* Market operator worries about extended plant outages
* AGL, Origin expect units to be back up in December
* Competition watchdog sees no gas shortfall in 2020 (Adds Origin, AGL power comments, ACCC gas comments)
By Sonali Paul
MELBOURNE, Aug 22 (Reuters) - Australia faces a higher risk of blackouts this summer because of generation outages in the state of Victoria and rising costs to avert shortages, just as the country is trying to cut power bills, the market operator warned on Thursday.
During the Southern (NYSE:SO) Hemisphere summer that runs from December through February, the Australia Energy Market Operator (AEMO) is concerned that the unplanned outages of 750 megawatts (MW) of generation capacity at a major coal-fired power station and gas-fired plant in Victoria may not be fixed by mid-December as planned.
"In Victoria, if extended into the peak summer period, the unplanned outages of two major power stations, Loy Yang A2... and Mortlake 2...pose a significant risk of insufficient supply that could lead to material involuntary load shedding," the AEMO said in its annual electricity outlook report.
The AEMO forecasts a 30% chance that the Loy Yang unit outage will extend into the summer and a 60% chance that the Mortlake plant will take longer than expected.
That could result in the equivalent of up to 1.3 million households going without power for four hours in an extreme heatwave, it said.
AGL Energy AGL.AX , however, said in emailed comments on Thursday it remains confident the Loy Yang unit will be back up by the middle of December.
Likewise, Origin Energy ORG.AX Chief Executive Officer Frank Calabria told Reuters its Mortlake unit is on track to be back up on Dec. 20. Still, he added that power supply could be "very tight" in Victoria "under certain circumstances".
AEMO is working on emergency measures with state governments and industry to line up between 125 MW and 560 MW of extra supply, including paying industrial users to cut power consumption at peak demand times.
"However,...we are finding this type of reactive action is imposing higher costs on consumers and risks to reliability which are not sustainable over the longer term," AEMO Managing Director Audrey Zibelman said in a statement.
She called for new markets to be established that would put a price on maintaining a reliable and secure system.
"At present, AEMO does not have the tools or mechanisms to enable cost effective access to sufficient resources for all hours of the year, so we are forced to use more emergency actions that impose unnecessary risk and costs on consumers," she said.
Separately, Australia's competition watchdog said on Thursday there is enough natural gas to meet domestic demand and liquefied natural gas (LNG) export contracts in 2020, with east coast producers expecting output to rise 6% to 1,988 petajoules, or 5.2 billion cubic feet per day.
However the supply-demand balance in the southern states remains tight, with the key uncertainty being how much gas will be needed for power generation, the Australian Competition and Consumer Commission said in its latest update in a long-running gas inquiry.
"Let's face it, gas is crucial to ensuring we have the back-up we need to keep the lights on on those really tough days like we saw in January and February last year," Energy Minister Angus Taylor said in a televised media conference after the two reports were released.