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National Electricity Market

The National Electricity Market (NEM) is an open access wholesale electricity market encompassing the Eastern States (including South Australia), which commenced in December 1998. The NEM arrangements originated in commitments by the Council of Australian Governments in the early 1990s, culminating in the NEM Legislation Agreement of May 1996 between the participating jurisdictions. Subsequently, the National Electricity (South Australia) Act 1996 was enacted by the South Australian Parliament to give effect to the Agreement.

That Act contains the National Electricity Law which establishes the NEM, comprising the wholesale electricity exchange that is operated and administered by the Australian Energy Market Operator (further details about NEM operations are available on the AEMO website, as well as the national electricity system, that is, the interconnected electricity transmission and distribution system, together with connected generating systems, facilities and loads.

The detailed standards that govern participation in, and the operation of, the NEM are set out in the National Electricity Rules. The initial rules were made by the South Australian Minister for Energy in June 2005 under section 90(1) of the National Electricity Law.

Two additional regulatory bodies have responsibilities under the NEM legislative scheme:

  • The Australian Energy Market Commission is the body responsible for making and amending the National Electricity Rules and for market development and market review at the national level, and for providing strategic and operational advice to the Ministerial Council on Energy.
  • The Australian Energy Regulator performs economic regulation of the wholesale electricity market and electricity networks in the NEM, and responsibility for consumer protection and performance monitoring of retail energy markets in those jurisdictions which have adopted the National Energy Customer Framework (NECF). It is also responsible for the enforcement of the National Electricity Law and the National Electricity Rules.

From 1 February 2013, the principal regulation of South Australia's retail energy market transferred to the Australian Energy Regulator (AER). The AER is now responsible for consumer protection and performance monitoring in the electricity and gas retail market.

ESCOSA licenses electricity distributors and transmission network operators pursuant to the Electricity Act 1996.

The functions of the Commission arising under the Essential Services Commission Act include monitoring and reporting on matters such as:

  • outcomes for South Australian consumers in terms of quality and reliability of electricity services (distribution, transmission, generation and off-grid); and
  • regulated businesses' compliance with their regulatory obligations.

The Commission fulfils these roles in a number of ways, including through the publication of periodic and special reports, such as Annual Performance Reports and reports into specific compliance matters. The Commission considers that the provision of such information is fundamentally important for consumers and assists in understanding the nature and levels of service which have been provided to them within the regulated market, as well as the reasons for any changes in performance over time. This information is also important for regulated entities, as it assist them to understand the areas of key interest for the Commission and, in some instances, their customers.

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