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HOME »CountryFactsheets »Oceania »Australia
( Last update: August 2006 )
| Electricity Market | |
| Sector structure | |
| Upstream | The sector is partially privatised. Australia electricity production comes from 49 GW capacity, of which 59% is coal-fired, 16% hydro and 21% gas. Electricity generation is highly dependent on coal-fired plants from which derives the 77% of production in 2004. Natural gas is increased used for electricity, especially in southern and western States. Ownership of generation remains concentrated and other barriers to entry persist. The National Electricity Market (MEM), is a compulsory wholesale pool operated by the National electricity Market Management Company (NEMMCO) and encompasses 60 entities in New South Wales, Victoria, South Australia, the Australian Capital Territory, Queensland and Tasmania. Western Australia is expected to join the MEM). Wholesale prices on the MEM are market based. Generation sector retains a significant element of state or territory-based regulation. |
| Networks | Distribution and transmission activities are partially privatised. The interconnected national electricity grid served by the MEM is operated by 8 TSOs - both privately and state-owned companies - under a TPA regime. It has interconnections through Queensland, New South Wales, South Australia, Victoria and the Austrialian Capital. The electricity network will soon reach across Bass Strait into Tasmania. Separate transmission networks and pipelines exist in Western Australia and the Northern Territory. Western Australia state is expected to joint the MEM via a high voltage direct current submarine cable (Basslink interconnector). The transmission sector has almost completed its move towards a national regulatory framework. Actually the Australian Energy Regulator (AER), the national energy regulator, assumed those responsibilities from the Australian Competition and Consumer Commission (ACCC), the competition authority. Thus transmission price on the MEM are subject to regulation by way of a revenue cap, which includes measures of service standards issued by the AER. 13 DSOs, both privately and publicly owned, operate distribution networks under different TPA regime. Each state and territory jurisdiction has, in fact its own independent Regulators setting both distribution prices and service standards for prescribed services. However the AER will also assume responsibility of electricity distribution regulation on the NEM by the 2007. |
| Downstream | The sector is partially privatised. Australian Gas and Light (AGL) is the main player. Retail competition has been introduced since 2003. Retailing competition has been introduced but the regulatory framework and methodologies change from different state and territory jurisdiction. |
| Gas Market | |
| Sector structure | |
| Upstream | The sector is privately owned. Large proven gas reserves primarily located in the Bass Strait, the Cooper/Eromanga Basin, and on the West and Northwest coasts, however in the majority of the case, their location in remote areas makes converting the natural gas into LNG for export more economical than building a pipeline to carry it inland. Australia is currently the fifth largest global LNG exporter, and experts predict that it will be the third largest by 2010. Main LNG exports destinations are Japan, South Corea, Spain and China. The possibility of LNG exports to US west coast is under negotiation as well as future suppliers to India (the Gas Authority of India Ltd (GAIL) is investing in gas exploration, production and liquefaction operations and LNG terminals across Australia). The Northwest Shelf Venture (NSV), a consortium of six energy companies led by Woodside Petroleum, dominate Australian’s LNG market producing the 8% of the world LNG supplies (4 off-shore LNG trains and 1 under development) mainly destined to Japan. Other LNG projects are being developed as well. Another important player is ConocoPhillips, the majority owner of the developing an LNG plant in Australia’s northern coast (at Darwin). A contract for supplying Tokyo Electric Power Company and Tokyo Gas Company for 17 years beginning in 2006 has been firmed by ConocoPhillips. Exploration and production is undertaken by many private companies, including: BHP Billiton, BP, Chevron Texaco, ExxonMobil, OMV, Origin Energy, Santos, Shell and Woodside Energy. |
| Networks | The sector is privately owned. Australian gas transmission infrastructure is fragmented, as well as ownership and operation. Major gas pipeline companies are: Australian Pipeline Trust; CMS Gas Transmission Australia; Coastal Gas Australia Pty Ltd; Duke Energy International; Envestra Ltd; Epic Energy Pty Ltd; Goldfields Gas Transmission Pty Ltd; GasNet Australia Pty Ltd. 9 DSOs operate the distribution pipelines under different states or territories regulation. Major distribution companies include AGL; AlintaGas; Allgas Energy Ltd/ENERGEX; Envestra; Country Energy; TXU Networks; and United Energy. Some local governments also distribute natural gas, such as at Dalby in Queensland. The National Gas Code (NGC) regulates the gas distribution and transmission access regime but these sectors still retain a significant element of state or territory-based regulation (i.e. different regulate tariffs/access regimes). Local governments are expected to quickly adopt the NGC. Gas transmission regulatory responsibilities (including prices) for all jurisdictions except Western Australia will also pass from the ACCC to AER by January 2007. |
| Downstream | The sector is privately owned. Most of Australia’s States and Territories are committed under the terms of the 1997 National Gas Pipelines Access Agreement (NGPAA) to implement full retail competition. Actually the eligibility level varies across different States and Territories. In 1999 the New South Wales and South Australian gas markets became contestable for customers using between 1 and 10 terajoules per annum, and in 2002 full gas retail contestability was introduced in New South Wales, the ACT and Victoria. Main Gas retailers include: AGL Energy Sales & Marketing; AlintaGas; Allgas Energy/ENERGEX; Country Energy; EnergyAustralia; Ergon Energy Gas; Origin Energy; and TXU Retail. |
| Current issues | Transition process to national regulation of the energy sector (gas functions and electricity distribution) and the choice of best form of regulation. Dozen of state or territory energy regulation still exist with different regulatory methodologies but the Australian Energy Regulator (AER), established in 2005, will assume these regulatory functions on a national basis. The transition of regulatory functions to the AER to be completed over approximately by the 2007. Current key policy issue regarding the Australian regulatory framework for energy sectors are: (i) the form of regulation to apply to gas pipelines and electricity networks (including pricing structure to include locational pricing signals, and incentive approach regulation); (ii) the type of the appeal mechanism against regulatory decision; (iii) the development of a national regulatory framework for distribution and retail; and the phase out of retail price regulation where effective competition can be demonstrated and (iv) establishment of price signals for energy investors and customers (i.e. by introducing national roll-out of smart meters and effective demand-side response mechanisms); Generation capacity expanding. Main projects are (i) the 370-MW gas-fired plant in the state of Queensland planned by AGL (first operation by 2009) and (ii) the gas-fired plant in the state of Queensland being developed by Baqbcock& Brown Partners and ERM Power (so called Braemar project) and will provide initially 450 MW by 2006-2007. The Australia’s Mandatory Renewable Energy Target (MRET) of 9,5 Bkwh of total electricity production by the 2010 stimulate investment in the renewable energy sector. Recent important natural gas reserves discovery and production field development (i.e. Henry –1 exploration well located in Otway Basin - estimated reserves 1.6 Tcf; (ii) Timor Sea site with ConocoPhillips as the principal operator of the well (estimated reserves 4 Tcf of natural gas combined.); (iii) the Kipper field, operated by Esso Australia, is set to come onstream by 2009 (recoverable natural gas reserves up to 620 Bcf). Several LNG projects under development:
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| National Legislation | National Electricity Law National Electricity Rules |
| Sources | IERN staff on publicly available information |