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.
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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”.
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A Victorian government spokesperson said there were no impacts to Victoria’s energy supply.
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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”.
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“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.
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Great picture Eric
The linked pic, (ABC site), shows a lot of scaffolding that was already set up BEFORE the duct came down. You can tell it was there before because the scaffold pallet, (storage box for the tubes), is crushed beneath the fallen duct.
So what was the scaffold up there for? I’d hate to think that some genius was undoing the supports for the insulated duct when it ‘surprisingly’ fell.
Scaffold always goes up for a defined purpose. Were the planned works the cause of the failure? If so…. what now? Government bans on maintenance?
Excuse me the problem is not a de-facto ban on maintenance but a government regulated price structure that does not allow enough money to do correct maintenance. A common problem with government regulate industries. Even worse not being allowed to do preventive maintenance due to “environment concerns” like removing upgrowth and trees from under powerlines, the same powerlines that are long over due for replacement do to the same price restraints. Here in the us Calistupid’s government solution is shut the power off so the failing infostructure under windy condition do not start fires, Said power shutdown costing billions in lost productivity and waste due to spoilage. When it comes to government you certainly cannot “fix stupid”. Even worse it often rewarded.
Prices in a socialist system are as meaningful as Cuban wages. It is doubling down on wishful thinking, and as Australia is trying to do the impossible, rather psychotic.
And when, if ever, will prices be Below the Maximum Allowed?
“During last week’s green energy outage in Victoria,”
I live in Victoria. There was no green energy outage. There have been no grid outages at all. Victoria’s grid is fine. And Victoria has consistently lower wholesale prices than the coal states:
Those are simple market prices. Below the NEM there is a layer of retailers, set up when electricity was privatised. These are granted government privileges, and so government regulation is needed. That is where the DMO sits. But Victorian retail prices are, after Tasmania (hydro), the lowest in the NEM, as they should be with the low wholesale price.
While I’m looking at the AEMO Q1 report, here are the state import/export figures. Victoria exports to each of its neighbours, again as you’d expect from the lower price. That is not a failing grid.
https://www.afr.com/companies/energy/victoria-uses-13pc-of-entire-year-s-gas-budget-in-just-three-days-20250612-p5m6v7
Sure 13 June might be slightly over 7 days, but suggesting there was no crisis is disingenuous
Eric, we’ve been through this before. There was no crisis. A coal generator unit failed at Yallourn, so they switched to using gas generation. Gas generation is readily available, but more expensive, so they try to keep usage down. Hence the low budget. But using some of that budget isn’t a crisis. It exists to cover exigencies such as a coal generator fault.
Nothing to see here right Nick?
https://wattsupwiththat.com/2023/09/03/aemo-east-coast-aussie-states-are-failing-or-about-to-fail-energy-reliability-standards/
Eric,
That is the AEMO forecast assuming nothing new is proposed over those years. With a rate of new building about equal to what has happened in the past, they forecast this:
Nick – you might not be lying, but you are certainly misrepresenting the numbers. The average whole sale price (which is distorted by all the trading periods with negative prices).is not what the domestic customer pays. It is the retail price. Here are the numbers for that.
Average Electricity Cost Per kWh In Australia | Canstar Blue
Yes Victoria is cheaper than the other states but there are also hidden subsidies
https://www.esc.vic.gov.au/electricity-and-gas/information-for-electricity-and-gas-consumers/energy-bill-support-victorians
Then there are the electricity subsidies to industry
https://www.smh.com.au/politics/federal/albanese-s-2-billion-counter-bid-for-a-power-hungry-industry-20250119-p5l5jt.html
Just because they don’t show on your electricity bill but on your tax return doesn’t mean the subsidies aren’t there
Chris,
Misrepresenting? You say “Yes Victoria is cheaper than the other states” and then list what are just programs for assisting indigent users, available in any decent society. And you list assistance to aluminium smelters. But this is just a business decision. The biggest of all such handouts was from Victoria to Alcoa in the 1980’s. Among other things, they built a power line across the state to Portland. But that paid off very well too, and now the power line has many uses.
Same old Nick – always trying to put lipstick on a pig.
Victoria is a coal state. Most of its generated power comes from brown coal currently at 60% of generation because the wind is actually generating something for a change. When the sun comes out the ratios change again.
The aluminium smelters (Pt Henry and Portland) were introduced to create employment and generate wealth in Victoria by using the abundant power generated from fossil fuels. Jobs and industry are now in jeopardy due to the high cost of power and the lack of reliability. The Queensland government has stated they are fed up with compensating the East Coast grid supply for deficiencies emanating from Victoria.
Cut the BS – face the facts.
Have you got that list of your domestic electricity price over that last 5 years, Nick.
So far you have strenuously avoided producing it. !
“But this is just a business decision” If the electricity grid was run just on business decisions not a single windmill or solar panel would have been installed ever.
Victoria has the lowest prices, wholesale and retail.
Thank you Chris.
It’s “where the rubber hits the road” that’s all that matters with electricity or anything else that we ordinary folks consume.
Graphs of production costs or wholesale pricing mean sweet f. all to end consumers.
No one lives in Victoria but rather they survive.
The state government is supported by a left and green voting public who have voted for infrastructure decay and lawlessness. It is a socialist utopia where handouts and subsidies support beliefs in ‘green renewables’ and individual irresponsibility.
Having participated in the construction of the FF power stations in Victoria during my working life it breaks my heart to watch the wanton destruction of reliable and efficient power generation due to an ill-informed belief such action can change the weather.
Unfortunately Victoria is the worst of all Australian state governments so much so we have moved to another state.
“No one lives in Victoria but rather they survive.”
In fact, people are pouring in:
Faster than the rest of Australia:
”In fact, people are pouring in:”
Yes… no thanks to Albo letting in over a million migrants in two years…
Here is the same graph with periods of ALP (Albo’s party) in orange and conservatives in the blue rectangle. Pretty hard to blame it on Albo:
Doesn’t matter who you blame it on Nick.
The end result is the same – scarcity and stress on infrastructure, housing and welfare services.
Your graph is wrong… in 2020 only around 150,000 migrants entered the country due to covid.
Regardless, Labor set the record for the most immigrants arriving on Australian shores at any given time…
It shows a dip in 2020
”It shows a dip in 2020”
LOL, it shows there were nearly 500,000… which is clearly wrong.
Of course they are – migrants who want to get out of even worse situations thinking Victoria is a chance for something better which it probably is but so would be Russia.
When machete attacks are commonplace and crime is increasing at an alarming rate due to lack of housing and cultural displacement what is improving for the long term public.
Pulling out figures and tables which obscure the truth is disingenuous and deceitful but isn’t that what socialism is all about?
But they could have gone to other states. They came to Victoria.
But but but – do you think government incentives or having their ethnic group already living their has an influence.
Incredibly unserious person.
In ’21 they left Victoria in your own graph. It was in lockdown.The whole state.The numbers after reflect the bounce back of return plus migration.
Within the state some areas have grown disproportionately, such as Ballarat, which is effectively a welfare area supported by the Commonwealth,not local industry.
Victoria gives the best handouts transferred from taxpayers to the newly arrived. Large numbers of economic refugees arrive in Victoria while the Victorians who developed much of the infrastructure are busy leaving for warmer states.
And for overseas readers, Victoria is Australia’s version of California. A machete ban (Australia has quite powerful anti-gun laws which most of us support) has recently been introduced to try and lower the violent crime rates particularly from North African youth gang immigrants. Bail laws allow everyone back on to the street in 5 minutes if you are under 18 no matter the crime – unless you are complaining about the government. Then the Victorian Police (the most politically comprised force in Australia) really will lock you up. They are particularly fond of arresting pregnant women at home in their pajamas for supporting anti-Covid-rules rallies and little old ladies sitting on park benches, 1.5 meters apart instead of 1.6 meters.
People
arewere “pouring in” to the US too, Nick.People will “pour in” to anywhere they can get in if easy access to welfare is on offer.
Talk to the Brits about “immigration”.
and a salient point –
if the USA is such a busted country, as the left makes out, why are millions of people from all around the world still busting their arses to go and live there any way they can?
“And Victoria has consistently lower wholesale prices than the coal states:”
Victoria is lucky to have that huge base-load supply from BROWN COAL, isn’t it !
It matters not what your graphs show. Elected politicians ultimately must answer to the people. The people who are consumers ate the final judge and jury.
Your arguments should show what consumer’s costs actually are in order to make a conclusion of how the SYSTEM is working. If the SYSTEM does not provide a consumer cost that can be borne by the people, then the SYSTEM is not working.
“The people who are consumers ate the final judge and jury.”
Yes, and in most of Australia, including federally, they elect Labor governments.
“consumer’s costs”
are least in Victoria, following the low wholesale price.
Another instance of looking backward and expecting things to remain the same in the future. Time will tell.
When the only tool in your bag is a hammer, everything looks like a nail.
(the “tool” in the bag being Chris Bowen)
When your only tools are a hammer and sickle, every problem starts to look like too much freedom.
Nailed it!
I see what you did there 🙂
Came to say something similar:
Every Socialist knows that all Socialist problems are caused by too little Socialism.
Just get rid of anything that isn’t Socialism, and all problems will be solved.
(“Nothing outside the state,” etc.)
Thus we get the spectacle of an Energy Minister declaring that he’ll increase supply by destroying supply; get more electricity by making it economically impossible to provide electricity. (I don’t suppose he got the idea directly from FDR, but it’s in the intellectual air this sort of politician breathes.)
Nothing makes it more clear that the government needs to get out of the energy business now. They suck at this kind of endeavor. We don’t have a climate problem, we don’t have a science problem, we don’t have an energy problem. What we have here is a government problem. Get the government out of the energy business and all of our problems go away. The government is so bad it is embarrassing.
Right after that fails, they may finally get sane.
I wish I could be sure of that.
Who is John Galt?
Ayn Rand…Prophet
Yep. Price controls in the midst of a supply crisis creates scarcity. The NSW government is paying hundreds of millions of dollars per year to a single coal plant to stay open. Price controls on top of everything else could tip the balance even further towards closure, either the subsidies will have to be increased, or coal plant operators will simply walk away and hand the keys to the government.
https://wattsupwiththat.com/2025/06/03/looming-us-battery-company-shutdown-imperilling-aussie-net-zero-push/
I remember this song from back in the 1970’s. It seems appropriate given the image that accompanies the post heading above.
“But where are the clowns?
Send in the clowns
Don’t bother, they’re here”
— Singer Judy Collins “Send in the Clowns” (1975)
This song was featured this afternoon in Sydney in the final farewell tour, Torville and Dean, Olympic ice skating gold medal winners 1984.
In the crowd I spotted no less a person than Hon Chris Bowen , Minister for climate and energy.
The grid was very stable, thanks to the NSW premier ,Chris Minns doing that deal to keep the coal fired power station run by Origin still firing for 3 years.
No wind and the shortest day of the year and sun low in the horizon, not good for our power supply.
This wind and sun drought has been going for at least 2 weeks.
Minns seems to understand the real need for stable power. He may remember the Wran days of the load shedding and brownouts that caused so much anguish.
The picture above of Bowen as a clown is quite deceptive.
He has no lear and looks quite normal to me.
Two days ago I received a green letter from Energy Australia that made my smile slip.
‘Your electricity rates will change from 1 July 2025’
Note the term ‘Change’. What AI wrote this?
How about inflate or go up or increase or rise above inflation or simply ‘price jump’.
The lowest possible price is $2712 [AUS] for 6800 kWh per year.
No wonder they have to bring in taxes on unrealised capital gains and effective death duties on superannuation to subsidise the price.
It’s time for a moratorium on this net zero.
Even Coles now advertises ‘Towards Net Zero’.Rather than an actual deadline.
Time for Minns to have a chat with Bowen before NSW ends up like Victoria.
There is a famous Chinese ‘curse’: “May you live in interesting times.”
Australia now does.
Rud, they’re interesting but also awfully depressing
My prediction from some work I did a few years ago was that the wheels would fall of Australia’s Net Zero bandwagon in 2027, as that is the point at which we’ll have closed enough fossil fuel plants that entirely predictable dunkelflauts will collapse the system every year. I hadn’t of course accounted for our state governments paying massive bribes to the fossil fuel plants to stay open, which may delay the inevitable.
I believe the Yallourn outage demonstrates the bribes aren’t enough to convince plant operators to perform proper maintenance. At most the bribes will purchase an extra year or two. Not quite sure what happens after that.
Surely Western Australia’s stand alone grid with reserved transition gas it will all be different with the fickles dumping-
Claims WA’s main power grid ‘slowly collapsing’ as its biggest gas plant teeters on edge
Greg, the real reason they pay the massive bribes is to save their own skin, not the electorates.
Manuels from Barcelona don’t like negative prices and Basils from Britain beware-
Net Zero Quickie: “RENEWABLES triggered Spanish grid collapse” | MGUY Australia
Not to worry Minister Bowen in Canberra will be all over the NEM grid and set the appropriate prices all the time so this doesn’t happen.
When you write a “No Fracking” clause into your state’s constitution it’s sort of like shooting yourself in the foot right before a route march with full pack.
A 20-mile route march with full 40 lb pack + SLR + ammo or radio would be regarded as “child abuse” these days.
story tip: The building bushfire risk in Victoria
https://www.msn.com/en-au/news/australia/ending-victoria-s-timber-industry-has-created-a-time-bomb-in-the-state-s-mountain-ash-forests/ar-AA1HaoR4?ocid=winp1taskbar&cvid=6915efc94adf41c880a53944c58d0e38&ei=23
Email yesterday from local electricity supplier. (Hunter region NSW Australia)
All prices for domestic electricity up approx 10%.. Solar feed-in tariff reduced.
Example is the only school of mankind. They will learn at no other.
All I can say is Australians live on two different planets-
Is Iran set to leave the Nuclear Non-Proliferation Treaty?
Trump giving humanity strong reason to be ‘optimistic’ about the Middle East
and that’s before we get into a debate about saving the planet.
Sounds like a great idea, with the best of intentions, what could possibly go wrong..?
The only thing that seems certain is that when government causes the problem, the solution is always more government.
Governments always believe they can tax or borrow their way to “greater good”. Those who pay taxes realize the limitations of tax policy over a decade, those who save for the future take a whole generation to realize that inflation is a tax, leaving those who lend to the government with…well, we aren’t quite there yet….
As a child I loved the carnival clowns, and I really wish you had not stuck our Energy Fool (oops sorry, Minister) on one of them as I cannot ever unsee that image. Plus, it is an insult to the clowns as they are just harmless fun. If Bowen achieves his aim, even in Australia, people will die from the cold. The man is an ideological moron, with nothing between his ears and NO senior advisers in his department who understand the physics of energy transmission properly.