The Turnbull government is signalling changes to the competition law to deal with market concentration in the energy sector.
The move comes as the energy market operator reports that the national energy grid maintained high levels of reliability over the summer, despite a number of heatwaves, and there were no supply interruptions due to insufficient generation.
After a discussion in the Coalition party room on Tuesday where a backbencher advocated a change in the competition law to stop companies providing essential services from acting uncompetitively, the energy minister, Josh Frydenberg, said he was “worried” about the current level of concentration of ownership in the energy market “and what that means for consumers”.
The government discussion is prompted by the refusal of AGL Energy to sell Liddell, its ageing coal fired power plant, to a competitor Alinta Energy. Frydenberg is waiting on advice from the Australian Competition and Consumer Commission about electricity prices and market dynamics, which is expected in July.
The ACCC chairman, Rod Sims, has already expressed concern publicly about the level of concentration in the energy sector.
The Liberal Craig Kelly used Tuesday’s party room meeting to advocate a “laser-like” addition to competition law that would only apply to companies providing essential services, like electricity, that have substantial market power.
While the former prime minister Tony Abbott has advocated the government compulsorily acquire Liddell and sell it to Alinta, Kelly, a fellow conservative, has split form that position and now advocates a competition policy response. Abbott agreed with Kelly’s proposal on Tuesday.
The positioning within the government comes as the Australian Energy Market Operator will on Wednesday report that Australia’s power system held up well despite the challenges of the hot summer.
“While the hotter than usual 2017-18 summer posed significant challenges from increased demand and risks of failure of generation and transmission assets, the power system held up well,” the Aemo chief executive, Audrey Zibelman, said.
She noted it was a credit to the industry that the market operator was “able to effectively mitigate the previously projected risks of load shedding”.
Zibelman said grid was “particularly challenged on two occasions” when a heatwave impacted Victoria and South Australia concurrently, prompting the operator to activate the Reliability and Emergency Reserve Trader (RERT) mechanism.
Aemo says during the tightest of supply and demand periods, if a single generating unit trip or a crucial piece of infrastructure had failed, load shedding would have been a real possibility without the contingency buffer.
