National Electricity Market

Brief history of electricity in Queensland

The Queensland electricity industry was restructured on 1 July 1997 to prepare the industry for participation in the competitive National Electricity Market (NEM). This included splitting the then single Government Owned generation corporation into three competing generation corporations and separating the retail activity from the electricity distribution businesses.

On 16 February 1999, the Queensland electricity industry was further restructured to improve governance arrangements and enhance the reliability of the State's electricity system. The main change was the amalgamation of the six regional distribution corporations into a single distributor corporation (Ergon Energy, with Ergon Energy Retail as a subsidiary).

About the National Electricity Market

The Governments of New South Wales, Queensland, Victoria, South Australia, Tasmania and the Australian Capital Territory have agreed over the period since the early 1990's to create a NEM. This involved reform of the structure, rules and regulation for the delivery of energy to customers.

The NEM commenced operating as a wholesale market for the supply of electricity to retailers and end-users in Queensland, New South Wales, South Australia, Victoria and the Australian Capital Territory on 13 December 1998, although Queensland did not become physically connected to the main New South Wales transmission system until an interconnector commenced commercial operations on 14 February 2001. Tasmania joined the NEM in 2005 and operations today are based in five interconnected regions that largely follow state boundaries.

The Ministerial Council on Energy (MCE) provides the strategic direction for ongoing energy market reforms and oversight of national energy market policy.

From 1996 to mid-2009, the National Electricity Market Management Company (NEMMCO), implemented, administered and operated the wholesale NEM.  From the introduction of Full Retail Competition in Queensland on 1 July 2007, NEMMCO (now replaced with the Australian Energy Market Operator (AEMO)), also undertook the role of facilitating retail customer transfers in the Queensland electricity market.

Information on the NEM, and its operation, is available on the AEMO website.

Australian Energy Market Operator

The Queensland Government, through the MCE, recently established the new Australian Energy Market Operator (AEMO).  AEMO commenced operations on 1 July 2009.

AEMO has assumed the functions of NEMMCO and various gas market operators, including Queensland's Gas Retail Market Operator.  AEMO is also adopting a number of planning functions, including the National Transmission Planning function for electricity, a key element of this being production of a National Transmission Network Development Plan.

AEMO's statutory functions are governed by the National Electricity Law (NEL) and National Gas Law (NGL), associated Rules, Regulations and Procedures.

The benefits of a single market operator include ongoing improvements to efficiency and competitiveness in gas and electricity markets and making sure Australians retain secure, well-managed energy markets and the lowest possible prices.

Roles of the Australian Energy Market Commission and the Australian Energy Regulator

From 1 July 2005, the roles and functions of the National Electricity Code Administrator were replaced by the Australian Energy Market Commission (AEMC) and the Australian Energy Regulator (AER).

The AEMC is the body responsible for energy market rule-making and market development at the national level.

The AER regulates the wholesale gas and electricity market and is responsible for the economic regulation of the electricity transmission and distribution networks in the NEM.  The AER is also responsible for the economic regulation of gas transmission and distribution networks, compliance and enforcement of wholesale and retail market procedures, and enforcing the national gas law and national gas rules in all jurisdictions, except Western Australia.

Australian Energy Market Agreement

The Australian Energy Market Agreement  (AEMA) underpins the ongoing Australian energy market reform program.  Under this arrangement, MCE is the national policy and governance body for the Australian energy market for electricity and gas.