According to the state’s energy minister, the Australian Energy Market Operator (AEMO) has intervened to prevent a gas shortage in Victoria. The AEMO activated the gas supply guarantee on Tuesday afternoon, according to Victorian Energy Minister Lily D’Ambrosio, as reserves at a storage facility in the state’s southwest continued to fall.
As a result, she explained, “they’ll have greater visibility of the sale and supply of gas across the market, including Victoria but in other states, to get some transparency here. The market begins to alter its behavior when there is more transparency; in this case, the market has been given too much leeway.
“More visibility ought to imply, as it did in April [when the guarantee was last triggered], that gas goes where it is needed.”
According to an AEMO spokesperson, the mechanism’s activation means that Queensland, not Victoria, will supply New South Wales’ gas needs.
An alert about low gas reserves at the Iona storage facility near Port Campbell was sent out by the AEMO on Monday night to industry participants.
The safe operation of Victoria’s gas system is in danger due to the Iona storage facility’s gas depletion, according to a statement from AEMO.
If the loss of reserves did not slow down, the market operator threatened to intervene. On July 11, the participants in the industry received a similar warning. Currently, Victoria has a wholesale gas price cap, which prevents household consumers from being hit with astronomical gas bills but does not encourage them to reduce their usage. The regulator stated that it anticipated the gas supply guarantee to last until September 30 or “until sufficient gas supplies” and Iona’s gas reserves were once again normal.”
“Greed” is to blame for the problems with the gas supply. Victoria has more than enough gas supply to meet demand, according to Ms. D’Ambrosio, who also stated that the price cap will remain in place. “Gluttony among gas producers is a major factor in this. They will follow the dollar, and we want to protect consumers by ensuring that they don’t pay more than what is considered to be a fair price, which is why that price cap is in place “she said.
“To be honest, the gas should cost a reasonable amount. There is more than enough supply available to meet our needs, and it ought to be sold for a reasonable price.”
To meet the state’s record-breaking winter demand, Victoria had been supplying gas to New South Wales.
Matthew Guy, the leader of the opposition in Victoria, demanded stricter restrictions on gas exports from that state.
He said, “Gas out of Victoria, there ought to be a domestic reserve figure on that.
“They are in place in Western Australia, and while they have 15%, ours will be higher than that, and we’ll do that to ensure that there are domestic reserves for Victorians, as well as Victorian gas for Victorians,” he added.
‘Increasingly tighter’ supply issues, according to the gas plant operator The Port Campbell facility’s owner, Lochard Energy, claimed that it was running “effectively and as intended.” The company claimed that users of the Iona storage facility, primarily energy retailers and industrial users, would store gas there during times of low demand and then remove it when needed, such as in the winter.
The company stated that it is anticipated that Iona’s customers will typically withdraw the majority of the gas they have in storage during the winter and refill once the season is over. “Winter demand is currently at its highest point, and high withdrawals from Iona are to be anticipated. According to the facility’s intended use, the inventory levels at this time are generally in line with expectations.
According to a statement from Lochard Energy, it is one of the key facilities used to manage the country’s eastern states’ energy requirements. On the east coast, “it is true that gas supply and winter peaking are becoming increasingly tighter.” The unusually cold winter weather and unplanned outages of coal-fired power plants this year have caused Iona customers to start removing gas from storage earlier and in greater amounts than usual.
Customers can manage their own supply and demand, and Iona helps them to do so. Customers are in charge of their own inventories. The company stated that the storage facility would be expanded in 2023, and that supply management would be handled in conjunction with AEMO and its clients during this time. As a result of days of volatility that put several states at risk of a blackout, AEMO intervened last month to suspend Australia’s east coast energy market.
The federal government, which recognized the energy market had essentially failed, supported AEMO in taking this action for the first time in its history.