Energy is delivered through a series of processes. Understanding the different parts of the energy industry and who the key players are, can help you make more effective decisions about managing and procuring energy for your business.

The components of the energy supply chain

There are three main components in the energy supply chain:

The energy commodity: either the generation of electricity at power plants or the production of natural gas

Network services: which includes transmission or moving the energy in high volumes from their sources toward end users and distribution or supplying and metering energy to end users’ premises

Retail services: billing and managing price risk for end users.

Each of these components may be undertaken by separate businesses.

The components of the electricity supply chain are depicted below.

Electricity Supply Chain

Source: Australian Energy Market Operator

Gas production for domestic consumption has remained separate from transport and supply and is dominated by a few major gas suppliers. The main segments of the gas supply chain are depicted below.

Gas Supply Chain

Source: based on Australian Gas Association (2003)

The key market players

Detailed legislation and regulations are in place to safeguard all participants in the market, including energy users. These legal arrangements establish market governance and regulatory arrangements and require that all supply side market participants must hold a licence or exemption in each State and Territory in which they operate.   A list of licensed participants in your State or Territory can be found on the jurisdictional regulator’s website and can be a good starting point if you are looking for a new energy retailer.

The summary below outlines who’s who among the supply side participants, and the governing and regulatory bodies that oversee Australia’s energy markets.

Market participants

Electricity generators: Electricity is generated from fossil fuels, such as coal and gas, and renewable sources such as hydro and wind. Some energy users also own and operate electricity generators that can be used to supply electricity and process heat for their own use or export electricity to the grid.

Gas producers: Gas is extracted from both off-shore and on-shore gas fields and processed to remove impurities to produce natural gas. There are only a few gas producers operating in each of Australia’s gas markets, although this may change as coal seam gas resources are developed.

Transmission network service providers: Bulk electricity is transported via extra high voltage electricity transmission lines. Bulk gas is transported in high pressure gas transmission lines. Each state has a single monopoly electricity transmission business, but there is more than one gas transmission business in some states. All electricity TNSPs are considered to be natural monopolies and are regulated by the relevant economic regulator. The regulated status of gas TNSPs varies, although all are required to provide access to third parties on fair and reasonable commercial terms. Some energy users are connected directly to the electricity and gas transmission networks.

Distribution network service providers: Both electricity and gas are delivered to the overwhelming majority of end users through a local distribution network. DNSPs are natural monopolies and are regulated by the relevant economic regulator. There are multiple DNSPs in most states, supplying either electricity or gas to specific geographic areas. For most customers, DNSPs are also responsible for metering installations and services.

Retailers: Retailers provide billing and price risk management services to end users. Retail businesses are now generally stand-alone businesses that operate only in the retail segment although a few retailers also own electricity generation interests.

Other participants: There is a range of other participants in Australian gas markets. A list of the participant categories and a brief explanation of the role they play can be found on the relevant market operators’ websites.

Intermediaries: Intermediaries are companies that offer a range of services to end users such as information and advice on energy use and procurement, supporting negotiations with retailers and facilitating demand-side response measures. They can be found by looking under Energy Management Consulting in Yellow Pages listings or using terms such as ‘energy trading’, ‘energy broker’, ‘energy management’, ‘energy services’ or ‘energy response’ in an internet search engine.

National governance and regulatory bodies

COAG Energy Council: The COAG Energy Council commenced in May 2014, replacing the former Standing Council on Energy and Resources (SCER). It incorporates the work of the former SCER, Ministerial Council on Energy and the Ministerial Council on Mineral and Petroleum Resources (MCMPR). The Energy Council seeks to ensure the safe, prudent and competitive development of the nation’s mineral and energy resources and markets to optimise long-term economic, social and environmental benefits to the community.

The Energy Council does this by:

  • facilitating national oversight and coordination of governance, policy development and program management to address the opportunities and challenges facing Australia’s energy and resources sectors into the future
  • providing national leadership on key strategic issues and effectively integrating these strategic priorities into government decision-making in relation to the energy and resources sectors
  • enhancing national consistency between regulatory frameworks to reduce costs and improve the operation of the energy and resources sectors.

The Energy Council continues to progress COAG’s energy market reform program, including ensuring balanced incentives for efficient demand side participation in energy markets and network development, progressing a national framework for smart metering and greater provision of energy information to consumers.

To find out more visit the COAG Energy Council website, email energycouncil [at] industry.gov.au or phone the Energy Council hotline on 02 6243 7788.

Australian Energy Market Commission (AEMC): The Australian Energy Market Commission (AEMC) is the rule maker for the nation’s energy markets. It is a national, independent body that makes and amends the rules for the National Electricity Market and elements of natural gas markets. The AEMC also provides strategic advice to the COAG Energy Council.

Information about the role of the AEMC, relevant market rules and details of AEMC’s reviews of these rules can be found on the AEMC website.

Australian Energy Regulator (AER): The AER is responsible for overseeing and monitoring the National Electricity Market and gas markets in southern and eastern Australia. The AER is also responsible for regulating the prices that electricity and gas transmission and distribution networks may charge in all states and territories, except Western Australia and the Northern Territory.

Information about the AER’s role can be found at the AER website. The site contains links to regular reports on the performance of electricity and gas markets overseen by the AER. The weekly reports also provide information on wholesale price movements that could be useful when preparing for negotiations with your energy retailer. The AER also publishes a ‘State of the Energy Market’ report each year in December.

State regulatory bodies

State and territory regulators license supply-side participants and regulate aspects of the energy market in their jurisdictions.  The regulators’ websites provide lists of electricity and gas retailers who are licensed to operate in that jurisdiction.  The Australian Energy Regulator also regulates aspects of the energy market in the National Energy Market jurisdictions.

Lists of state regulatory bodies and licenced electricity and gas retailers

State  Regulatory body  List of licenced energy retailers
Queensland Queensland Competition Authority (QCA) Queensland energy retailers
New South Wales Independent Pricing and Regulatory Tribunal (IPART) NSW electricity retailers NSW gas retailers
Australian Capital Territory Independent Competition and Regulatory Commission (ICRC) ACT energy retailers
Victoria Essential Services Commission (ESC) of Victoria Refer to the Licences section of the ESC website
Tasmania Office of the Tasmanian Economic Regulator (OTER) Tasmanian electricity retailersTasmanian gas retailers
South Australia Essential Services Commission of South Australia (ESCoSA) South Australian electricity retailersSouth Australian gas retailers
Western Australia Economic Regulation Authority (ERA) Western Australian electricity retailers Western Australian gas retailers
Northern Territory Utilities Commission Refer to the Utilities Commission website for information on their role

Market operators

The Australian Energy Market Operator (AEMO): AEMO operates the National Electricity Market and the retail and wholesale gas markets in south-eastern Australia.

AEMO’s website contains detailed information on the structure, planning and operation of the eastern States’ energy markets, including detailed information on energy prices, network losses and ancillary service costs. This data is accessed by following links from the ‘Electricity Data’ and ‘Gas Data’ tabs. AEMO’s Natural Gas Services Bulletin Board provides a  detailed market overview.

AEMO also publishes reports each year that outline forecast conditions in both the electricity and gas markets over the coming decades. The most useful of these reports for energy users are the Electricity Statement of Opportunities and the National Transmission Network Development Plan.

Independent Market Operator (IMO): IMO operates the wholesale electricity market in Western Australia.

The IMO website contains detailed information on the structure, planning and operation of the Western Australia South West Interconnected System (SWIS) electricity market. This includes detailed information on the SWIS capacity market in which energy users can participate, energy prices, network losses and ancillary service costs. This data is accessed by following links from the ‘Reserve Capacity’, ‘Publications and Reporting’ and Market Data’ tabs. Weekly reports that provide a useful summary of market outcomes are also available.

IMO also publishes a ‘Statement of Opportunities’ report each year that outlines forecast conditions in the SWIS electricity market over the coming decade.

Retail Energy Market Company Ltd: REMCo is the retail market operator for the contestable gas retail markets in Western Australia.

Information about REMCo’s role can be found at the REMCo website.  The REMCo website contains information that is more relevant to retail gas supply businesses in Western Australia than to energy users. However, familiarity with the site content will help you understand how gas supply to competing retailers is managed.