Interview with Natalie Barr, Channel Seven, Sunrise

Natalie Barr
Energy supply

NATALIE BARR: Well, Queensland narrowly avoided widespread blackouts overnight, but entire suburbs of Sydney were plunged into darkness when the power went out. Both states have been in panic mode after the Australian Energy Market Operator warned of potential load shedding. The cold weather, high energy prices and planned maintenance are being blamed for this crisis, but just two weeks into winter, is this just the beginning of east coast power pain? 

PAUL SIMSHAUSER: There are a number of gas generators that are and were able to operate under that price cap, but there are some that if they were to have turned on at those prices would have actually lost money. So, at the moment what’s causing a lot of those gas fired generator cost rising, of course, is the international market for gas.

NATALIE BARR: Energy Minister Chris Bowen joins me now. Good morning to you. Look, during the election – 

CHRIS BOWEN: Good morning.

NATALIE BARR: – you promised cheaper electricity prices. People are going to be hit with higher prices from next month. Now we’re seeing blackouts, possibly from tonight, in Australia’s biggest city. What can you do about this? 

CHRIS BOWEN: Well, the first thing is that the plans that we went to the election with are more important than ever to manage the transition to get more energy into the system and more renewable energy and more storage and transmission. That’s more important than ever. 

In terms of the immediate challenge, I can assure people that it’s being very actively managed. We did avoid any load shedding or blackouts in Queensland yesterday and last evening. AEMO, our market operator, is working very, very hard, together with the State Government. I was in regular contact yesterday with both AEMO and with Minister Mick de Brenni in Queensland, and that was avoided because AEMO could instruct the generators to put more power into the system. And AEMO has also told me that they believe we can avoid load shedding and blackouts in New South Wales and other States today but, of course, they’ll continue to work very hard and actively monitor the system. 

So, the system is being actively managed, and we have avoided any load shedding. Load shedding means, basically, asking big energy users to turn off. We have avoided that so far and I believe, and I’m certainly advised, we should be able to avoid that in the next 24 hours.

NATALIE BARR: We’re only two weeks into winter though. What about the rest of it? 

CHRIS BOWEN: Well, we’re going to be in for a bumpy period. There is no doubt about it. I’ve said that very consistently. Our system is under pressure. We’ve had a lot of coal-fired power station outages – some of them planned, some of them unplanned. There’s a big chunk of coal-fired power out of action in Queensland at the moment. This has led to higher prices and, as you said, also with the situation in the Ukraine and the world situation, we’ve had flooding in coal mines and it’s a bit colder earlier than normal, so that’s increased the load on the system. 

But, as I said before, it’s all been very actively managed. We can have confidence in our operators, in our regulators, working together with the States. There’s a real spirit of cooperation around the State and Federal table under the new Government, working together. Don’t care what political party, don’t care what State, we’re working together with manage the situation, and I believe that will result in a better situation for energy consumers and avoid blackouts and certainly minimise the risk of any load shedding activities.

NATALIE BARR: So, as you were saying, AEMO, who’s basically the market operator, has ordered those generators to operate in some cases at a loss. Doesn’t sound like they’ll do that forever. Would the Federal Government have to compensate some of those companies? 

CHRIS BOWEN: Look, there’s a scheme in place already. It’s a bit complicated, but because the price cap has come in, because the prices were high over a long period, the price cap came in; that meant generators didn’t want to put a bid into the market because they weren’t making money. AEMO has the power to force them to supply the power. They’ve done that – 1,700 gigawatts yesterday, for example. They’ve done that. There’s then a scheme which the generators can then seek to be compensated for that, but that’s really not the immediate challenge. The immediate challenge is making sure we avoid the load shedding, and that’s what we’ve been working very hard on, and our regulators together with the States will continue to work hard on over the course of today. 

NATALIE BARR: So, this could cost the Government – or us – a lot of money if we’re going to have to pay the operators to, basically, keep Australia’s lights on, is it? 

CHRIS BOWEN: Well, again, there’s a system in place together with the States where that’s all managed pretty carefully and, you know, when the price cap comes in, price caps sound good and they’re important and they play a role in the system, but it does mean then that we have to manage the generation going forward, and it does mean when generators say they don’t want to provide energy, the Government through AEMO – and Governments, State and Federal – step in and force them to do so. That’s what’s happened yesterday and what will happen today.

NATALIE BARR: Can you guarantee that you’re going to keep the lights on? 

CHRIS BOWEN: Well, as I said, we’re working very hard to avoid any blackouts and load shedding. We’ve done that so far. I’m advised that we can do that. We’ll continue to do that. There’s load shedding, which is basically asking the big industrial users to turn their equipment down or off. We’ve avoided that and certainly AEMO tells me there’s no need to be concerned about blackouts in the immediate future. There’s always a risk. It always takes management and there can be unexpected outages from coal-fired power into the – that nobody is expecting. So, they will be managed. I’m not here to give magic guarantees. What I am here to do is to say that everything that could be done is being done very actively, again working together, State and Federal, to avoid that situation. And I have some confidence that we can avoid it in the immediate future.

NATALIE BARR: Okay. Chris Bowen, thank you for your time today. 

CHRIS BOWEN: Always a pleasure.