AER issues new energy market report

The Australian Energy Regulator today issued its second report on the state of Australia's energy market. The report provides a comprehensive overview of Australia's electricity and natural gas markets.

AER Chairman, Mr Steve Edwell, said the report comes at a challenging time for the energy market, which over the past two years has experienced price pressure, a move from state-based to national regulation, and the imminent introduction of the Carbon Pollution Reduction Scheme.

"The last two years have seen increased volatility in the National Electricity Market," Mr Edwell said. "While prices eased in most regions in 2008, South Australia posted record prices in March, causing the unprecedented use of administered price controls. Across the market, there have also been some concerns about future supply risk, but the investment response in most regions is finally picking up."

"The natural gas industry continues to thrive," Mr Edwell said. "On the east coast this is underpinned by the burgeoning coal seam gas sector and rising demand to supply gas-fired power stations. In the longer term, LNG projects in Queensland are likely to raise east coast prices. Across Australia, we are starting to see increases in wholesale prices for both electricity and gas flow through to the retail sector."

"A significant reform for the gas sector was the launch of the Gas Market Bulletin Board in July," Mr Edwell said. "It serves a dual purpose of providing better information on supply-demand conditions and can also help the market respond to gas emergencies. It will also complement a new short-term trading market in gas, expected to start in 2010, which will improve price signals."

"The yet to be finalised Carbon Pollution Reduction Scheme has created some uncertainty for the market, but it will also create investment opportunities," Mr Edwell said. "In particular, it will add further momentum to the natural gas sector and over time will spur greater interest in clean coal and renewable generation technologies."

The State of the energy market supplements the more technical reports the AER publishes and is written for a wide audience including government, industry and the broader community.

The State of the energy market report is linked below. A limited number of hard copies will also be available.


The Australian Energy Regulator, established in 2005, is Australia's independent national energy market regulator.

It monitors and enforces compliance with the national legislation governing the electricity and natural gas industries and is the economic regulator of electricity and gas networks in eastern and southern Australia.

Issued date: 
21 November 2008
AER reference: 
NR 014/08
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