High wholesale electricity prices on 9 July in South Australia have been investigated by the Australian Energy Regulator (AER), which has now released its analysis into the event.

On Monday 9 July 2018, the spot price in South Australia reached $8824/MWh for the 12:30pm trading interval.

The AER’s analysis found the following factors contributed to the high price:

  • Planned network outages limited supply from Victoria
  • A significant amount of capacity offered by generators in South Australia was priced above $5000/MWh
  • As forecast, (low cost) wind generation in South Australia was at very low levels

Rebidding from low to high prices did not contribute to the high price events on the day.

Wholesale electricity price spikes do not directly impact most customers, typically households and small and medium businesses. Although some extremely large businesses and industrial customers do purchase direct from the generators, the energy retail companies are the main buyers in the wholesale electricity market.

Generators and retailers manage their exposure to wholesale price variations by locking in, through hedge contracts, the price for the electricity they produce or buy. This helps provide price stability for their customers. 

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