Do we have an energy crisis?
You’re probably hearing a lot about the energy crisis right now. That’s because unusual conditions are affecting Australia’s east-coast energy market, such as:
- The invasion of Ukraine triggered a global supply shock that sent the prices of gas, black coal and fuels skyrocketing as Russia’s oil and gas were sanctioned
- Unplanned outages at Australian coal-fired power stations and high coal prices, have increased the price of electricity and demand for gas-fired electricity generation
- Weather has played a big part – floods in NSW and QLD have affected coal supplies and a colder-than-usual start to winter means more people are using energy.
All of this has led to a rise in gas and spot electricity prices.
Who can fix this problem?
The Australian Energy Market Operator (AEMO) runs our energy system on a day-to-day basis. AEMO first put a cap on the price that electricity generators could charge for the power they produce. This led to some generators withdrawing their power from the system to protect their profits. With less power in the system, AEMO was forced to use its powers to direct generators to provide available supply to avoid electricity blackouts. Then on Wednesday, 15 June AEMO suspended the National Electricity Market to ensure a reliable supply of electricity for homes and businesses. This suspension was lifted on 24 June, with AEMO monitoring the system closely.
Does Victoria have an energy supply problem?
No, this is not a supply issue. We produce more electricity and process more gas in Victoria than we currently need and export significant volumes of gas to other east-coast states. In fact, last year, we provided more than half of the gas used for domestic consumption on the East Coast. This map shows how much gas Victoria produces and shares each day.
Our government’s priority is always that gas is available first for our households and businesses.
Does the ban on fracking mean Victoria’s gas supplies will run out?
No, there is no gas shortage. Offshore gas development has continued in both state and commonwealth waters over the past decade and more gas is processed in Victoria than it uses.
While fracking and coal seam gas development are banned in Victoria,the moratorium on onshore gas exploration and drilling has been lifted. However, there are currently no potential or confirmed onshore gas reserves. Since the 1960s, the vast majority of gas processed in Victoria has come from offshore sources and this remains the case today.
Contrary to recent claims, Victoria does not rely on other states for their gas.
We have more than enough gas in Victoria, however we are moving to renewable energy sources. Victoria has a target for 50% of our electricity to come from renewable sources by 2030 and to have net-zero emissions by 2050 .
Is the transition to renewable energy the cause of the price increases?
No. In fact, our record investments into renewables mean Victorians are better protected from rising energy costs than households in other states. Ageing coal-fired power plants are unreliable and increasingly costly to fix. Moving to renewable technologies will drive down energy bills, create jobs, deliver more reliable energy, and lower our emissions.
Our offshore wind targets, the Victorian Renewable Energy Target auctions, our $1.3 billion Solar Homes Program, the biggest battery in the Southern Hemisphere, our Renewable Energy Zones Development Plan, our Gas Substitution Roadmap, and a raft of other measures are delivering a cleaner, cheaper and stronger energy system for all Victorians.
What does this mean for my power bills?
Victoria’s energy price increases have been less than in other eastern states, but we know that rising energy bills will put pressure on businesses and households. Increases to your power bill will depend on the type of energy you use (gas, electricity) the type of user you are (household, business) and what type of energy plan you are on (fixed price or wholesale).
The best way to be prepared, take control of your energy bills and get support is to read the advice available on the Victorian Energy Saver homepage.
Here you will find:
- how to apply for your $250 Power Savings Bonus
- winter energy savings tips that can save you money on your next bills
- a tool to find the best energy deal, so you’re not paying more than you have to
- programs to help you go all-electric and lock in long-term savings
- energy concessions and energy accounts payment assistance
For more information download the factsheet:
Page last updated: 28/06/22