The broad objective of the combined electricity legislation across the east coast of Australia is to govern the supply, distribution, management and pricing of electricity from energy suppliers through wholesalers to retail customers and is known as the National Electricity Market.
Having been designed over 25 years ago, the market structure, legislation and rules can no longer be described as "fit for purpose." The market was set-up to manage a relatively stable, centralised, energy supply model run by a series of utility monopolies at different tiers.
The National Electricity Law (NEL) is the overarching legislation which governs the National Electricity Market (NEM). The NEM is comprised of the states of NSW, VIC, QLD, SA, TAS, and ACT but not NT or WA each of which have similar replicating state-based legislation. NT has adopted most of the NEL but with local variations.
Bringing together the former respective pieces of state electricity legislation under the National Electricity Market (NEM) regime was given effect by using the SA Act as the base model which then became the National Electricity (South Australia) Act 1996 with each of the States: NSW, VIC, QLD, TAS, ACT having their respective state mirror legislation referenced within the Schedule attached to the SA Act. Note that VIC has slightly differing state legislation but is substantially similar.
The Australian Energy Market Commission (AEMC) is responsible for making the rules which give effect to the energy market and make the national electricity and gas system work and answers directly to COAG (Council of Australian Governments - the peak Ministerial policy body).
The National Electricity Rules (current version 126) which has the effect of legislation, applies the decisions from the AEMC to govern the operations of the National Electricity Market by interpreting and applying rules for the operation of the NEL.
The Australian Electricity Market Operator (AEMO) has the statutory responsibility to administer the NEL within the rules of the NER legislation as determined by the AEMC.
The Australian Energy Regulator (AER) is then responsible for monitoring all of this and to give effect to Regulations and changes to Acts as may be required. AER is directly responsible for managing compliance and exemption applications. Both AER and AEMO have substantial discretion in how they apply, interpret, and manage the NEL.
This overview demonstrates the complexity of navigating through the NEM process.
A whole array of new distributed/embedded/renewables generation as well as a growing range of smart technologies just simply does not fit the model that was created decades ago.
Consider simply the increasing use of solar panels and their ability to push excess electricity back into the grid, which was technically never designed for this. Add the increasing use of electric vehicles and as with the rapid deployment of smart controls and internet of things (IoT), if you don’t fit within this existing and highly prescriptive legislative model, it is extremely hard to change it, fit within it, or extricate yourself from it.
Overall, the NEM is leading to most external parties being very frustrated with the market and the monopoly suppliers equally feeling threatened and fervently trying to slow down or defeat external change which is happening at a faster pace than the industry or the regulators can cope.
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