Businesses ‘on stand-by to switch off’ in fallout from gas crisis gripping Australia’s east

First, the good news for consumers.

Despite the latest iteration of the gas crisis rippling through Australia’s south-eastern states in the dead of winter, you’re unlikely to go without warm showers over the coming cold months.

Alas, the bad news.

None of this is good for your gas or power bills, which have been rocketing quite enough as it is for the past couple of years.

And if you happen to work in industries that are heavily reliant on gas, energy expert Gavin Dufty from St Vincent de Paul has a sober warning.

It appears your gas supplies might be “curtailed” – or cut off.

“That has an impact to them as an industry and as businesses, but also it has impacts on employment and a whole lot of other things.”

System at tipping point

Last week, the fragile state of the gas system in Australia’s south-east – encompassing Victoria, New South Wales, South Australia and Tasmania – was laid bare by a series of shocks.

An outage at the Longford gas plant in the Bass Strait – the historic bedrock of the south-eastern gas supply – collided with a cold snap that sent demand for the fuel soaring.

At the same time, a prolonged spell of relatively calm weather led to a run on gas for electricity generation as the power system scrambled to compensate for a slump in wind farm output.

Stepping into the breach was the Australian Energy Market Operator (AEMO), which runs the country’s biggest gas and electricity markets.

On Thursday, the agency took the extraordinary step of issuing an imminent threat notice for gas supplies across the nation’s most populous corner.

Josh Stabler from consultancy Energy Edge said AEMO had to act.

Mr Stabler likened the state of the gas system to a redlining car engine, saying it was running at full capacity and was dangerously close to failing.

“Basically, all of those systems there were running at full capacity and there wasn’t any clear shortfalls of supply under those circumstances.

“But it is reliant on everything going fine.

“It’s reliant on [Victorian gas storage facility] Iona being available, it’s reliant on Longford not having any problems, it’s reliant on gas coming from Queensland without any constraints.

“There’s a lot of business-as-good is the scenario there.”

Crisis ‘a policy failure’

According to Mr Stabler, Australia’s east coast gas system was in a state of scarcity but the risk of shortfalls would be ever-present over the coming few months, especially if the weather was cold and demand stayed high.

He said household supplies were unlikely to be affected, but industry wouldn’t be so lucky.

Gas-fired electricity generators would be the first to feel any hit, he said, given they could switch to diesel if necessary to produce power.

But Mr Stabler said that in the event that was insufficient to deal with any shortages, more and more businesses – and jobs – would be in the firing line.

Andrew Richards, the boss of the Energy Users Association of Australia, struck a similar serious note.

“If you’re making bricks, steel, glass, paper, cement, all those guys are going, ‘Well, I could get curtailed,'” Mr Richards said.

“Food processors, I think they’re probably further down the list.

“But certainly the really big high temperature, high heat people, they’re the ones who are getting these notices that basically say, ‘We might be interrupting you.'”

For Mr Richards, the intervention of AEMO was similarly understandable.