The crisis that has gripped the East Coast gas market in recent weeks, and which has been more fully exposed since the failure of Weston, is compounded by the deteriorating energy price situation in Australia. , where wholesale electricity prices have also risen and are being fed. to households and industry.
Extreme gas prices will be out of reach for many manufacturers who depend on spot prices to get their gas because they were unable to set contract rates at prices they thought were affordable at the time.
They arrive when hundreds of Weston customers along the east coast were transferred to “last resort retailers” such as AGL Energy, where many received default rates linked to wholesale prices, but with an additional margin.
Textile and other manufacturers have said they cannot continue to operate with high tariffs and will have to consider whether to close the plants as they call for government action to curb prices.
Willox said short-term responses would be needed to help vulnerable industry and households, as well as long-term measures to change demand and increase fuel supply.
“The pain of prices is already intense for those companies that have suddenly found themselves in need of new energy contracts amid local and global unrest,” he said.
“Households will be hit by higher default electricity prices starting in July, and there will be more pain for everyone.”
No luck with alternative supplies
Causmag International, a NSW magnesium product maker that was a Weston customer but is now being asked to pay more than $ 40 / GJ for gas, has been unable to find alternative supplies.
“Our broker is still exploring the market,” CEO Aditya Jhunjhunwala said. “No luck so far.”
High prices are similar to the shocking peaks in gas and energy prices in Britain last fall that led to the closure of energy-intensive industrial plants and pulled dozens of small energy retailers out of the market.
Josh Stabler, CEO of Energy Advisor Energy Edge, noted that three of the four East Coast national gas markets are now being managed by the AEMO below imposed price limits.
Prices began to take control in the Sydney and Brisbane markets last week, at around $ 28 / GJ in Sydney and $ 40 / GJ in Brisbane, Energy Edge said, based on rules activated when customers of Weston were transferred to “last resort retailers.”
Then, on Monday, the Melbourne market broke the cumulatively high price threshold allowed for a period of seven days according to the rules of the energy market, which caused its market price to be limited to $ 40 / GJ.
A ministerial order in NSW issued on Monday would cause the Sydney price cap to rise to $ 40 / GJ as in other states, Stabler said.
Victoria’s situation was exacerbated by a very cold climate that was expected in the coming days due to the so-called “polar wave”, which resulted in a projected gas demand for the retail market of 1,247 terajoules a day, surpassing last year’s high, Stabler added. . Gas demand in Victoria on Wednesday is expected to be 92% higher than on the same day last week, he said.
Stabler said AEMO’s intervention meant that prices expected to reach $ 85 / GJ in Melbourne on Tuesday and $ 800 / GJ on Wednesday, “fortunately for besieged energy markets,” would be limited to $ 40 / GJ. .
Queensland LNG exports do not appear to be causing the tightening, and East Coast LNG exports have declined this month. EnergyQuest consultant Graeme Bethune said Gladstone’s LNG exports in May were 1.784 million tonnes by May 30, down from 2.068 million tonnes in April.
But more gas was being used in the domestic market this month for power generation, to help offset a 26.9 percent drop in solar generation production, Dr. Bethune said, citing preliminary May figures.
He said gas use rose 34.6 percent this month, accounting for 9.5 percent of the generation, up from 7.2 percent last month. Hydroelectric power generation also rose sharply, by 58.6%, while coal and wind power were both 1.9% lower.