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. 24 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 Generators Established by Retailers Coal, natural gas and renewable power stations sell electricity into the market. Buy electricity from the market. They sell electricity on to residential customers like you. 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 MARKET WORK The transmission and distribution networks The financial market sits TOGETHER deliver electricity from power stations anywhere in the system to homes and business at all times of the day and night. alongside the NEM and involves retailers and 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. 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 2$ market price To manage price volatility, retailers and generators often enter into hedging contracts to fix the NEM market price 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. Source: www.aemo.com.au/About-the-Industry/Energy-Markets/National-Electricity-Market For more energy information visit Energy Explorer at www.ORIGINENERGY.COM.AU/ENERGYEXPLORER origin MAY 2013