September 1999

As highlighted in the diagram above, September 1999 saw very low prices in all regions, with the exception of South Australia.

The chart above (generated in NEM-Review version 5.3) illustrates why this was the case – prices were consistently higher in SA over the month, but still without any large price spikes.

September 2000

The main chart (above) illustrates that prices rose significantly in all regions in September 2000 (compared with September 1999) except SA, which softened slightly.

The chart here (generated in NEM-Review version 5.3) illustrates why this was the case. Specifically:

• Prices in SA followed VIC prices much more closely over the month;
• Prices in QLD were still significantly different to the other regions, at times, due to the small interconnection capacity (Directlink only) available at the time.

September 2001

September 2001 saw prices subside in all regions from their levels in September 2000.

Especially on a log scale, we can clearly see how prices were very flat in all regions over the month.

September 2002

September 2002 saw average prices rise slightly (from their levels at September 2001).

The following chart (from NEM-Review version 5.3) provides more detail about what happened over the month.

As can be seen, prices were much like they were in September 2001, with the exception of a single price spike in NSW on Wednesday 18th September 2002 (the main reason why NSW averaged slightly higher over the month).

September 2003

As noted in the chart above, prices were lower across all regions in September 2003 (the lowest of all 10 x September-months).

Importantly, we see that this occurred despite a significant jump in (average and peak) demand in the 12 months to September 2003.

That prices would fall despite a sharp jump in demand is indicative of the large amount of low-cost new capacity that had been brought into the market through 2002 and 2003 (i.e. 1200MW at Millmerran and Tarong North). This is also why prices in QLD were the lowest of all NEM regions.

The reason why this was the case can be seen in the above chart (drawn with NEM-Review version 5.3).

September 2004

As shown in the main chart (above) September 2004 saw prices recover back to the levels seen in September 2001.

The NEM-Review chart (drawn with NEM-Review version 5.3 and shown above) highlights the reason for this.

As can be seen, September in 2004 was a month of low price volatility (as it had been in the preceding 5 years as well).

Through NEM-Watch version 5 (using playback mode , and the snapshot facility ), we did make a record of one of only two times in the month when the price jumped significantly, below:

As can be seen in this snapshot (of 11:35 dispatch interval on Tuesday 28th September 2004), the QLD price had risen to VOLL with both interconnectors importing at their maximum capacity of the time. As such, we would now term the QLD region as an “Economic Island” for that period.

Without delving into our detailed database, it would appear that QLD had about 7,200MW of available generation at the time (reflecting, we presume, a large amount of capacity out on maintenance in preparation for summer). This generation capacity was required to supply the 5,692MW of local QLD demand (i.e. regional demand less that supplied from NSW).

Thus, the 1500MW of space capacity represented an IRPM of approximately 26% for the QLD Economic Island (compared with 29% for the whole NEM).

Hence, whilst the QLD region had marginally less capacity, in relative terms, the levels were still quite healthy – hence the VOLL pricing must have been due to any of a number of different reasons (which have not been further investigated).

September 2005

As noted in the chart above, prices climbed slightly across all regions in September 2005 (except in QLD, where they declined slightly).

The reason why this was the case can be seen in the above chart (drawn with NEM-Review version 5.3).

As can be seen, TAS prices were totally independent from prices on the mainland in 2005, prior to the commissioning of Basslink.

September 2006

As the main chart above shows, September 2006 showed that prices continued to nudge upwards, compared to previous years – with prices in Tasmania converging on the mainland (given the commissioning of Basslink earlier in the year).

The exception to this increase was a further decline in average prices in QLD.

From the NEM-Review chart here, we can clearly see why prices in TAS were still slightly higher than the other prices, whilst prices in QLD were lower.

Indeed, as shown in the following snapshot (from NEM-Watch version 6) there was at least one occasion when the dispatch price in QLD was $0/MWh in the month.

September 2007

As shown in the main chart (above), average prices in September 2007 were significantly higher than in previous years – but nowhere near the huge levels seen in other months of 2007.

This occurred despite the fact that demand in September 2007 was almost identical to the levels seen for September 2006.

From the above chart (drawn with NEM-Review version 5.3), the drought can be seen to have had some effect in September 2007 (shifting the overall shape of prices upwards).

Our review for April highlighted the reasons why the drought meant 2007 was a unique year, amongst the 10 years of NEM history to date.

Particularly for September, we have performed additional analysis (in NEM-Review) to highlight how the drought delivered:

1) A decline in the amount of available generating capacity equivalent to approximately 1,400MW of capacity, NEM-Wide (as shown here). Keep in mind that from 2006 to 2007 the (peak and average) September demand was virtually the same

2) An increase in gas-fired generation, to compensate for a reduction in hydro generation (as shown below):

In addition to the general increase of the median prices that occurred in most months of 2007 (including September), we also see in the NEM-Review chart above two price spikes in QLD.

We have included below a record of one of these – when the QLD dispatch price went to VOLL in the morning of Friday 7th September 2007.

As can be seen, this occurred when QLD had in excess of 2,000MW of spare available generation capacity.

September 2008

Finally, we see that prices dropped from the high levels experienced in September 2007, but still remained higher than most of the other years in the 10-year sample.

The reason for this can be seen in the chart from NEM-Review version 5.3 below:

As can be seen, median prices were somewhat higher than was the case in the September months 1999→2006 (but below the case of 2007).