National Electricity Market
[5] During the 2017-18 financial year, 203 TWh of electricity with a market value of AU$17 billion was traded through the NEM, serving 9.7 million end-use consumers.
FY19/20 rooftop solar capacity was 10,696MW, NEM capacity 49,832MW, NEM demand 35,626MW [6] Exchange between electricity producers and electricity consumers is facilitated through a spot market where the output from all generators is aggregated and instantaneously scheduled to meet demand through a centrally-coordinated dispatch process.
[citation needed] From all offers submitted, AEMO’s systems determine the generators required to produce electricity based on the principle of meeting prevailing demand in the most cost-efficient way (see also Economic dispatch).
[citation needed] AEMO uses the spot price as the basis for the settlement of financial transactions for all energy traded in the NEM.
The process continues until the rolling average drops to allow normal trading without impinging the threshold too rapidly again.
Market Price Cap (MPC) – which was previously called the value of lost load (VoLL) – is the price automatically triggered when AEMO directs network service providers to interrupt customer supply in order to keep supply and demand in the system in balance.
[13] When reserves acquired by AEMO are dispatched they are bid in at the MPC thus setting the spot price at the maximum level.
[citation needed] The Sydney Futures Exchange lists eight standardised futures products based on Base Load and Peak-Period energy bought and sold over a calendar quarter in the NEM in New South Wales, Victoria, South Australia and Queensland.
[16] The Australian Energy Market Commission (AEMC) is currently responsible for determining rules and policy advice covering the NEM.
[citation needed] AEMO draws together the functions carried out by these organisations, incorporating management of the NEM and the retail and wholesale gas markets of eastern and southern Australia, and it oversees system security of the NEM electricity grid and the Victorian gas transmission network.
[citation needed] In addition, it is responsible for national transmission planning and the establishment of a short term trading market for gas.
[18] The NEL is applied as law in each participating jurisdiction of the NEM by application statutes, for example the National Electricity (Victoria) Act 2005.
[20] Up-to-date versions of the Australian National Electricity Rules can generally be found on the AEMC's website.
[citation needed] This is a reference to the vertical integration of companies operating in the NEM, where generators own a retail arm.
[24] In terms of the climate change impacts of the reforms, experts have concluded that the outcome is increased emissions with respect to business as usual scenarios.
[citation needed] This is due to the lower cost of coal fired generation compared to other generators, reduced emphasis on energy efficiency from lower prices, the failure to price greenhouse gas emissions, combined with market design and regulation that favours incumbents.
ACCC Chairman Rod Sims said: “It’s no great secret that Australia has an electricity affordability problem.
What’s clear from our report is that price increases over the past ten years are putting Australian businesses and consumers under unacceptable pressure.
Consumers have been faced with increasing pressures to their household budgets as electricity prices have skyrocketed in recent years.
The ACCC accused the network operators of "over-investing" in poles and wires and gaming rules around revenue.
[27] The ‘big three’ vertically integrated gentailers, AGL, Origin, and EnergyAustralia, continue to hold large retail market shares in most regions, and control in excess of 60% of generation capacity in NSW, South Australia, and Victoria making it difficult for smaller retailers to compete.
