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Unprecedented domestic natural gas prices have followed dramatic price rises in internationally traded oil and coal. At the same time, some generation assets were flooded or offline, and some have been accused of improper behaviour.

The risk of future price volatility remains high as we continue to work towards an ambitious target requiring 50% of all electricity generation to come from intermittent renewable sources by 2030. With no coherent national energy policy in place, an increasing likelihood of further plant closures, reduced plant output and a rising number of generation outages, there is a very good chance we will see high price volatility over the next 3-5 years.

Bryan Dawe and the late John Clarke discussed the energy crisis,  originally aired on ABC TV five years ago, which is still relevant today in the current energy crisis.

Image by Hello I'm Nik
Image by Subhayan Das


Labor’s Rewiring the Nation will invest $20 billion to rebuild and modernise the grid, in line with a blueprint already completed by the Australian Energy Market Operator and signed off by all governments.

Modernising the grid will provide thousands of new construction jobs for Australians, many of those in our regions. It will revitalise traditional industries like steel and aluminium and allow growth in new sectors like hydrogen and battery production. Fixing transmission is technology neutral and will allow the market to drive least cost, reliable new energy production.





The AER in June quietly demanded sensitive information from the retailers amid concern about the behaviour of some retailers which urged customers to leave and sold their hedges at large profits, and the potential for others to collapse under the pressure on their profits.

The information will give the AER a glimpse into the state of Australia’s energy retailers, many of which are struggling to cope with a surge in wholesale electricity prices and demands from the country’s market operator following the unprecedented suspension of the market earlier this year.

The AER has vowed to test the level of financial stress retailers were under when they urged customers to leave. Those deemed to have urged customers to leave when they were capable of continuing to serve them risk losing their retail licences.


AEMO billed retailers more than $85 million for the first tranche of costs associated with the suspension of the National Electricity Market. A further bill to compensate generators for any losses incurred when they were ordered to generate during the suspension is expected later this year.

Retailers are expected to be charged hundreds of millions of dollars for this second tranche and compensation payments fall outside of hedges acquired by retailers to protect them against the costs of wholesale electricity. As a result, retailers will have to pay for the compensation and then move to recoup the costs from consumers.

Image by Mariana Proença


New transmission lines will be paramount to ensure cleaner and cheaper wind and solar power for Australia, but current concerns about the building time required and the amount of lines needed, will result in higher energy bills in the meantime.


RE-Alliance, a regional energy advocacy organisation, said there is a need to build significant amounts of new transmission lines over the next decade in the switch to renewable energy; around 10,000km, according to the Australian Energy Market Operator’s (AEMO) energy system roadmap, the 2022 Integrated System Plan (ISP)


The modelling shows that prompt action to upgrade the grid will bring down the average price of electricity. If transmission lines are delayed, prices become higher and more volatile.


Other important findings include:

  • If transmission is built according to AEMO’s plan, nearly all energy users experience the lowest prices (compared with the delay scenarios)

  • Avoiding the cost of building new transmission does not lower our electricity bills

  • A delay of even one year in delivering new transmission results in higher bills

  • If VNI West and Marinus Link are delayed, there would be significant price spikes in Victoria

  • A delay of even one year in delivering new transmission results in higher bills for consumers.

  • As delays to the building of transmission get longer, the modelling demonstrates prices are higher and price spikes are more likely to occur more frequently.

  • Tasmania would see a temporary fall in bills if the Marinus Link was delayed, due to over-supply of renewable electricity locally, but prices would rebound to higher levels once the link is constructed.

  • The increase in the wholesale cost of electricity due to delays far outweighs any ‘saving’ from not building the transmission, because low-cost renewable electricity cannot then be utilised widely in the NEM.

  • Victoria would be the most severely impacted because of its reliance on energy generation in NSW and Tasmania.

  • The modelling shows a significant spike in prices if HVNI West and Marinus Link are delayed.



East coast gas crisis threatens to linger

AEMO has requested Queensland’s LNG exporters to again make more gas available for the southern states as it warned of a shortfall of natural gas lasting out until the end of September that could destabilise the Victorian supply system. It comes after AEMO issued a warning on Monday of a “threat to system security” due to low gas storage levels at the Iona underground gas storage plant in Victoria.


The three ventures are understood to have agreed (APLNG, QCLNG, GLNG), while pipeline operator APA Group has been involved in the discussions to transport more gas southward. As part of its emergency intervention, AEMO has asked users not to buy spot gas from Victoria.

To avoid further runs on gas from the transmission system, AEMO, took the extreme step last Wednesday of requiring two gas-fired power plants owned by Snowy Hydro in Victoria to curtail operations until 1-Oct-22.

Global supply crisis

As maintenance on the Nord Stream pipeline that transports gas from Russia to Germany’s industrial heartland begins on Monday night, politicians and business leaders are nervously wondering whether gas flows will be restored after the usual 10-day shutdown, or whether Russia will play its key bargaining chip and refuse to turn the gas back on at all.

The emergency that would hit Germany and Europe more broadly if Russian gas stops flowing is ugly. But as JP Morgan chief executive Jamie Dimon told this column last month, the impact of gas shortages during the northern hemisphere winter could threaten the European Union itself, as energy rationing leads to an every-country-for-themselves scenario.

This volatile environment suggests extraordinary tightness in global energy supply and the potential for big profits for energy producers.

AGL demands gas supplies to serve Weston customers

AGL said that without the supply contracts from Weston Energy, it would be forced to buy on the spot market and accordingly charge Weston’s former customers higher prices. AGL is unable to offer fixed-price, fixed-term contracts to Weston’s relevant former customers,” the spokesman said.

The AER said it had directed that gas supplies be transferred to AGL from Weston.

Weston wants the option to sell the contracts, which are “in the money” thanks to surging gas prices, despite its inability to service its customers.

With neither side relenting, the row sets the scene for a protracted legal battle, and AGL’s lawyers late last month sent a letter to Weston Energy to demand the long-term supplies. It also vowed to escalate the matter to the AER.

Extending the Domestic Gas Security Mechanism to 2030

  • The Federal Government has proposed an extension of the Australian Domestic Gas Security Mechanism (ADGSM) until 2030

  • It is currently due to expire on 1 January 2023

  • The Federal Government will also renegotiate the Heads of Agreement with east coast LNG producers

  • Consultation should focus on maintaining investment confidence

  • Foreign investors and trading partners are the same partners Australia will work with to build our future hydrogen export industry, so it is important to demonstrate consistency, certainty and market stability now (note: In other words, don’t shoo away future hydrogen investment with the threat of price controls on natural gas)

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