It started with an unusual May season…
May, and autumn in general, is known as one of the ‘shoulder’ seasons in the electricity market. This is where demand is typically lower than in summer when everyone is cranking their air-con, and so is a good time for large generators to go offline and complete maintenance. This year we saw even more generators than usual go offline, possibly because of Covid delaying maintenance throughout 2020.
Heading into this May we’d had a very mild summer with almost no volatility - and then were hit with an unseasonably cold Autumn. Increasing demand from heating, combined with higher-than-usual generator outages, saw traditional generators taking the opportunity to push up prices.
This saw several unusual price spikes during May, especially in NSW where generation was lower than usual.
Then there was a coal plant explosion.
So it was already an unusually volatile May period when things took an extraordinary turn on Tuesday May 25th with a major coal generator in Queensland exploding. This was one of the largest electricity failures in the last 20 years and resulted in power being lost to over 470,000 homes across Queensland.
Even once power was restored that afternoon, the grid across QLD and NSW was very close to collapsing again that evening as many generators were affected by the outages and electricity demand was almost more than could be supplied. This saw large price spikes occurring in QLD and NSW.
Amber customers during this period did an incredible job managing their demand and helping keep the lights on for everyone. It’s times like these that show the important role we as individuals can play in helping prevent and manage power disasters – and why it’s so important to get more people actively engaged in Australia's energy transition.
The last week of May then saw continued small spikes as a result of the outages caused in the explosion. This is likely to dissipate over early June as generators come back online.
Fortunately Amber customers are protected against price spikes.
Price spikes and volatility are an inherent part of the electricity market and will happen at some stage almost every year – of course, a coal plant explosion is particularly rare, with most incidents lasting only a few hours and being relatively easily managed.
All electricity retailers pay for these spikes, and if you’re with a traditional retailer you end up paying for them everyday through higher average prices.
But we’ve always got your back. We have insurances in place to guarantee you won’t pay more than the DMO/VDO over a 12 month period (you can see this on your bill as “Price Protection Hedging”).
In this case, because so many customers did so well avoiding these price spikes by shifting or reducing their energy usage, almost no Amber customers are on track to pay more than the DMO/VDO - but for the small number who are, our insurances are able to cover the additional costs.
Price spikes are also one of the best opportunities to make an environmental impact - coal and gas generators make a large share of their total profits each year from these volatile periods, so avoiding using power then is money out of their pockets and into yours.
And there are even more features coming soon
We’re always looking at ways to reduce price spike anxiety and ensure you feel protected and rewarded for engaging during these times. We have some product design announcements coming soon that we think will be a step in that direction, so watch this space.