The energy market operator has warned that a gas shortfall could leave millions of Australians without heat or electricity tomorrow night.
The Australian Energy Market Operator has responded to the worry with a gas supply guarantee as Australians struggle with an especially frigid winter.
In a notice published on Tuesday, AEMO stated that a “trigger event” for a shortage in gas supply had been discovered for the states of Victoria, New South Wales, South Australia, and Tasmania from July 19 to September 30.
In the short term, gas supplies could falter in the peak period of between 5.30pm and 7pm on Wednesday night
The supply guarantee allows the operator to direct Queensland producers to pipe gas south to NSW instead of shipping it overseas, which should free up Victorian producers, where supplies are dangerously low.
Victorian Energy Minister Lily D’ambrosio said the gas supply guarantee was triggered on Tuesday afternoon, as reserves at a storage facility in the state’s southwest dropped to record lows.
The Iona gas storage facility in Port Campbell, Victoria has dwindling supply levels due to high demand amid the state’s price cap.
‘That (the guarantee) means 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,’ Ms D’Ambrosio told ABC Radio Melbourne.
‘When you’ve got greater transparency in the market, the market starts changing its behavior, and frankly, the market has been able to get away with too much here.
‘More visibility should mean, as it did in April [when the guarantee was last triggered], that gas goes to where it’s needed.’
In a letter the energy market operator said the risk of gas outages would remain for the next two months.
‘AEMO expects the gas supply guarantee and threat to system security mechanisms to need to remain in effect until 30 September 2022 or until gas supplies are sufficient and the threat to gas supply caused by Iona storage inventory depletion has subsided,’ the operator said.
Lochard Energy, which owns Iona, said ‘unplanned coal fired generation outages’ and cold weather has increased demand.
‘It is the case that gas supply and winter peaking capacity are becoming increasingly tighter on the east coast,’ Lochard said in a statement.
‘This year, unplanned coal fired generation outages and especially cold winter weather have led to Iona customers starting to withdraw gas from storage earlier and in larger quantities than usual.’
The state’s price cap remains at $40 per gigajoule, as demand for gas continues to soar globally due to various factors including a significant drop in supply caused by the war in Ukraine.
The latest warning comes after AEMO temporarily halted the entire east coast electricity market in June amid a risk of blackouts.
Victorian Opposition leader Matthew Guy says the imminent gas shortage is unacceptable.
‘There are Victorians making a decision, either heating or eating,’ Mr Guy said.
‘That shouldn’t be a choice that people are forced to make but it is when the Labor government bans exploration.
‘Here’s the alternative – I’ll allow it, I’ll explore it, I’ll open it up so that we’ve got more gas reserves so people can afford to heat their home.’
While acknowledging the energy network is under pressure, Deputy Premier Jacinta Allan said Victoria is a net gas exporter and AEMO’s latest advice is the state has enough supply to met its needs.
‘The energy minister will continue to work closely with AEMO and our gas operators to ensure supply is adequate for Victoria,’ she said