The Australian Energy Regulator (AER) monitors and reports on wholesale electricity markets. As part of this role, we report on events that result in wholesale electricity spot prices exceeding $5000 per megawatt hour (MWh) and frequency control ancillary services (FCAS) prices exceeding $5000 per megawatt (MW).
On Monday 22 May 2017 the price of regulation ancillary services in South Australia exceeded $5000/MW for 5 trading intervals. Regulation services are used to keep the frequency of the power system constant in response to changes in demand and supply.
Most end-customers are not directly exposed to wholesale electricity and ancillary services prices. Energy retailers are the main purchasers in the wholesale electricity market - they bundle electricity with network services for sale to their residential, commercial and industrial customers. Generators and retailers can manage their exposure to price variations in the wholesale market by entering hedge contracts that lock in firm prices for the electricity they intend to produce or buy.