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The National Electricity Market

THE NATIONAL ELECTRICITY QLD MARKET (NEM) SA NSW VIC NEM TAS Australia has one of the largest interconnected power systems in the world. It powers almost 10 million customers in the eastern and southern states around the clock. The NEM is a wholesale electricity market that helps to deliver electricity to homes and businesses. YOU Knowing more about the NEM can help you to better understand how electricity is delivered to your home and the factors influencing your electricity bill. NEM PARTICIPANTS The Australian Energy Market Operator Retailers Buy electricity from the market. They sell electricity on to residential customers like you. Generators Established by Coal, natural gas and renewable power stations sell electricity into the market. government to oversee the NEM HOW THE NEM WORKS The NEM The NEM is a wholesale electricity market in which generators sell electricity and retailers buy it to on-sell to you. There are lots of generators and retailers participating in the market so it's highly competitive and therefore an efficient way of maintaining relatively competitive electricity prices in the wholesale market. THE NEM, The physical supply system 'the grid' THE GRID, AND THE FINANCIAL - The financial MARKET WORK market The transmission and distribution networks The financial market sits TOGETHER alongside the NEM and involves retailers and deliver electricity from power stations anywhere in the system to homes and business at all times generators entering into hedging contracts to buy and sell electricity. These contracts set an agreed price for the electricity and help to manage the risk of price volatility. of the day and night. FLUCTUATING PRICES CONTRACT All electricity sales are traded through the NEM. It is a wholesale market and prices fluctuate in response to supply and demand at any point in time. Financial market price To manage price volatility, retailers and generators often enter into hedging NEM market price contracts to fix the The price of electricity in the NEM is based on: price for future electricity sales. 1. Offers by generators to supply electricity to the market at particular volumes and prices at set times. 2. Demand at any given point of the day and night. For more energy information visit Energy Explorer at www.ORIGINENERGY.COM.AU/ENERGYEXPLORER MAY 2013 origin

The National Electricity Market

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Australia has one of the largest interconnected power systems in the world. This infographic takes a look at how this is achieved

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