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Ever wonder how your home or business is powered?

The National Electricity Market takes electricity from power generators and delivers it to millions of Aussie homes and businesses. Here’s how it works.

Close your eyes and imagine 40,000km of electricity lines and cables – more than three times the diameter of Earth. This is the National Electricity Market (NEM).

The NEM is much more than just a collection of cables and wires. It’s also the wholesale market that takes electricity from power generators and delivers it to homes and businesses.

Here’s the lowdown on this massive network supplying power to millions of Aussies.

So just how far does the NEM reach?

The NEM’s physical cables extend from Port Douglas, into Far North Queensland, down to Hobart in Tasmania and then west into Port Lincoln in South Australia and to ACT. It operates over five states, and each state forms a ‘price region’, with these five regions connected by six high voltage sets of lines called interconnectors.

Info-graphic outlining the wholesale electricity system

The newest interconnector, introduced in 2006 by Basslink, welcomed Tasmania to the NEM. This hard-working line is the second longest submarine power cable in the world.

The spot market

Currently, the NEM operates as a ‘spot’ market. This is because the national market requires more electricity than current technology can store.

So what’s a spot market? It lets users buy and sell physical quantities of power in a short time frame ahead of delivery. This way, electricity supply can always meet demand.

Prices on the spot market are determined by the Australian Energy Market Operator, basing it on bids from power generators to meet demands. Every energy generator in the NEM contributes to this by offering specified amounts of power, for a specific price within a time period.

Rules and regulations

To keep a large network running smoothly, there need to be some rules. That’s where the National Electricity Rules (NER) and National Energy Retail Rules come in.

The NER covers much ground, including rules for participating in the spot market, keeping the NEM stable, and even regulating the amount of revenue transmission and distribution businesses are allowed to earn by providing poles and wires services.

The NERR deal with electricity and gas customers’ rights, things like contracts and bill information. Though Western Australia and the Northern Territory aren’t part of the NEM, they do have similar regulations and consumer protections.

Take control of your energy today

We’ve been powering Australian homes and businesses for over 180 years. We’re here to help you better understand your energy usage, and the energy market, putting the power in your hands. 

Our AGL app is part of that promise. From the palm of your hand, you can access your account to view plans, pay bills and track your energy usage. 

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