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Five Aussie states facing blackouts amid energy, inflation woes

June 15, 2022

Five Aussie states facing blackouts amid energy, inflation woes

The Australian Energy Market Operator has warned citizens in five Australian states to prepare for possible blackouts as a power shortage threatens the grid and bids up consumer prices.

The Australian Energy Market Operator has warned citizens in five Australian states to prepare for possible blackouts as a power shortage threatens the grid and bids up consumer prices.

The AEMO has cautioned that consumers in Queensland, NSW, Victoria, South Australia and Tasmania could face possible blackouts as unusually cold temperatures force households to use more power heating their homes.

The shift in supply and demand dynamics also pushed consumer energy prices to previously inconceivable levels and forced the AEMO to introduce a $300 per megawatt hour cap in Queensland, NSW, Victoria and South Australia.

If wholesale prices remain at these levels – in some cases more than three times what they were at the start of the year – consumers will be paying even more on their power bills in the second half of the calendar year.

Energy crisis deepens as fuel prices rise

The blackout warnings come only a few weeks after the Australian Energy Regulator increased its ‘default market offer’ – the maximum price that retailers are permitted to charge consumers for energy.

This price cap is intended to protect consumers while still balancing the need for retailers to turn a profit, and the latest decision to increase it comes in response to the high wholesale energy prices that have climbed significantly in the wake of Russia’s invasion of Ukraine.

Russia is a major supplier of oil and gas to global markets and sanctions imposed in the country in an effort to undermine its economy and loosen its grip on neighbouring Ukraine have effectively reduced supply of these key fuels into the global economy.

The significant increases in fuel and electricity prices are one of the drivers behind higher-than-expected levels of inflation globally, with the US on Monday recording some of the largest increases in consumer prices since the 1980s.

That prompted sell-offs on US and European equity markets, which then flowed through to Australia when markets reopened on Tuesday after the Queen’s Birthday holiday on Monday.

Reach Markets are the advisors assisting with the management of this offer and may receive fees depending on whether an offer is taken up by investors.

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