AER issues further data on electricity transmission congestion

The Australian Energy Regulator today issued its second annual report into the Market Impacts of Transmission Congestion. This report covers the 2004/05 financial year and follows on from the decision and accompanying report on the 2003/04 financial year published in June this year.

"The impact of transmission network congestion on electricity market outcomes has been a key issue since the commencement of the National Electricity Market", AER Chairman, Mr Steve Edwell, said. "The AER, with the assistance of industry and NEMMCO, has developed a number of indicators to measure this impact. The indicators will help industry, policy makers and the AER understand the impacts of transmission congestion on the cost of dispatched generation and to identify measures to reduce those costs.

"The indicators show total congestion costs in the NEM of $45 million in 2004/05, this is up from $36 million in 2003/04. Given turnover in the electricity market for 2004/05 was in the order of $7 billion this would indicate that the cost of congestion is relatively low. However, caution should be exercised before reaching conclusions at this stage. The AER will publish a third report on the 2005/06 financial year later this year, and will then consult with the market in order to develop a service standards regime based on the understandings gained through these reports.

"At the moment transmission network service providers have limited incentives to minimise the cost of transmission congestion to the market. The service providers incur the costs associated with improvements, but retailers, generators and end users gain the benefits.

The information issued today will be followed by the third annual report for the 2005/06 financial year which will be published before the end of 2006. The AER will then publish the indicators on a weekly basis.

"The AER will use the information in the three reports to review the case for new or revised service standards incentives. The AER intends to commence its review early in 2007", Mr Edwell said.

Issued date: 
12 October 2006
AER reference: 
NR 009/06
Steve Edwell, AER Chairman 03 9290 1421 0423 047 554
Lin Enright, Media 02 6243 1108 0414 613 520
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