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Energy Security and Reliability Part 1 – The energy market

Energy Security and Reliability Part 1 – The energy market

20/6/2017

On the 23rd of May we held our latest Reframing Ageing Seminar looking at the issue of Energy Security and Reliability, our guest speakers on the day began by giving us an overview of our current energy market by looking at all the different organisations/factors involved in our bill. This was followed by reviewing the issues around energy security and reliability including the factors behind the September 2017 statewide blackout and the measures being taken to protect our energy in the future.

In this blog post we aim to give a broad overview of the first part of the morning, we'll also include links to documents containing more in-depth information for those who'd like to learn more. In our next blog post we'll include an overview of the second part of the morning.

The energy market - where your money goes

Given that our bills include two components, a supply charge and a usage charge, as consumers, we could be forgiven for thinking that our energy bills mainly consist of the costs for the generation and supply of the power to us and for the actual amount of energy or gas we've used. But in truth the system is much more complex, there are multiple organisations and components which, together, form your final bill:

  • Generation: the wholesaler is the company responsible for generating the electricity and extracting the gas
  • Retail: The retailer/supplier is the company which deals most directly with the customers - they connect customers to the energy they need, manage customer accounts, send out bills and assist with problems when they arise. They also ensure that the fluctuations in the wholesale price of energy are properly managed.
  • Network: The network is how the energy gets to our homes and business. Network costs pay the distributors to build and maintain the infrastructure and, through that infrastructure, deliver the energy to where it needs to go.
  • Environmental policies: A small proportion of the bill goes to cover environmental policies which include:
    o government programs to save energy and support the development of renewable energy
    o services such as REES to support households and business to improve energy efficiency
    o Solar FiT - Feed-in Tariff for owners of solar panels

Regulation

Finally, not part of the bill, but regulation is a key part of any system, the regulators oversee the system and deal with issues as they arise. The Australian Energy Regulator (AER) has key responsibility for regulating energy markets and networks under national energy market legislation and rules. They also liaise with other energy market bodies such AEMC (Australian Energy Market Commission) and AEMO (Australian Energy Market Operator) and assist the ACCC (Australian Competition and Consumer Commission) with energy related issues.

Links

The following links include more information about your energy bill:

For more about energy regulation in Australia visit:

In our next blog post on this topic we'll look at the second discussion of the morning on the issues around energy security and reliability and the steps being taken to safeguard our energy in the future.