NEMMCO

Who is responsible for the power shortages we experience this week?

NEMMCO, this is the company that controls the electricity grid in Australia.

Australia's National Electricity Market

The National Electricity Market (NEM)—a wholesale market for electricity supply in the Australian Capital Territory and the states of Queensland, New South Wales, Victoria and South Australia—commenced operating on 13 December 1998. The NEM delivers electricity to market customers on an interconnected power system that stretches more than 4000 km from Port Douglas in Queensland to Port Lincoln in South Australia. It comprises six regions that are based on the State boundaries, with the Snowy Hydro Scheme being classified as a region in its own right. Tasmania became the sixth region of the NEM in 2005.

Establishment of the NEM was the result of extensive consultation and collaboration between the states and the electricity supply industry. The NEM's development was guided by a major 1990s Industry Commission report that recommended a major restructure of the industry. The reforms led to the disaggregation of the vertically integrated government-owned electricity authorities into separate generation, transmission, distribution and retail sales sectors in each State. The goal of the reform process was to increase competition in the industry and provide greater choice for end-use electricity consumers.

Queensland and New South Wales have largely corporatised the individual sectors of their electricity supply industry (while keeping them as government-owned entities), Victoria has fully privatised its sectors, and the bulk of electricity supply businesses in South Australia are currently operated by private companies under long-term lease arrangements.

NEMMCO

The National Electricity Market Management Company Limited (NEMMCO) is a company that was established under the National Electricity Code. NEMMCO was established in May 1996 to implement, administer and operate the wholesale NEM, continually improve its efficiency, and manage the security of the power system. It is a body corporate whose members are the governments of the Australian Capital Territory, New South Wales, Queensland, South Australia, Tasmania and Victoria.

NEMMCO has dual roles of Market Operator and System Operator. Its objectives and functions are set out in clause 1.6 of the Rules, and in the Members' Agreement and S49 of the National Electricity Law respectively. In summary, NEMMCO's objectives are to:

• establish and conduct the electricity market efficiently on a break-even basis;
• continually improve the NEM's efficiency;
• maintain the security of the power system; and
• coordinate planning for the power system.

I like this paragraph, copied from Wikipedia on NEMMCO.

NEMMCO manages the market and power system from two control centres in different states. Both centres operate around the clock, and are equipped with identical communication and information technology systems. The entire NEM, or individual regions within it, can be operated from either or both centres. This arrangement is a means of ensuring continuous supply despite the risks that natural disasters or other events present, and provides NEMMCO with the flexibility to respond quickly to dramatic changes in the market or the power system.

Get it!!

So, I headed off to the hardware store to buy a power generator, guess what? They had sold out. No surprise considering the fiasco that occurred this week. (20% of the state experience blackout caused by bushfires cutting off supply lines)
The fact that 20% of Victoria's power supply comes from NSW is surprising. It shouldn't matter as long as NEMMCO has the capacity and ability to provide electricity as it is required to do, no problem. With the overhanging threat of restrictions on the use of air conditioners, I'm not so happy. Let's recall, what the excuse was for the power blackout this week, bushfires, otherwise known as "natural disaster". (Read the paragraph above again)

Keeping track of the ever changing face of the power companies in Australia since the establishment of NEMMCO is a real task. Here is some of them.

Origin Energy
Who is Origin Energy?
Origin Energy is a top 100 ASX listed company involved in gas and oil exploration and production, energy retailing, power generation and utility network management.

TXU
Who is TXU?
A Texas based electricity and gas marketer.

Alinta
Who is Alinta?
Alinta is a leading Australian energy company with operations and investments that span five states of Australia and New Zealand. An ASX Top 100 company with a market capitalisation approaching
A$3 billion, Alinta manages, operates or owns a diversified portfolio of energy assets worth A$8 billion.
As well as being recognised as Western Australia's leading energy retailer, Alinta is building a reputation as a reliable, safe and efficient manager of infrastructure assets at all levels of the supply chain from generation to distribution, across Australia and in New Zealand.

Eastern Energy
Who is Eastern Energy?
This was the power company before they were sold to TXU

United Energy
Who is United Energy?
Alinta Limited and entities managed by AMP Henderson (via Power Partnership) acquired all shares in United Energy Limited under a Scheme of Arrangement in July 2003. United Energy de-listed from the Australian Stock Exchange at the close of trading on 15 July 2003.

Service Guarantee from United Energy

• If we are more than 15 minutes late for an appointment time agreed with you, you will receive a $20 credit on your electricity account.
• If we do not connect your new electricity supply on the date we agreed, for everyday we are late you will be credited $50, up to a maximum of $250.
• If you report a faulty street light next to your house or business that we are responsible for maintaining, and we do not fix it within two business days, we will pay you $10.
• If you experience more than ten unplanned sustained interruptions in a year, you will be credited $100. If you experience more than fifteen unplanned sustained interruptions in a year, you will be credited a further $50. If you experience more than 30 unplanned sustained interruptions in a year, you will be credited a further $150.
• If you experience more than 20 hours of unplanned sustained interruptions in a year, you will be credited $100. If you experience more than 30 hours of unplanned sustained interruptions in a year, you will be credited a further $50, and if you experience more than 60 hours of unplanned sustained interruptions in a year, you will be credited by a further $150..
• If you experience more than twenty four momentary interruptions in a year, you will receive $25, and if you experience more than thirty six momentary interruptions in a year, you will receive $35.

I like United Energy although I can't remember ever getting money back from them.

TruEnergy
Who is TruEnergy?

TRUenergy is the new name for the energy business previously called TXU. The new name also covers the businesses previously called Yallourn Energy and Auspower. These businesses now form one integrated business.


In a long article by Mike Steketee in the Weekend Australian, he laments the declining investment of governments in infrastructure. Here I quote,

" A breakdown in figures supplied to The Australian, by the Australian Bureau of Statistics show that in the '60s state and local governments regularly allocated 2 per cent or more of gross domestic product to capital spending for electricity, gas and water supply. Twenty years ago, the figure was down to 1.4 per cent but it was after that the fall became precipitous. By 1994, capital spending in this area had halved to 0.7 per cent..."

Not only neglect of power infrastructure, Mike Steketee also says,
" Contrary to the impression created by the states, water is not scarce."

This is interesting since we are experiencing a drought in Australia.

So, what is my gripe? That the state governments are raking in the money (read taxes) and not giving anything back (read investment in infrastructure).