ACCC rejects AEMO request to co-ordinate repairs of ageing coal clunkers

Just days after choosing climate over competition in a landmark ruling on the proposed takeover of Origin energy, the ACCC has reverted to type by denying a request from the Australian Energy Market Operator to co-ordinate the timing of repairs and maintenance to the country’s ageing fleet of coal generators.

AEMO wanted an exemption to ensure it could keep the lights as more coal generators exit the market and the remainder face increasing threats to their reliability because of their age, their declining reliability and changing market dynamics.

“There is a real threat to the reliability of the electricity supply if maintenance, repairs, renewables, upgrades and new connections requiring outages of generation, transmission and distribution assets are not carefully connected,” AEMO said in its application.

In effect, it was asking for an extension, or a repeat, of the measures – including the sharing of market information – that it was allowed to introduce during the Covid-19 shutdowns, and again in the heat of the energy crisis last year.

But the ACCC has denied its request. Earlier this week it approved Brookfield’s takeover of Origin’s utility business – despite concerns about the competition impacts from its ownership of network assets – because it was likely to accelerate the roll out of renewables and cut emissions, and it said that was a good thing.

It appears to have take the opposite view on the AEMO application. AEMO could argue that without the ability to co-ordinate repairs and maintenance, it will have to be more conservative around the way it manages the grid to ensure it has enough capacity to meet any unexpected developments.

In its application, it warned that connecting new renewable energy projects, and new transmission links – both desperately needed to maintain the pace of the green energy transition – require extensive outages, and that requires both co-ordination and information sharing.

AEMO is caught betwixt and between because delaying the closure of coal fired power stations – and creating new barriers to new connections – creates new problems in managing ageing machines that are more prone to failure, particularly at the moments when they are needed most.

But the ACCC says – in its draft decision – that co-ordination and information sharing between competitors can breach competition laws.

“We are not currently satisfied that the proposed coordination is likely to result in public benefits that would outweigh the likely harm to competition, given AEMO’s existing powers,” ACCC acting chair Mick Keogh said in a statement.

“While there are challenges arising from the transition towards renewable electricity, currently we do not consider that the proposed coordination would significantly increase AEMO’s ability to manage the scheduling of outages.”

It said that reforms recently implemented, soon to be implemented and those currently being contemplated by the Australian Energy Market Commission will further assist AEMO to manage the scheduling of outages during the transition to renewable electricity generation.

In an emailed comment, AEMO said it noted the ACCC’s draft determination to refuse authorisation for continuation of the NEM maintenance forums.

“The purpose of the forums is to share information about, and coordinate, outages of generation, transmission and distribution for repairs and maintenance – in order to minimise the risk of disruptions to electricity supply,” it said.

“As we move into a difficult summer, AEMO will continue to look for ways to minimise the potential for disruptions to electricity for Australian homes and businesses.”

AEMO is currently working with the federal government and other authorities to prepare a “Summer readiness plan” to deal with the increased risk of generator failures in the El Nino summer heat.