Despite electricity shortfalls in Queensland and NSW on Tuesday, blackouts were avoided after intervention from the Australian Energy Market Operator overnight.

The chair of the Australian Energy Regulator Clare Savage said talks were taking place on Wednesday to ensure there was enough power supply.

Despite shortages in some of the market, Savage said generators were doing everything they could to keep the power running.

“Supply is very tight right now, but we do know there is more generation available that is being bid into the market,” she told the Seven Network.

“The Australian Energy Market Operator is working around the clock with generators to make sure we have enough supply to keep the lights on.”

Savage said she wrote to every generator in the east coast on Tuesday to make sure they understood their responsibilities.

“We saw the situation evolve over the weekend where there was a price cap put into the wholesale market and a number of generators who said they were available suddenly withdrew their capacity,” she said,

“We wanted to be quick off the market to communicate with these generators to put them on notice and make sure they understand their obligations.”

In a statement on Wednesday morning, the market operator said it would encourage energy generators in the eastern states to bid for availability into the energy market, rather that direct them to.

“Wholesale electricity prices remain capped in Queensland, NSW, Victoria and South Australia due to wholesale prices reaching the cumulative high price threshold,” the statement said.

“The price cap will remain until cumulative wholesale electricity prices fall below the cumulative price threshold.”

Australian Energy Council chief executive Sarah McNamara said the current crisis in the sector was unprecedented.

She said unplanned maintenance outages at several coal plants had contributed to the shortages, but denied generators were trying to game the system.

“It’s very challenging for generators to be expected to bring supply online,” she told ABC radio.

“It’s costing them $400 a MWh, if they’re only going to get paid $300 a MWh, that’s running at a deep and significant loss … generators are doing what they can and trying to make rational, commercial decisions.”

Greens environment spokeswoman Sarah Hanson-Young said the energy market system needed to be reviewed in light of the shortages.

“We got a situation where these big corporations are gaming the system, they’re effectively holding Australians and consumers hostage,” she told ABC TV.

“We do need to have a much stronger response from the government to force these companies to do the right thing, simply asking them to play fair isn’t working.”