AER releases reports on high ancillary services prices in South Australia on 18 October 2016

The Australian Energy Regulator (AER) monitors and reports on events and causes that result in the wholesale spot price of electricity exceeding $5000 per megawatt hour (MWh) and frequency control ancillary services (FCAS) prices exceeding $5000 per megawatt (MW).

On 18 October 2016 the price for regulation FCAS in South Australia exceeded $5000/MW for more than 5 hours spanning two periods – from 7.05 am to 8.20 am and from 7.05 pm to 11.30 pm. Regulation FCAS is used to keep the frequency of the power system constant at 50 Hertz in response to small changes in demand and supply.

The AER’s analysis determined that a combination of factors led to the high prices, including:

  • A planned outage on the Heywood interconnector created a risk of islanding South Australia from the NEM. Under these conditions, AEMO requires 35 MW of raise and lower regulation FCAS to be sourced locally in South Australia.
  • Two of the generators registered to provide regulation FCAS in South Australia experienced technical difficulties leading to a reduction in low-priced  services.
    • Delays in the return to service for Engie’s Pelican Point Power Station reduced its capacity in the morning.
    • A gas valve trip at Origin Energy’s Quarantine Power Station reduced its capacity in the evening.
  • High-priced regulation FCAS was enabled to meet the 35 MW requirement.

More in-depth analysis of these events can be found in the AER’s 18 October 2016 high price event report.

The AER’s role in monitoring wholesale energy markets and reporting on high price events helps to enhance market transparency and compliance. Our analysis provides a foundation to detect non-compliance, market irregularities, inefficiencies and consumer harm. We draw on this work to advise the COAG Energy Council, other stakeholders and market bodies on wholesale market issues.

Issued date: 
21 March 2017
AER reference: 
AC 26/17