The National Electricity Market
On this page:
What is the National Electricity Market (NEM)?
The National Electricity Market (NEM) is the market for the wholesale supply and purchase of electricity in Queensland, New South Wales, South Australia, Victoria, Tasmania and the Australian Capital Territory.
Power stations sell their power into this wholesale market then retailers such as Origin Energy and AGL make bulk purchases of power to on-sell to their residential and commercial customers. Large industrial and commercial customers sometimes buy power directly from the NEM too.
The NEM is managed by the Australian Energy Market Operator (AEMO), and the rights and responsibilities of all market participants (transmission companies, power generating companies, distribution and retail companies and AEMO) are set out in the National Electricity Rules (NER).
Powerlink's role in the NEM
Powerlink is a Transmission Network Service Provider (TNSP) within the NEM. We don’t buy or sell electricity; instead we transport it between participants within the NEM. As a TNSP, Powerlink is a regulated monopoly business, with revenues set by the Australian Energy Regulator (AER).
We’ve also been appointed by the State Government as the Jurisdictional Planning Body for Queensland. In this role, we assess the capability of our transmission network to meet forecast electricity load growth in accordance with the mandated reliability standards for electricity transmission.
When we identify emerging limitations in our network, we consult with market participants and interested parties through a transparent process to identify network and non-network (for example, local generation) solutions. The solution which satisfies the transmission reliability standards at the lowest long-run cost to customers is selected and implemented. This is a requirement of the AER’s Regulatory Investment Test for Transmission (RIT-T).
Grid Australia
Grid Australia represents the owners of Australia’s electricity transmission networks within the NEM, plus Western Australia:
Members of Grid Australia (including Powerlink) undertake joint planning and investment with distribution networks to deliver lowest cost upgrades to consumers.
They also undertake joint planning with each other to assess interconnector upgrades, such as the recent Queensland/New South Wales Interconnector (QNI) upgrade study, and are committed to implementing upgrades where the AER’s Regulatory Investment Test for Transmission (RIT-T) allows.
Powerlink cost allocation
The AER issued its Electricity Transmission Network Service Providers Cost Allocation Guidelines (Guidelines) in September 2007 in accordance with the National Electricity Rules.
Each Transmission Network Service Provider (TNSP) is responsible for developing detailed principles and policies for attributing costs to, or allocating costs between or within, the categories of transmission services it provides. These detailed principles and policies must be included in the proposed cost allocation methodology that the TNSP submits to the AER for approval.
Download Powerlink’s Cost Allocation Methodology (PDF 71 KB).
See also