Gas shortages to add to the energy price problems during winters

Australians face a grim double whammy of skyrocketing electricity bills and gas shortages during the winter.

The energy market operator has warned Australia’s east coast could face severe gas shortages with extreme weather conditions hampering supply.

Australian Energy Market Operator (AMEO) CEO Daniel Westerman said on Thursday that declining production in the Bass Strait threatens gas supplies for the next three winters.

“Every winter there are risks of peak day shortages if there are periods of very high demand for both gas for heating and gas and power generation at the same time,” he told the ABC.

“From 2027, we emphasize the need to invest in new sources of gas supply to meet the predicted annual shortages every year from then onwards.”

Victoria, the state that uses the most gas and on which 70 percent of households depend, will see a particularly sharp cut in production this year of 16 percent.

This comes on top of Wednesday’s bad news that Victorian households are facing a crippling 30 percent increase in utility bills, while the other East Coast states will also see sharp increases.

Adrian Merrick, CEO of Victorian energy supplier Energy Locals, said the power surges should have been avoidable.

“It should enrage people, it enrages us too,” he told Channel Nine on Thursday morning.

“We see little justification in a country that has such incredible access to natural resources that because there is conflict on the other side of the world, we suddenly penalize customers here.

“This is really driven by the wholesale market. Most other price changes that make up an energy bill are therefore relatively immaterial.

“But wholesale energy prices have really gotten out of hand, to be honest.

“And this is caused by fuel supply problems because a lot of coal and gas goes abroad and there isn’t enough to run the power plants we have here.”

Mr Merrick said that while fossil fuels ‘are not the future’, they are vital in the meantime until renewables can shoulder the burden.

“In the short term we need gas and in the short term, as unpopular as it is for some people, we also need coal,” he said.

“It is part of this mix to guide us into this more sustainable future. There are a lot of projects that are being held up.

“We don’t yet have the transmission network to support the new renewable energy sources in the locations where they go.

“So in the short term, it’s important to make sure at a policy level that the plants that need fuel have access to it and that they have access to it and that the suppliers of that fuel are willing to sell it at prices generate affordable electricity. ‘

On Wednesday, the energy regulators for NSW, Victoria, Queensland and South Australia released the default maximum prices that retailers will be allowed to charge residential and small business customers from July 1.

Victorians are facing a whopping 30 percent increase in electricity prices for households and 31 percent for small businesses.

This would increase a typical household bill from $1,403 to $1,829 per year, while small businesses could expect an increase from $5,620 to about $7,358.

Approximately 400,000 Victorian households and 55,000 small business customers use the state’s standard offering.

For NSW, Queensland and South Australia, the Australian energy regulator signaled price increases of between 19.5 and 23.7 percent.

Standard offerings for residential customers in NSW were expected to increase by 20.9 percent to 23.7 percent, with small businesses seeing their bills increase by about 25 percent.

Queensland house prices are expected to rise nearly 20 per cent in the south east of the state, but closer to 30 per cent in some regional areas, while in South Australia house prices are set to rise by 22 per cent.

Small businesses could see price increases of between 14.7 percent and 25.4 percent, depending on their regions and carriers.

The energy market regulator has announced that energy prices for homes in the eastern states will increase by 19.5 to 30 percent (image stock image)

The regulator said the increases would increase a household’s average bill between $300 and $564 a year.

For the hardest hit areas of NSW, households could see their utility bills rise by up to $463, while small businesses could see their bills rise by up to $858.

The looming gas shortages led AMEO to warn that gas exporters may have to reserve supplies for Australian households, which would mean breaking contracts with Asian customers.

‘But in the longer term we really need investments in more gas supplies,’ says Westerman.

AMEO said there were a number of factors hindering new projects, but pointed to the Albanian government’s price cap and stricter environmental regulations as reasons why new projects had stalled.