Related reform - electricity

Arising from the Competition Principles Agreement and the Agreement to Implement the National Competition Policy and Related Reforms, governments undertook to:

• restructure their electricity sector, apply competitive neutrality and review electricity regulation that restricts competition (Competition Principles Agreement) and
• introduce a fully competitive National Electricity Market (NEM) in southern and eastern Australia, extend competition in supply so that all consumers could have choice of supplier and provide for specific bodies to have operational responsibility in the market (1994 intergovernmental electricity agreement).

Under the intergovernmental electricity agreements governments undertook, prior to joining the NEM, to structurally separate the monopoly electricity transmission function and competitive generation activities, and ring‑fence retail and distribution businesses.

The major undertaking was the agreement to establish the National Electricity Market (NEM) in southern and eastern Australia. The NEM was to have been implemented from 1 July 1995, or on such other date agreed by the parties. In December 1996, the implementation date was changed to early 1998. The NEM commenced on 13 December 1998.

The NEM operates in New South Wales, Victoria, Queensland, South Australia, Tasmania and the Australian Capital Territory. Western Australia and the Northern Territory are not part of the NEM because of the distances between their load centres and the interconnected electricity network in the southern and eastern states, but both jurisdictions committed to apply all other electricity sector reforms.

The electricity agreements set the following objectives for the competitive electricity market:

• the ability for customers to choose the supplier, including generators, retailers and traders, with which they will trade (full contestability)
• non-discriminatory access to the interconnected transmission and distribution network
• no discriminatory legislative or regulatory barriers to entry for new participants in generation or retail supply and
• no discriminatory legislative or regulatory barriers to interstate and/or intrastate trade.

Further information on the development and content of the intergovernmental electricity reform agreements can be obtained from Council of Australian Governments communiqués.

The ongoing electricity reform process is being continued by the Ministerial Council on Energy. Further information is available on the website of the Ministerial Council on Energy.

Key electricity reform documents on this site

• Agreement to Implement the National Competition Policy and Related Reforms (Attachment)
• Intergovernmental electricity agreements (reproduced in National Competition Council Compendium of Agreements, second edition 1998)
• Governments’ annual National Competition Policy reports
• National Competition Council progress assessment reports (annual, supplementary and deferred assessments)