Essay by Eric Worrall
I wonder what happens next, when a government imposes more price fixing in the middle of a supply and affordability crisis?
Major electricity price crackdown confirmed ahead of $200 bill hike: ‘Reform is needed’
Energy Minister Chris Bowen will announce a review of the Default Market Offer system, which acts as a benchmark for what retailers can charge customers.
Tamika Seeto · Finance Reporter
Updated Wed 18 June 2025 at 9:54 am AEST
Australian households could soon be spared from soaring power prices following a crackdown by the federal government. Energy Minister Chris Bowen is set to announce a review of the Default Market Offer (DMO) system as it looks to stamp out overcharging and price gouging.
…
Bowen will tell an energy industry conference today that the DMO system is not working and will be changed next year.
…
Bowen says the reforms will be designed to “get the best deal for consumers” and will bring the system more in line with that used in Victoria, where households will be hit with smaller hikes next month.
…
According to Canstar, this will translate to an average increase of up to $228 for NSW households, $77 for Queensland households and $71 for South Australian households.
Victoria, in comparison, will see an average increase of 1 per cent, with some consumers expected to see a price drop. Maximum prices are set by the state’s Essential Services Commission.
…
Read more: https://au.finance.yahoo.com/news/major-electricity-price-crackdown-confirmed-ahead-of-200-bill-hike-reform-is-needed-235426451.html
Bringing the rest of Australia in line with Victoria threatens to spread Victoria’s grid management disaster to the entire East Coast of Australia. Victoria’s energy system is not working. Consumers in Victoria might have avoided paying market costs on this occasion, but power companies appear to be responding to Victoria’s price control squeeze by slashing power plant maintenance.
During last week’s green energy outage in Victoria, the problem was exacerbated because one of Victoria’s main coal plants was offline. The coal plant had literally started to fall to pieces (h/t RickWill).
Collapse at Yallourn Power Station leaves unit offline for weeks
Mon 9 Jun
In short:
A unit at Yallourn Power Station will be offline for at least two weeks after an air duct collapsed.
It follows a report last month that showed Yallourn is the most unreliable of Gippsland’s power stations.
What’s next?
EnergyAustralia and WorkSafe are investigating the incident.
A unit at Yallourn Power Station in Victoria’s Latrobe Valley is expected to be offline for weeks after a huge air duct collapsed inside the facility on the weekend.
…
EnergyAustralia said it expected the unit to be offline for at least two weeks and it was investigating the incident “to ensure the integrity of similar equipment”.
…
A Victorian government spokesperson said there were no impacts to Victoria’s energy supply.
…
Victorian district president Andy Smith said the near-miss was a wake-up call to improve safety at aging coal plants.
“Luck was the only reason that no-one was injured or killed at Yallourn over the weekend,” he said.
“It is unconscionable that the plant has reached the stage where it’s literally collapsing around workers while they perform their duties.”
…
Read more: https://www.abc.net.au/news/2025-06-09/yallourn-power-station-outage-air-duct-collapse/105394406
It is worth clicking the link above to view pictures, to appreciate the scale of the collapse, the size of the air duct which collapsed.
At the time of the coal plant collapse (a few days before the renewable generation collapse crisis), the Victorian government claimed there was no impact on supply, but subsequent events demonstrated energy supply is a real problem in Victoria.
Victoria’s mismanagement of their energy supply is so bad it is creating public friction with other states, who are fed up with continuously bailing out Victoria’s bad decisions. But other states might soon have no choice but to live by Victoria’s failed grid management rules, thanks to federal energy minister Chris Bowen.
‘Bailing out bad decisions’: Queensland slams Victoria over gas supply
James Hall, Angela Macdonald-Smith and Sumeyya Ilanbey
Jun 13, 2025 – 5.55pmVictoria cannot rely on pulling more gas from Queensland to shore up an energy system pushed to the edge by a cascading set of breakdowns and concerns over the reliability of renewables, with the pipeline flowing south already at full capacity.
Queensland’s Liberal-National government remains staunchly opposed to further propping up the southern state’s energy grid, saying it doesn’t have the gas supply capacity to keep “bailing out Victoria’s bad decisions”.
…
“Queenslanders should not be penalised over unscientific decisions down south that favour ideology over economics and engineering,” he said.
“We don’t have the pipeline capacity to keep bailing out Victoria’s bad decisions. The solution to the southern state gas crisis is for the southern states to develop their gas reserves. We’re not asking them to do anything we haven’t done ourselves.”
…
Read more (paywalled): https://www.afr.com/policy/energy-and-climate/bailing-out-bad-decisions-queensland-slams-victoria-over-gas-supply-20250613-p5m762
You can’t fix a supply crisis with price controls, any more than you can tax your way into prosperity. During last week’s crisis energy prices spiked to $15,000 / MWh, or $15 / kWh, thanks to a collapse in renewable generation and a series of gas and coal failures, but Federal Energy Minister Chris Bowen’s proposed response is to restrict electricity retailer’s scope to recoup those losses. At those prices, one plugin household oil heater can burn through $30 worth of wholesale electricity per hour, but stricter government price controls would mean electricity retailers will only be able to claim back a small fraction of that cost.
The sensible solution to the supply crisis is to liberate the energy market, to let producers solve the supply problem by any means available. Price signals north of $10,000 / MWh would normally have suppliers rushing to bring their generation capacity to market, leading to rapid stabilisation of price and supply. But that necessary market correction isn’t going to happen, so long as Australian politicians continue to penalise reliable energy generation in their insane pursuit of Net Zero. Imposing price controls in the middle of a supply crisis will make the supply crisis worse – as we Australians are about to discover the hard way.
Related
Discover more from Watts Up With That?
Subscribe to get the latest posts sent to your email.