower or a small adjustment to your thermostat.
Choice recommends turning appliances off at the power point so that you’re not using electricity in “standby” mode.
“Choice has found TVs, computers, microwaves, even some washing machines have a ‘standby’ mode which means that they’re still using energy even when they’re not in use,” Ms Cameron said.
“If you’re shopping for a new appliance make sure you’re buying one that has a good energy rating or a good water rating, because that will save you money down the track.”
4. Switch retailers for a better deal
Dr Wagner also advocates shopping around.
“I would of course always advise people to go and check out different retailers to get the best price they can,” he said.
If your existing retailer can’t offer you a better deal, ECA says chances are somebody else can.
5. Hack your home to save
ECA recommends using door snakes, floor rugs, weatherproof tape and other inexpensive home hacks to reduce your bills.
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