Electricity Infrastructure August 07

Electricity Infrastructure
Market Intelligence Report
a customised briefing by
the Energy and Utilities team
August 2007
To obtain information about the content of this report, please contact:

Karen Redshaw
Senior Manager, Energy and Utilities Team
Invest Australia GPO Box 9839, Canberra ACT 2601
Tel. +61 2 6213 6178
Email: karen.redshaw@investaustralia.gov.au
Web www.investaustralia.gov.au
Invest Australia has prepared this work in the belief that it will be of assistance to the reader. This document
covers a wide range of issues and it is not intended to be a detailed nor exhaustive reference.
Accordingly, before relying on the material, readers should independently verify its accuracy, currency,
completeness and relevance for their purposes and should obtain appropriate professional advice.
Any reference to companies or investment activities is for illustrative purposes only and does not
constitute an endorsement of those companies or investment activities. The Commonwealth does
not accept any liability in relation to the contents of this work.
Table of Contents
Overview ....................................................................................................................... 1
Australian Electricity Markets ........................................................................................ 2
Electricity Generation .................................................................................................... 4
Electricity Transmission ................................................................................................ 8
Electricity Distribution.................................................................................................. 13
Electricity Retail........................................................................................................... 15
Australian Government policy and programs .............................................................. 17
State & Territory Government Policies and Programs ................................................ 21
Attachment A: Ownership of Australia’s major energy companies ............................. 23
Attachment B: Major Electricity Generation Businesses ............................................. 25
Attachment C: Proposed Electricity Generation Projects, as at April 2007 ................. 26
Attachment D: Owen Inquiry - Key Points and Recommendations ............................. 28

Overview
Investment in Australia’s electricity market is driven by economic growth (load
growth) and location, access to transmission sites, fuel availability and cost,
technology development, and government policy.
Since the mid 1990s there has been increased private investment in Australian
electricity infrastructure. While this infrastructure has in the past been primarily a
State and Territory Government responsibility, reforms are underway to create a
coordinated national approach to energy supply and to increase competition. The
creation of a National Electricity Market (NEM) and the dis-aggregation of energy
supply businesses and liberalisation of ownership have created opportunities for
private sector investment. There are a growing number of private players in
Australian electricity infrastructure.
Of Australia’s 42 major electricity generation, transmission and distribution

companies, 17 (or over 40%) are primarily owned by a foreign entity. Key investors to
date include: China Huaneng Group; Cheung Kong Infrastructure; International
Power; Mitsui; Tokyo Electric Power Company; NRG Energy; ATCO Group; Intergen;
Singapore Power International; Hydro-Quebec; and CLP Power Asia. A table listing
the 42 companies, location, and primary owner(s), share of ownership and country of
origin is provided at Attachment A.
The Australian Bureau of Agricultural and Resource Economics (ABARE) has
estimated that Australia’s primary energy consumption will grow by 2% per year from
5593 petajoules (PJ) in 2004-05 to 6311PJ in 2010-11. Around 45% of the primary
fuels consumed in Australia are used to generate electricity. Gross electricity
generation in Australia is expected to rise from 907PJ (252TWh) in 2004-05 to
1468PJ (408TWh) in 2029-30, an increase of 62% over the period.
Figure 1: Projected Electricity Demand for Australia 1

PJ
1600
1400
1200
1000
800
600
400
200
0
2004-05 2009-10 2014-15 2019-20 2019-30
Year
Aging Infrastructure and Meeting Peak Demand

Much of Australia's current electricity infrastructure in the areas of transmission and
generation is ageing and investment is needed in both new plant and the upgrading
1
Australian Bureau of Agriculture and Resource Economics (ABARE) Energy in Australia 2006
Electricity Infrastructure Market Intelligence Report 1

of existing plant. ABARE has estimated that A$72 billion of new investment in
Australia’s electricity industry will be required by 2020. This includes investment in
base load and peak electricity generation, distribution and transmission systems, gas
pipelines and renewable plant. ABARE estimates that electricity generation alone will
require A$11 billion of new investment. Give the scale of investment required; new
opportunities for private sector participation are likely.
Fuels
Coal and gas are the major fuel sources for electricity generation. Demand for gas in
the primary energy market (including electricity generation) is expected to grow from
1102PJ in 2004-2005 to 2029PJ in 2029-2030, (up 84% over the period). There has
been steady investment in renewable energy generation.
Figure 2: Australia’s Projected Energy Mix 2
Natural gas is playing an increasingly significant role in Australia’s energy market.

Natural gas consumption is expected to almost double from 168PJ in 2009 to 333PJ
in 2029-30. As well as supplying the domestic retail market, gas powered electricity
plants are increasingly supplying Australia’s remote mining and minerals processing
industries. A key market driver is governments’ and industry recognition of gas as a
clean, cost effective alternative to other fossil fuels.
Australian Electricity Markets

National Electricity Market
The National Electricity Market (NEM) links the Australian Capital Territory, South
Australia, New South Wales, Victoria, Queensland and Tasmania to a competitive
wholesale electricity market for the supply and purchase of electricity. Forty-eight
companies bid their electricity generation output to the National Electricity Market
Management Company (NEMMCO), for sale to electricity retailers and major
industrial end users.
Up to A$7 billion in electricity is traded annually through NEMMCO, to supply almost

8 million customers. The NEM comprises generators, customers (retailers or end-
users) and network service providers (transmission and distribution entities) and
traders. To supply into the NEM, threshold generator capacity is 30MW. Applications
are made to NEMMCO. 3 High-voltage transmission line (inter-connectors) transport
power between the six electricity regions.
2
3
An explanation of the process to connect a new generator to the National Electricity Market, including:
enquiry, agreement and construction phases; performance, technical and access standards; and a compliance
program is outlined at www.nemmco.com.au/registration/110-0543.pdf

Figure 3: Structure of the National Electricity Market
Australia has among the lowest electricity costs in the developed world.
Figure 4: Electricity spot market prices in Australia’s eastern states (NEMMCO
average wholesale prices) 4
Western Australia
Western Australia’s electricity market is thousands of kilometres from the NEM.
There is neither a physical interconnection nor governance linkages between the
Western Australia market and NEM. Western Australia’s electricity infrastructure
consists of: the North West Interconnected System (NWIS); and the South West
Interconnected System (SWIS); and 29 regional, non-interconnected power systems.
Energy trading is facilitated through a system of bilateral contracts, a day-ahead

short term energy market and balancing. It is regulated by the Independent Market
Operator, which has no commercial interest in the market.
The NWIS serves some towns and resource industry loads in the North-west of the
state. It has a generation capacity of 400MWs. Due to the small scale of the system it
is unlikely that the NWIS will introduce a wholesale energy market. The SWIS is the
largest network serving Perth and other major population centres in the south west.
The network comprises 4200MW of installed generation capacity and, as previously
mentioned, introduced a wholesale electricity market in September 2006.
4

Northern Territory
The Northern Territory’s electricity industry supplies about 200,000 people and small,
but growing industry base. In 2005-06 the Territory consumed 1660GWh of electricity
across 3 small regulated systems. The Territory uses a bilateral contracting system in
which generators dispatch the appropriate amount of power into the system to meet
their customers' needs. The Northern Territory government has scheduled the
introduction of full retail contestability for 2010.
Electricity Generation
There are 15 major electricity generation companies across Australia (those
generating over 5000GWh), being: Macquarie Generation, Delta Electricity, Taurus
Energy, AGL, Eraring Energy, TRUEnergy, Loy Yang Power, Hazelwood Power,
Stanwell Corporation, CS Energy, Tarong Energy, Verve Energy, Comalco/NRG,
Snowy Hydro and Hydro Tasmania. A table showing major electricity generation
businesses, market share, and revenue is provided at Attachment B.
As at April 2007, there were 57 electricity generation projects scheduled for

commissioning from 2008. The largest project developers (by generation capacity)
include: Delta Electricity (3552MW); AGL (2099MW); Origin Energy (2070MW);
Stanwell Corporation (1281MW); CS Energy (750MW); and Wandoan Energy
(700MW). A table listing the 57 projects is provided at Attachment C.
New South Wales is Australia’s largest electricity producing state (32% of total
output), followed by Queensland (26%) and Victoria (24%). In total, the eastern-
Australia states generate about 80% of Australia's electricity. Western Australia
produces about 6%, Tasmania (5%), South Australia (5%) and the Northern Territory
(less than 4%) of national electricity generation.
Figure 5: Electricity Generation by State, 2005-06 5

80,000
70,000
Gigawatt hours (GWh)
60,000
50,000
40,000
30,000
20,000
10,000
0
New South Victoria Queensland South Tasmania Western Northern
Wales Australia Australia Territory
States
Investment Opportunities
Coal and gas will continue to be the predominant electricity fuel source in Australia.
Investment opportunities in gas and coal fired powered plants are strongest; in
particular those plants incorporating lower emissions technologies and improved
5

water consumption measures. ABARE suggests that between 2003 and 2020 an
additional 8,410MW of gas and coal fired electricity generation plant will be required. 6
Gas fired power will account for approximately A$5 billion of a total estimated
A$11 billion investment. Most gas fired power plant is predicted to be built in
Queensland, Western Australia, Victoria and South Australia. Required investment
in coal fired generation is an estimated A$6 billion, of which an estimated
A$3.3 billion will be invested in Queensland (assuming the completion of the Aldoga
aluminium smelter) and A$2.2 billion, to fund a 1200MW brown coal fired station in
Victoria. A list of proposed generation projects is at Attachment C.
While some States have to a large extent privatised their electricity supply operations
(Victoria and South Australia) others have sought increased private involvement in
certain areas of power generation and distribution, through Public Private
Partnerships. For example, in 2005, the New South Wales Government indicated
that three new power stations were to be built either privately or in partnership with
the State. There are also growing opportunities for private investment in embedded
and remote power generation projects to service Australia’s mining and minerals
processing industries.
New South Wales

New South Wales needs future investment in an estimated 327MW of electricity
generation capacity to meet summer peak demand in 2010-11 and about a further
300 – 400MW per annum thereafter. 7 In response, both TRUenergy and Delta
Electricity are constructing gas-fired peaking power stations. Further NSW is
introducing NSW Renewable Energy Targets of 10% of electricity consumed by the
State to come from renewable sources by 2010 increasing to 15% by 2020. Already
planning consent has been granted for a 132MW $132M wind farm in the State’s
Southern Highlands The New South Wales Government recently commissioned an
Inquiry undertaken by Anthony Owen, Professor of Energy Economics at Curtin
University of Technology, on the future security of electricity supply in the State. A
summary of the report, which recommended the privatisation of energy generation
and retail assets in New South Wales, is at Attachment D.
Figure 6: NSW Power Generation Outlook
6
7
National Energy Market Management Company (NEMMCO) (2006) Statement of Opportunities

Queensland
Queensland will require an estimated 244MW of additional electricity generation
capacity by 2009-10, to meet summer peak demand. 8 The Queensland Government
has committed to reduce the State’s greenhouse gas emissions to 60% below 2000
levels by 2050. As a result, whilst coal-fired generation will remain a major part of
Queensland’s generation mix; new coal-fired power stations will be required to
deploy clean coal technologies, which provide for carbon capture and storage, and
efficient water practices.
Figure 7: Queensland Generation Outlook
Victoria & South Australia

It is worth pointing out that Victoria has privatised its energy industry - electricity and
gas - and a number of international companies already own energy assets in Victoria.
An additional 136MW of allocated installed capacity is required to meet the minimum
reserve for the combined Victoria and South Australian network. 9 Victoria’s energy
demands are projected to increase significantly. NEMMCO projections indicate that
between 2006 and 2016 base load electricity demands will increase at about 1% per
year and summer peak electricity demands at about 2% per year. Gas demand
(including gas used in electricity production) is forecast to increase at about 0.8% per
year between 2007 and 2011.
South Australia, which has also privatised or leased out its energy assets, will require
a forecast additional 186MW of electricity generation capacity by 2008-09 to meet its
local minimum reserve level. South Australia’s electricity demand profile is very
‘peaky’. Renewable energy generation, specifically wind farms, is contributing to
meeting peak demands by supplementing fossil fuelled power stations. In the year
June 2004 to 2005, South Australia’s wind farm electricity capacity increased from
34.5MW to 318MW, with another 150MW of capacity approved for development.
Even with this capacity increase there is some concern that that new investment in
electricity supply will not be sufficient to keep pace with consumer demand.
8
National Energy Market Management Company (NEMMCO) (2006) Statement of Opportunities
9
ibid

Figure 8: Victoria and South Australia Generation Outlook
Western Australia
New investment will be required for the Wholesale Electricity Market to increase
system capacity to 4322MW in 2008-09 and to 4463MW in 2009-10. 10 Demand in the
South West Interconnected System (SWIS) is expected to increase by 2.2% each
year from 2005-06 to 2015-16. The maximum demand for the summer peak season
is expected to increase at 3.2% per year (or around 120MW). Figure 9 indicates
potential opportunities for investment in the SWIS. Demand is expected to exceed
existing system capacity in 2009-10 (taking into account plant closures and
committed projects over the next two years).
Figure 9: Wholesale Energy Market Generation Outlook 11
10
Western Australia Government, Independent Market Operator, No.27: Statement of Opportunities 2007
11
ibid

Electricity Transmission
National Electricity Market (NEM)
Major investment in transmission and distribution will be required. ABARE has
estimated that an additional A$62 billion (real 2003-04 dollars) in network investment
will be required by 2019-2020 to service additional generation capacity, meet
demand growth and maintain network reliability.
The National Electricity Market Management Company (NEMMCO) has prioritised

potential transmission augmentation across the Victoria to Snowy; Snowy to Victoria
and between Queensland and New South Wales transmission flow paths. Figure 10
summarises the scope of the works, modelled timing and indicative costs of these
augmentations.
Figure 10: Transmission augmentation priorities in the NEM 12
Third party access arrangements and economic regulation have been established for
all transmission and distribution networks within the NEM. Connection of generators
to the transmission and distribution network is by negotiation and arbitration. Parties
negotiate commercial arrangements for access to services. If agreement cannot be
12
National Electricity Market Management Company, Statement of Opportunities 2006

reached, the regulatory framework provides for arbitration by reference to principles
for determining an administered price for that service. In June 2007, the Australian
Energy Regulator (AER) released an issues paper on the development of a new
incentive scheme to reward transmission companies for reducing the number and
duration of outages with a market impact, and for providing more advanced notice of
outages.
Key Players
Table 1: Transmission companies and their primary owners
Company Name Primary Owner(s)
Victoria
VENCorp Victoria Government
SP AusNet Public company, 51% owned by Singapore International Pte Ltd
Murraylink Private partnership, including: Murraylink HQI Australia Pty Ltd,
SNC-Lavalin Investment Australia Pty Ltd
Basslink CitySpring Infrastructure Management (Singapore)
South Australia
ElectraNet Private corporation; major shareholders include: Harold Street
Holdings (a subsidiary of Powerlink Queensland), YTL Power
Investments, Hastings Funds Management, Macquarie
Specialised Management Limited
Murraylink Private partnership; including: Murraylink HQI Australia Pty Ltd,
SNC-Lavalin Investment Australia Pty Ltd
Tasmania
Transend Networks Ltd Tasmania Government
Basslink CitySpring Infrastructure Management (Singapore)
New South Wales
TransGrid (includes ACT) NSW Government
Energy Australia NSW Government
Queensland
Powerlink QLD Queensland Government
Western Australia
Western Power WA Government
Northern Territory
Power Water Corporation NT Government
Basslink
The Basslink cable connects Tasmania to the National Electricity Market. BassLink
may seek status as a regulated asset from the Australian Energy Regulator 13 .
Present arrangements involve Tasmania's main power generator, Hydro Tasmania,
paying BassLink's owner, the Singapore based CitySpring Infrastructure
Management, a fee for use of the link to the National Electricity Market. If BassLink
gained regulated status, some of that cost could be shifted to Tasmanian and
Victorian power consumers via higher power charges.
ElectraNet
ElectraNet’s network comprises over 5,600km of transmission lines with
76 substations and switching stations. The network operates at 275kV, 132kV and
66kV and is characterised by long distances, a low energy density and a relatively
small customer base.
13
IBIS World Report May 2007

EnergyAustralia
EnergyAustralia is predominantly a distribution and retail business. EnergyAustralia
also owns and operates a part of the New South Wales transmission network. Its
network spans 1,040km of lines and 19 substations, extending from the south of
Sydney to north of Newcastle and into the Hunter Valley.
Murraylink
Murraylink operates as a regulated DC inter-connector, capable of delivering
220MW, between the Red Cliffs substation in Victoria and the Monash substation in
South Australia. Murraylink has 180km of transmission lines with a converter terminal
station at either end.
Powerlink
Powerlink owns, develops, operates and maintains Queensland’s high voltage
electricity transmission network which spans more than 1,700km from Cairns to the
New South Wales border. Its network includes 12,013km of transmission lines and
cables, as well as 98 substations. It is the most decentralised network in the NEM
and operates at 330kV, 275kV, 132kV and 110kV.
SP AusNet
SP AusNet owns, operates and maintains over 6,500km of electricity transmission
lines as well as 44 switching and transformation facilities throughout Victoria. The
network is built around a 500kV backbone running from the major generating source
in the Latrobe Valley, through Melbourne and across the southern part of the state to
Heywood near the South Australian border.
Transend
Transend owns and operates the electricity transmission system in Tasmania;
including over 3,500km of transmission lines, 46 substations and 9 switching stations
operating at voltages of 220kV and 110kV.
TransGrid
TransGrid is responsible for the management of the high voltage electricity

transmission network in New South Wales and the Australian Capital Territory. The
network comprises 82 substations and switching stations, and 12,480km of
transmission lines and underground cables operating at voltages of 500kV, 330kV,
220kV, 132kV and 66kV. TransGrid has received regulatory approval and is
embarking on a major infrastructure spending program to relieve major network
constraints affecting supply to the Sydney/Newcastle/Wollongong area by converting
and upgrading existing power lines.
VENCorp
VENCorp is Victoria’s peak energy sector planning organisation and a network
service provider. It does not own network assets. Victoria’s network assets are
predominantly owned and operated by SP AusNet. In 2005 Vencorp published 2030:
a 25 year outlook for additional transmission infrastructure investment in Victoria,
which outlines a need for up to A$2 billion of investment in new transmission pipes,
poles, wires and other network infrastructure over the period. Potential Augmentation
to Victoria's energy transmission infrastructure can be described by regions: the
Eastern corridor; South-Western corridor; Northern corridor; and Metropolitan. 14
14
VenCorp (2005) Vision 2030: Victoria’s Energy Transmission Networks

Investment Opportunities
In addition to the priority NEM transmission augmentations identified by NEMMCO
(refer Figure 10) the Victoria, South Australia and Western Australia governments
have identified the following additional augmentation requirements.
Victoria
Table 2: Forecast electricity transmission augmentation projects in Victoria
Corridor and Project(s) Cost (A$m)
Eastern
43.0
• Additional 600MVA 500/200kV transformer in the Latrobe Valley
• Line termination and switchgear upgrade works to remove existing
constraints
• Additional (fourth) 500kV line between Hazelwood and Loy Yang
Northern
• Additional 250MVA 330/220kV transformer at Dederang 16.0
• Uprate Bendigo-Fosterville-Shepparton 220kV line
Metropolitan
• Three 1000MVA 500/220kV transformers 365.0
• Uprate Rowville-Springvale, Springvale-Heatherton, Rowville-Malvern
220kV lines
• Reconductor Keilor-West Melbourne, West Melbourne-Fisherman’s Bend,
Rowville-Spingvale and Rowville-Richmond 220kV lines
Regional network
• Uprate Ballarat-Moorabool, Ballarat-Bendigo, Shepparton-Bendigo, 230.0
Kerang-Red Cliffs, Bendigo-Kerang, Dederang-Shepparton 220KV lines
• Third Moorabool-Ballarat 220kV line
• Additional 1000MVAr reactive support
Total 654.0
Table 3: Forecast gas transmission augmentation projects in Victoria

Corridor and Project(s) Cost (A$m)
Eastern
• Duplication of the Longford-Pakenham pipeline between Tyers and 80.0
Bunyip
South-West
• South West pipeline extension Lara to Hopkins Rd 130.0
• Iona to Stonehaven pipeline duplication
• New compressor stations at Stonehaven
Metropolitan
• New Wollert to Hopkins Road pipeline 65.0
• New Hopkins Road to Brooklyn pipeline
Regional network
• New Ballan to Mount Franklin pipeline 55.0
• New Hopkins Road to Ballan pipeline
• Wollert to Wandong pipeline duplication
Total 330.0
South Australia
Network planning is the responsibility of the individual network owners, ElectraNet
and ETSA Utilities. The South Australia Electricity Supply Industry Planning Council
analyses the capability of State’s transmission networks to transport forecast peak
power demand under a range of dispatch conditions and with outages applied to
various critical items of plant. The Council has forecast a number of network

constraints, to be considered and addressed by ElectraNet, ETSA Utilities and other
individual network owners (see Table 4).
Table 4: Projected network limitations in South Australia 15
Short term (imminent) limitations
1. Lower Eyre Peninsula 132 kV system voltages are low in the absence of local support. An
increased rating is required for several Eyre Peninsula 132 kV line segments: Playford-
Whyalla #1 and #2; Cultana-Whyalla; Whyalla-Middleback; Middleback-Yadnarie; and
Yadnarie-Pt Lincoln.
2. Performance standards indicate that connection point transformers at Waterloo require
re-sizing.
3. Barossa 132 kV voltages may be low under some contingencies
4. Templers-Dorrien 132 kV lines need to be uprated to meet performance requirements.
5. Hummocks-Kadina East 132 kV line needs to be uprated to meet performance
requirements.
6. Eastern Hills 132 kV voltages may be low under some contingencies.
7. The Blanche-Mt Gambier 132 kV line needs to be uprated to meet performance
requirements.
8. Several Riverland 132 kV lines need to be uprated to meet performance requirements:
Robertstown-North West Bend #1 and #2 lines; and North West Bend-Monash #2 line.
9. Several Eastern Hills 132 kV lines need to be uprated to meet performance requirements:
Para-Angas Creek; Angas Ck-MAP3; MAP3-MAP2; MAP2-Mannum; Mannum-Mobilong;
and Tailem Bend-Mobilong.
10. Several connection point transformers need to be re-sized to meet customer demands at
Para, Magill, and Happy Valley, Morphett Vale East, Mt Barker, Ardrossan West, Kadina
East, and Playford.
Limitations likely to arise over the medium to long term
1. Lower and Upper Yorke Peninsula 132 kV system voltages will be low.
2. The Para-Magill line will need to be uprated to meet performance requirements.
3. Transmission system tie transformers will need to be re-sized to accommodate system
meshing transfers at: Para, Cultana, Robertstown, and Tailem Bend.
4. Connection point transformers will need to be re-sized to meet customer demands at:
Parafield Gardens West, Angas Creek, Tailem Bend, Keith, and Kincraig.
5. Several major 275 kV lines will need to be uprated meet performance requirements:
TIPS-Cherry Gardens, Para-Magill, TIPS-Magill, Magill-Happy Valley, TIPS-Kilburn, TIPS-
Northfield, and Happy Valley-Cherry Gardens.
6. Transmission system reactive support will need to be increased at: Davenport, Para,
Monash, and South East.
Capacity limitations are also expected to emerge in many areas of the sub-
transmission network by 2016-17, particularly across the greater Adelaide
metropolitan area. The Planning Council has also indicates that additional capacity
will be developed to serve the outer southern suburbs and the Fleurieu Peninsula
and the eastern hills area. The transmission system also faces potential challenges
with load growth in the far north and on Eyre Peninsula and these will be addressed
as the customer demand becomes clear.
Western Australia
Western Power and the Independent Market Operator have identified the need for
significant network augmentation of the SWIS to support committed and proposed
additional generation capacity (in particular the South-West region, where 555MW of
new generation capacity is committed for 2008-09) 16 :
• Construction of 330kV transmission lines in the south west region of the Perth
metropolitan area;
15
SA Electricity Supply Industry Planning Council (2007) Annual Planning Report
16
Independent Market Operator (2007) Report No. 27 Statement of Opportunities

• Installation of additional power compensation, in the form of Static VAr
Compensators, and shunt capacitor banks;
• Installing an additional 330/132 kV transformer capacity in the metropolitan
area;
• Construction of additional transmission lines within the metropolitan area; and
• Establishing new terminal stations within the metropolitan area.
Western Power has also developed a scenario based on increased generation

capacity in the northern part of the SWIS. This area operates close to its power
transfer limits. Network augmentation is required before additional generation
capacity can be connected to the system. The Western Australian Government has
indicated that capital works valued at approximately A$3.1bn anticipated over the
next 4 years.
Electricity Distribution
There are 13 major electricity distribution networks in the NEM. Of these, six (in
Victoria and South Australia) are privately owned or leased, one has combined
government and private ownership (the Australian Capital Territory) and six (in other
jurisdictions) are government owned.
The physical scale and range of existing assets, coupled with peak demand growth,
will give rise to large and continuing investment (forecast at A$15 billion to
A$20 billion by 2009-10). Investment is required to meet both new demand in areas
of residential growth, and ensure energy reliability through new, upgraded and
replacement assets. Already construction has commenced on $1.5 billion of
upgrades to the existing NSW electricity network.
Individual state and territory governments are responsible for distribution networks
within their jurisdictions, including implementing regulations and reliability service
standards. However, as part of the ongoing national energy market reforms, in 2008
NEM participants will transfer regulatory responsibility to the Australian Energy
Regulator.
Table 5: Ownership of electricity distribution networks 17

Line
Length Customer RAB 18
Network Location (km) Numbers (A$m) Regulator Owner
NEM Regions
Alinta (Solaris) Vic 5,579 286,085 589 ESC 19 Alinta 20
Cheung Kong
Infrastructure (CKI);
Hongkong Electric
Holdings (HEH) (51%);
Spark Infrastructure
CitiPower Vic 6,488 586,107 1,022 ESC (49%)
CKI, HEH (51%);
Powercor Vic 80,577 644,113 1,671 ESC Spark Infrastructure
17
National Electricity Market Management Company (2006) State of the market 2006
18
RAB (regulated asset base) measurement: ESC (A$2004 as of 2006-07); ESCOSA (Dec A$2004 as of
2006-07); IPART (nominal as of 1 July 2004); ICRC (nominal as of 2005-06); QCA (nominal as of 2005-06);
OTTER (nominal as of 30 June 2003); ERA (nominal as of 30 June 2006); UC (includes both transmission and
distribution, as of February 2004).
19
ESC is the Essential Services Commission of Victoria
20
Alinta was acquired in May 2007 under a conditional agreement, by a consortium led by Babcock & Brown
and Singapore Power.

Line
Length Customer RAB 18
Network Location (km) Numbers (A$m) Regulator Owner
(49%)
Singapore Power
SP Ausnet Vic 29,397 573,766 1,363 ESC International (51%)
Alinta (34%); DUET
United Energy SA 12,308 609,585 1,229 ESC (66%) 21
CKI/ HEH (51%); Spark
ETSA Utilities NSW 80,644 781,881 2,468 ESCOSA 22 Infrastructure (49%)
EnergyAustralia NSW 47,144 1,539,030 4,116 IPART 23 NSW Govt
Integral Energy NSW 33,863 822,446 2,283 IPART NSW Govt
182,02
Country Energy NSW 3 734,071 2,375 IPART NSW Govt
ACTEW Distribution
Limited (50%) (ACT
ActewAGL ACT 4,623 146,556 528 ICRC 24 Govt); Alinta (50%)
ENERGEX Qld 48,115 1,217,193 5,023 QCA 25 Qld Govt
142,79
Ergon Energy Qld 3 736,710 4,690 QCA Qld Govt
Aurora Energy Tas 24,400 259,600 687 OTTER 26 Tas Govt
Non-NEM Regions
Western Power WA 69,083 1,595 ERA 27 WA Govt
Power & Water NT 1,869 440 UC 28 NT Govt
South Australia
South Australia’s single distribution company (ETSA Utilities) is leased (from 2000-
2200) to the Cheung Kong Infrastructure (CKI) group. In 2005, CKI floated 49% of its
equity as Spark Infrastructure to hold a 49% interest in ETSA Utilities; and shares in
Powercor and CitiPower, in Victoria. CKI and Hong Kong Electric Holdings (HEH)
retain a 51% share in Spark Infrastructure. Spark Infrastructure is jointly managed by
CKI and RREEF Infrastructure, the global infrastructure investment business of
Deutsche Asset Management.
Victoria
CitiPower, Solaris and United Energy mainly serve metropolitan Melbourne. Eastern
Energy and Powercor serve the rest of Victoria. Solaris Power, the smallest of the
electricity distribution companies in Victoria, was sold in 1995 for A$950 million to the
Australian Gas Light Company Ltd and US-based utility GPU Inc (equal partners in
the initial purchase). In 1995, AGL bought out GPU. 29
The CKI and HEH purchased the distributor and retailer functions of Powercor in mid
2001 for A$2.3 billion. The retail operations were sold to Origin Energy. CKI and HEH
acquired Citipower's distribution arm for A$1.42 billion in August 2002, selling the
retail business to Origin Energy.
21
Alinta and DUET (which is managed by AMP Henderson and Macquarie Bank) acquired the United Energy
network in 2003. Alinta operates and manages the network.
22
ESCOSA is the Essential Services Commission of South Australia
23
IPART is the Independent Pricing and Regulatory Tribunal for the New South Wales Government
24
ICRC is the Independent Competition and Regulatory Commission for the Australian Capital Territory
government.
25
QCA is the Queensland Competition Authority for the state government
26
OTTER is the Office of the Tasmanian Energy Regulator for the state government
27
ERA is the Energy Regulation Authority of Western Australia for the state government
28
UC is the Northern Territory Utilities Commission for the territory government
29
IbisWorld (2007) Electricity Distribution in Australia

Alinta and DUET, which is managed by AMP Henderson and Macquarie Bank,
acquired the United Energy network in 2003. United Energy is 34% owned by Alinta,
which operates and manages the network.
Electricity Retail
All states in Australia are implementing or considering implementing full retail
contestability under the national Energy Market Reform program. Full retail
contestability gives electricity customers the right to choose their retail supplier
according to their individual needs.
Table 6: Licensed Retailers of Electricity and Gas in Australia 30

Licensed Retailers NSW Vic. Qld SA WA Tas. NT ACT
ActewAGL Retail
AGL
Alinta
Aurora Energy
CitiPower
CountryEnergy
CS Energy
Delta Electricity
EA IPR Retail Partnership
Energex Retail.
Energy One
Energy Australia
Eraring Energy
Ergon Energy
Griffin Energy
Integral Energy
International Power
Jackgreen (International)
Landfill Gas and Power
Momentum Energy
NRG Flinders
Option One
Origin Energy
Perth Energy
Power and Water Corporation
Powercor Australia
Powerdirect
Red Energy
Stanwell Corporation
Tarong Energy Corporation
TransAlta Energy
TRUenergy
Victoria Electricity
Horizon Power
Synergy
Worsley Alumina
Retail Pricing
Between 1990-91 and 2005-06, there was a 4% rise in the cost of electricity;
however the cost of electricity to business customers has decreased by 23%. This
has been attributed to the removal of government subsidies and that full retail
30
Energy Supply Association of Australia (2007) Electricity Gas Australia 2006

contestability for business customers has been phased in earlier than for residential
consumers.
Figure 11: Change in the real price of electricity from 1990-91 to 2005-06 31
Note: The household index is based on the consumer price index (CPI) for household electricity, deflated by
the CPI series for all groups. The business index is based on the producer price index for electricity supply in
the “Materials used in Manufacturing Industries”, deflated by the CPI series for all groups.
Full retail contestability

Table 7: Timetable for full retail contestability implementation
New South Wales 1 January 2002
Victoria 13 January 2002
South Australia 1 January 2003
Australian Capital Territory 1 July 2003
Queensland 1 July 2007
Tasmania Retail contestability is being phased in over a four year period with
large consumers of electricity of over 4 GWh/yr currently
contestable. All residential and small business users are
scheduled to have full retail contestability from July 2010, subject
to an assessment of the associated costs and benefits.
Western Australia Western Australia allows retail contestability for customers using
at least 50MWh each year. The WA Government is now assessing
the whether to implement full retail contestability; and will report its
findings in January 2008.
Northern Territory Planned from April 2010.
Whilst New South Wales, Victoria, South Australia and the Australian Capital
Territory have introduced full retail contestability, each government continues to
regulate various aspects of the market, to protect residential consumers. These
regulatory measures include:
• price caps for small customers;
• setting minimum terms and conditions in default’ service offers;
• information disclosure and complaints handling requirements; and
• community service obligations for retailers.
31
National Electricity Market Management Company, State of the Energy, Market 2007, using data from the
Australian Bureau of Statistics, Cat. No. 6401.0 and 6427.0; and the Australian Energy Regulator

In the Australian Energy Market Agreement 2004 (amended 2006) State and
Territory Governments agreed to transfer some regulatory functions to a national
framework, to be administered by the Australian Electricity Market Commission
(AEMC) and the Australian Electricity Regulatory (AER) from July 2008.
Australian Government policy and programs

The Australian Government's energy policy is underpinned by three core objectives:
• to ensure the provision of competitively priced energy;
• to ensure security of supply and efficient use of energy; and
• to reduce the environmental impacts of energy production.
To achieve these policy objectives, the Australian Government, in partnership with

state and territory governments and industry has developed and is implementing a
suite of Energy Market Reforms. This includes reforms to disaggregate state owned
enterprises and increase competition; Energy Efficiency measures; and Greenhouse
Gas Abatement measures such as establishing an emissions trading scheme,
mandating renewable energy supplies and supporting the development and
demonstration of a wide range of cleaner fossil fuels and alternative energy
generation technologies.
The following pages provide an introduction to key energy policies and programs of
the Australian and State and Territory Governments.
Energy Market Reforms

The Australian Government’s energy policy Securing Australia’s Energy Future was
released in 2004. The report projects domestic electricity demand will grow by at
least 50% from 2000 to 2020, requiring ongoing large scale investment in new and
replacement energy supply infrastructure and improved energy strategies 32 .
To facilitate new investment and secure future energy supplies, Australian

governments are increasingly opening energy markets and providing a framework in
which investment in energy supply, use and infrastructure will be made. Further
electricity and gas industry reforms are scheduled, with a view to facilitating full retail
contestability, rationalising pricing regulations and monitoring, and further opening
access to transmission and distribution networks.
Electricity Reform is being progressed by the Council of Australian Governments

(CoAG) through the Ministerial Council on Energy, which provides a national forum
for electricity and other energy issues.
Energy Reform targets in 2007-08 include:

• Passage of the National Electricity Law and accompanying Rules;
• Transfer of distribution and retail economic and non-economic regulatory
functions to the national framework and institutional arrangements (AER and
AEMC);
• Respond to recommendations arising from NERA's expert review of the rules
regarding treatment of distributed generation and demand side response;
32
Department of Prime Minister and Cabinet (2002) Securing Australia's Energy Future', Energy Sector
Overview (p2) (www.pmc.gov.au/publications/energy_future/index.htm)

• Implement recommendations from the Energy Reform Implementation Group
report; and
• Introduction of the retail legislative package into South Australian parliament
(South Australia being the lead jurisdiction).
Greenhouse Gas Abatement Measures

The generation and direct combustion of stationary energy such as electricity and
fossil fuels is Australia’s largest source of greenhouse gas emissions, accounting for
50% of total greenhouse gas emissions in 2005 and this proportion is rising. An
increase in coal-related emissions accounted for 72.2% of the overall increase in
emissions, with gas accounting for 21.8%, and oil 7%
An Emissions Trading Scheme 33

On 3 June 2007, the Prime Minister accepted the final report of the Emissions
Trading Taskforce, which recommended that Australia introduce an emissions
trading scheme by 2012. On 17 July 2007, the Prime Minister released Australia's
Climate Change Policy - our economy, our environment, our future. The report
explains how the Government will:
• reducing domestic emissions at least economic cost;
• develop key low emissions technologies, improving energy efficiency and
supporting households and communities to reduce emissions;
• support world class climate science and adapting to the impacts of
unavoidable climate change; and
• pursue effective international responses to climate change that involve all
major emitters, and that reflect our domestic policies.
National Emissions Trading Taskforce (NETT)

New South Wales is the only Australian state with a carbon emissions trading
scheme. However in 2004 the Australian State and Territory Governments
established the National Emissions Trading Taskforce to develop a multi-
jurisdictional emissions trading scheme for consideration by State and Territory
Governments. The work of the National Emissions Trading Taskforce is to develop
an agreed model for such a scheme which will:
• Provide a framework for Australian States and Territories to reduce greenhouse
gas emissions and assist in meeting Australia’s Kyoto Protocol target;
• Position Australia for a carbon constrained future and emission reductions
beyond 2012;
• Allow for consistency with international developments;
• Include coverage of the stationary energy sector, and may include coverage of
other sectors or economy-wide coverage if this is considered appropriate; and
• Minimise the cost of compliance and administration for participants and the
Regulator.
The Low Emissions Technology Demonstration Fund is an A$500 million

program to develop low-emissions technologies and to demonstrate their commercial
33
A fact sheet outlining the key features and significant milestones of the Australian Emissions Trading
Scheme can be downloaded from www.pmc.gov.au/publications/climate_policy/docs/features_ets.rtf

potential in Australian circumstances by 2030. The program began in 2005-06 and
will offer funding through 2019-20. 34
Low Emissions Technology and Abatement is an A$27 million program,

operating since 2004, to encourage technologies that reduce energy demand and
emission intensity in the electricity sector, as well as generally in general business,
industry and the community. Projects supporting the local deployment, industry
development and export of renewable technologies are eligible to apply.
Australian Coal Mine Methane Reduction Program

Fugitive emissions from Australian black coal mines have been estimated by the
Australian Greenhouse Office to constitute 3.1% of Australia's net greenhouse
emissions. To help reduce these emissions the Australian Government is offering
competitive grants (totalling A$15.9 million from 2007-08 to 2012-13) to reduce
emissions by up to 0.9Mt per year (totalling 4.5Mt by 2012-13).
Greenhouse Challenge Plus is a largely voluntary program to support and

encourage businesses to manage greenhouse emissions through emissions
inventory reporting and action plans for cost effective abatement. The program
includes generator efficiency standards to encourage generators using fossil fuels to
achieve best practice performance in their power plants to lower greenhouse
emissions.
Greenhouse Gas Abatement Program provides funding to leverage private

sector investment in greenhouse abatement activities or technologies. Funding is
provided for projects such as co-generation (the use of waste heat or steam from
power production or industrial processes for power generation), energy efficiency,
coal mine gas technologies and fuel conversion.
Mandatory Renewable Energy Target (MRET)

The MRET commenced on 1 April 2001. The Renewable Energy (Electricity) Act
2000 requires the generation of 9500GWh of extra renewable electricity per year by
2010, enough power to meet the residential electricity needs of four million people.
Under the target, all electricity retailers and wholesale buyers have a legal liability to
contribute towards the generation of additional renewable energy. They are called
‘liable parties’ and meet their legal obligation by acquiring renewable energy
certificates from the generators of energy from renewable sources. These
certificates can be traded between retailers and wholesale buyers in the event of any
surplus or deficiency in their use of renewable energy. The MRET has encouraged
the growth of renewable generation, particularly in the case of wind farms.
MRET applies nationally, with the majority of electricity retailers and wholesale
electricity buyers on liable grids exceeding 100MW in all States and Territories
contributing proportionately to increase Australia's renewable energy sources.
The Office of the Renewable Energy Regulator has been established to oversee the
implementation of the measure. Information on the measure, including registration
and accreditation forms, fact sheets, the Renewable Energy (Electricity) Act 2000
and the Renewable Energy (Electricity) Regulations 2001, is available at
www.orer.gov.au.
34
Australian Greenhouse Office, LETDF website: www.greenhouse.gov.au/demonstrationfund.

Renewable Energy Certificates (RECs) 35
Owners or operators of eligible renewable power generators can earn one REC for
each MWh of renewable electricity produced, by applying to the ORER. RECs are
traded, purchased by electricity wholesalers liable for their electricity generation
under MRET. The sale of RECs provides an additional income stream for renewable
energy generators, improving the viability of projects. The value of RECs is not fixed
and is subject to the market. There is currently a surplus of RECs (above the
number that needs to be acquitted), which has deflated their value. From September
2005 to September 2006, RECs began trading at A$27 and ended trading at A$16 on
the spot market. However, additional RECs are still required to meet demand in the
later years of the scheme and this may result in some increase in REC price if the
current surplus is exhausted.
GreenPower
Established in 1997, GreenPower is a national accreditation program that sets
stringent environmental and reporting standards for renewable electricity products
offered by energy suppliers to households and businesses across Australia.
GreenPower aims to increase Australia’s capacity to produce environmentally
friendly renewable electricity by driving demand for alternative energy generation.
Since 1997, over 500,000 residential and commercial customers Australia wide have
contributed to reducing greenhouse gas emissions by buying GreenPower, resulting
in savings of over 3.9Mt of greenhouse gas emissions. 36
National Electricity Industry Regulators

• The National Electricity Market Management Company (www.nemmco.com.au)
manages the operation of the wholesale electricity market;
• The Australian Energy Market Commission (www.aemc.gov.au) has responsibility
for rule changes, rule making and market development.
• The Australian Energy Regulator (www.aer.gov.au) enforces economic
regulation of the wholesale electricity market and electricity transmission
networks and the National Electricity Law and National Electricity Rules. From 1
July 2007, the AER is also responsible for economic regulation of electricity
distribution as well as gas transmission and distribution.
• The Office of Renewable Energy Regulator (www.orer.gov.au) manages the
Renewable Energy (Electricity) Act 2000 and the registering and transferring of
Renewable Energy Certificates;
• The Australian Competition and Consumer Commission (www.accc.gov.au) is an
independent authority that administers the Trade Practices Act, including its
competition and access provisions;
• The National Electricity Tribunal, established under the National Electricity Law,
determines applications that Code Participants have breached the code;
• The Australian Securities and Investments Commission
(www.asic.gov.au/asic/asic.nsf) regulates the financial instruments used by
participants to manage the risk of trading in the National Electricity Market.
35
Further information is available at www.greenhouse.gov.au/markets/mret and www.orer.gov.au
36
Further information is available at www.greenpower.gov.au

National Electricity Industry Representative Bodies
• The National Generators Forum (www.ngf.com.au/html) represents the 22 major
power generators in the National Electricity Market;
• The Renewable Energy Generators Australia Ltd (www.rega.com.au) is a national
body representing zero emission electricity generators, equipment suppliers and
industry specialists;
• The Energy Supply Association of Australia (www.esaa.com.au) is a national
body representing members involved in electricity generation, transmission,
distribution and retailing;
• The Energy Retailers Association of Australia (www.eraa.com.au) is an
independent association lobbying in the interests of retailers of electricity and gas
throughout the National Electricity Market the National Gas Market;
• The Energy Users Association Australia (www.euaa.com.au) represents business
users of energy with activities across all states and many sectors of the economy;
• The Energy Networks Association (www.ena.asn.au) is the peak national body
representing gas.
State & Territory Government Policies and Programs

Green Energy Targets
The Victorian Government has introduced to State Parliament the Victorian
Renewable Energy Target Act 2006 that sets a target of 10% (approximately
3274GWh) of the State’s energy supply to be sourced from renewable sourced by
2016. This policy is expected to attract some A$2 billion of investment in renewable
energy generation to Victoria. 37
The South Australia, Climate Change and Greenhouse Emissions Reduction Act
2007 sets three targets: to reduce state emissions by at least 60% by 2050 (an
amount equal to or less than 40% of 1990 levels); and 20% renewable energy target
(as a percentage of total state electricity generation capacity and total state electricity
consumption) by 31 December 2014.
From 2008, the New South Wales Government will requiring electricity retailers to
source 10% (~1317GWh by 2010) and 15% (~7250GWh by 2020) of NSW end use
consumption from renewable sources. Retailers will have access to Renewable
Energy Certificate trading (income stream) but penalties for non-compliance with the
target will also be enforced. In addition, under the New South Wales Greenhouse
Plan, electricity retailers will be required to offer a product with at least 10% Green
Power to all new (or moving) residential customers.
The Western Australian Government has set a renewable energy target of 6% on the
South-West Interconnected System electricity transmission grid by 2010. In February
2007 the Premier announced that the state government will be also required to
purchase 20% of its electricity requirements from renewable energy sources by 2010.
In the Northern Territory, Power and Water Corporation has set a 2% renewable
energy target to meet its obligations under MRET.
37
Sustainability Victoria website, www.sustainability.vic.gov.au/www/html/1632-victorian-legislation-and-
guidelines.asp

Links to State and Territory renewable energy programs and
electricity industry regulatory bodies
Australian Capital Territory Department of Environment www.environment.act.gov.au
Independent Competition and Regulation Commission
www.icrc.act.gov.au
New South Wales Department of Water and Energy www.dwe.nsw.gov.au
Independent Pricing and Regulatory Tribunal
www.ipart.nsw.gov.au
Northern Territory www.minerals.nt.gov.au
Queensland Environmental Protection Agency
www.epa.qld.gov.au/environmental_management/sustainability/
energy/renewable_energy_rebate_programs
Office of Energy, Department of Treasury www.energy.qld.gov.au
Queensland Competition Authority www.qca.org.au
South Australia Department of Energy www.energy.sa.gov.au/index.php
Essential Services Commission
www.escosa.sa.gov.au
Tasmania Department Of Infrastructure Energy and Resources
http://www.dier.tas.gov.au/energy
Tasmanian Energy Regulator
http://www.energyregulator.tas.gov.au
Victoria Sustainability Victoria www.sustainability.vic.gov.au
Essential Services Commission www.esc.vic.gov.au
Department of Primary Industries www.dpi.vic.gov.au
Western Australia Sustainable Energy Development Office
http://www1.sedo.wa.gov.au
New South Wales Greenhouse Gas Abatement Scheme (GGAS)

GGAS was the world’s first mandatory greenhouse trading reduction scheme. The
Scheme began operation on 1 January 2003, regulating mandatory targets for
greenhouse gas emissions abatement from electricity production and use.
Participants are required to reduce greenhouse gas emissions to a benchmark of
7.27 tonnes of carbon dioxide equivalent per head of state population by the end of
2007. This benchmark will be maintained until the end of 2020 or until a national
emission trading scheme is established (scheduled for 2012).
Queensland 18 per cent gas scheme

Electricity retailers in Queensland are required to source at least 13% of the
electricity they from gas-fired generation. The scheme aims to encourage greater
penetration of gas and the development of new gas sources (including coal seam
methane) and infrastructure in Queensland and to reduce greenhouse gas emissions
from the Queensland electricity sector. Building on the success of the current
scheme, the State government has announced that the target will be increased to
18% by 2020.
Queensland: Climate Smart 2050

The Queensland Government’s climate change strategy details a number of future
initiatives to promote a lower carbon future, in particular, A$900 million Future
Growth Fund, to demonstrate clean coal technologies (A$600 million of the funding is
provided by the Queensland coal industry); and introducing (staged) a low emissions
energy target of 10% by 2020.

Attachment A: Ownership of Australia’s major energy companies
Company Name Energy Sector Primary Primary Owner(s) Share (%) Primary owner's
location registered country
ActewAGL Distribution ACT ACT Government 50 Australia
AGL 50 Australia
AGL Generation; distribution Vic, SA, ACT The Australian Gas Light Company 100 Australia
Alinta Generation; distribution Vic, WA Alinta Ltd 100 Australia
Aurora Energy Distribution Tas Tasmanian Government 100 Australia
Basslink Transmission Vic, Tas CitySpring Infrastructure Management 100 Singapore
CitiPower Distribution Vic Cheung Kong Infrastructure 100 Hong Kong
Country Energy Distribution NSW NSW Government 100 Australia
CS Energy Generation Qld Queensland Government 100 Australia
Delta Electricity Generation NSW NSW Government 100 Australia
Ecogen Energy Generation Vic Babcock & Brown Infrastructure 50 Australia
Babcock & Brown Development Group 50 Australia
IPM Eagle Generation Vic International Power 70 UK
Mitsui 30 Japan
Electranet SA Transmission SA ABB; Powerlink; YTL Power Investment Leased International consortia
ENERGEX Distribution Qld Qld Government 100 Australia
EnergyAustralia Distribution NSW NSW Government 100 Australia
Enertrade Generation trader Qld Queensland Government 100 Australia
Eraring Energy Generation NSW NSW Government 100 Australia
Ergon Energy Distribution Qld Qld Government 100 Australia
ETSA Utilities Distribution SA Cheung Kong Infrastructure Leased Hong Kong
International Power Generation Vic International Power Australia 91.8 UK
Hazelwood Commonwealth Financial Services 8.2 Australia
Hydro Tasmania Generation Tas Tasmanian Government 100 Australia
Integral Energy Distribution NSW NSW Government 100 Australia
International Power Australia Generation SA International Power Australia 100 UK
Loy Yang Power Generation Vic The Australian Gas Light Company 32.5 Australia
Tokyo Electric Power Company 32.5 Japan
Commonwealth Bank of Australia (leader of an 35 Australia
international consortia)

Company Name Energy Sector Primary Primary Owner(s) Share (%) Primary owner's
location registered country
Macquarie Generation Generation NSW NSW Government 100 Australia
NRG Flinders Generation SA NRG Asia-Pacific Leased US
NRG Gladstone Generation Qld Comalco 42 Australia
NRG Asia-Pacific 37.5 US
Origin Energy Generation; retail SA, Qld, Vic Origin Energy 100 Australia
Osborne Cogen Generation SA ATCO Group 100 Canada
Intergen Australia Generation Qld InterGen 50 US
China Huaneng Group 50 China
Powerco Distribution Tas Babcock and Brown 100 Australia
Power &Water Corporation Generation, NT NT Government 100 Australia
transmission, distribution
Powercor Australia Distribution Vic Cheung Kong Infrastructure 100 Hong Kong
Powerlink Queensland Transmission Qld Qld Government 100 Australia
Snowy Hydro Limited Generation NSW NSW, Vic. and Commonwealth governments 100 Australia
SP Ausnet Transmission; distribution Vic Singapore Power International 100 Singapore
Stanwell Corporation Generation Qld Qld Government 100 Australia
Tarong Energy Generation Qld Qld Government 100 Australia
Transend Network Transmission Tas Tas.Government 100 Australia
TransÉnergie Transmission NSW, Qld, Hydro-Québec 100 Canada
Vic, SA
TransGrid Transmission NSW NSW Government 100 Australia
TRUenergy Generation; distribution Vic, SA CLP Power Asia 100 Hong Kong
Western Power Corporation Generation, WA WA Government 100 Australia
transmission, distribution

Attachment B: Major Electricity Generation Businesses 38
Share Revenue
Generation (GWh) (%) (A$ million) Share (%)
New South Walesa
Macquarie Generation 28,030 14.56 867 13.24
Delta Electricity 23, 286 12.10 876 13.37
Sithe Energies 1,016 0.53 44 0.68
National Power 1,064 0.55 38 0.57
Earing Energy 14,456 7.51 792 12.09
Snowy Hydro Limited 5,167 2.68 323 4.94
Victoria
AGL 296 0.15 51 0.77
Alintab 66 0.03 8 0.12
Energy Brix 1,064 0.55 31 0.48
Hazelwood Power 11,330 5.89 339 5.17
Loy Yang Power 17,086 8.88 494 7.54
IPM Eagle 8,772 4.56 254 3.88
TRUenergy 11,276 5.86 318 4.86
Ecogen Energy 484 0.25 48 0.74
Alcoa 1,355 0.70 41 0.63
Others 197 0.10 24 0.37
Queensland
Stanwell Corporation 10,703 5.56 279 4.26
Enertrade 142 0.07 5 0.08
CS Energy 14,599 7.59 399 6.10
Intergen 6,236 3.24 153 2.33
Tarong Energy 14,964 7.77 395 6.03
Transfield Holdings 2,205 1.15 70 1.06
Comalco/ NRG 8,110 4.21 245 3.74
Others 75 0.04 9 0.14
South Australia
International Power (Synergen) 1,622 0.84 69 1.06
Origin Energy 477 0.25 24 0.37
NRG Flinders 4,521 2.35 158 2.41
TRUenergy 2,502 1.30 142 2.17
ATCO Power 1,167 0.61 44 0.68
Western Australia
Western Power Corporation 13,875 6.32 NA NA
Others 1,783 0.81 NA NA
Northern Territory
Power and Water Corporation 1,366 0.62 NA NA
Others 395 0.18 NA NA
Tasmania
Tasmanian Hydro 9, 213 4.19 NA NA
Others 609 0.28 NA NA
a
Including the Australian Capital Territory
b
Alinta was acquired by Babcock & Brown Infrastructure and Singapore Power on 17 August 2007.
ASX trading of Alinta (AAN) ETO positions are suspended until 30 August 2007.
38
Australian Bureau of Agriculture Research Economics (ABARE), Energy in Australia 2006 (p51)

Attachment C: Proposed Electricity Generation Projects, as at April 2007 39
Power station Developer Capacity Plant type Primary fuel type Location Scheduled
(MW) commissioning
New South Wales
Bamarang Delta Electricity 400 Gas turbine Natural Gas Bamarang 2008-09
Bega Wambo Power Ventures 120 CCGT Natural Gas Bega 2008-09
Cobar Wambo Power Ventures 114 Gas turbine Natural Gas Cobar 2008-09
Eraring Eraring Energy 50 Gas turbine Natural Gas Eraring -
Leafs Gully Stage 1 AGL 300 Gas turbine Natural Gas Appin 2009
Leafs Gully Stage 2 AGL 500 Gas turbine Natural Gas Appin -
Marulan Stage 1 Delta Electricity 250-320 Gas turbine Natural Gas Marulan 2009-10
Marulan Stage 2 Delta Electricity 400-450 CCGT Natural Gas Marulan 2010-11
Munmorah Delta Electricity 667 Gas turbine Natural Gas Doyalson 2009-10
Mt Piper upgrade Delta Electricity 180 Steam Black Coal Mt Piper 2008
Tallawarra TRUenergy 430 Gas turbine Natural gas Tallawarra 2008
Tomago Stage 2 Macquarie Generation 260 Gas turbine Natural gas Tomago -
Tomago stage 3 Macquarie Generation 270 Steam Black coal Tomago -
Wagga Wagga Wambo Power Ventures 600 Gas turbine Natural gas Wagga Wagga 2007-08
Victoria
Bogong AGL 130 Hydro Water Bogong 2009
Loy Yang A upgrade Loy Yang Power 236 Steam Brown coal Latrobe Valley 2008
Macarthur AGL 330 Wind Wind Macarthur -
Maryvale Paperlinx/ Alinta 200 Cogen Natural gas Maryvale -
Mortlake Origin Energy 1000 CCGT Natural gas Western Vic. 2009
Portland (including Yambuk) Pacific Hydro 195 Wind turbine Wind Portland 2007-08
Yaloak Pacific Hydro 115.5 Wind turbine Wind Ballan 2008
Queensland
BHP (Peak Downs) BHP (Peak Downs) 230 Steam Coal Bowen Basin -
Chinchilla Queensland Gas Company 57 CCGT Natural Gas Chinchilla 2008
Kogan Creek CS Energy 750 Steam Coal Kogan North 2007-08
MIM/ Entergy (Wandoan Energy) MIM/Entergy 700 Steam Coal Western Surat -
Fields
Spring Gully Origin Energy 1000 CCGT Natural gas Durham Downs 2008-09
Stanwell Stanwell Corporation / 350 Steam Black Coal Rockhampton -
Macarthur Coal
Surat Surat Dawson Development 470 Steam Coal Surat Coal Field -
39
ABARE, Major Projects List, April 2007

Power station Developer Capacity Plant type Primary fuel type Location Scheduled
(MW) commissioning
Corporation
Townsville AGL 370 CCGT Natural gas Townsville 2009
Townsville Stanwell 766 CCGT Natural gas Townsville -
South Australia
ATCO Auspine 60 Cogen Natural Gas Tarpeena -
Lake Bonney Stage 2 Babcock & Brown 159.5 Wind turbine Wind Lake Bonney -
Hallett expansion AGL 250 Gas turbine Natural gas Hallett -
Innamincka Geodynamics 13 Steam Hot dry rocks Innamincka -
Pelican Point expansion International Power Australia 250-300 Gas turbine Natural gas Pelican Point -
Port Pirie International Power Australia 230 Gas turbine Natural gas Port Pirie -
Quarantine expansion Origin Energy 70-200 CCGT Natural gas Torrens Island 2009
The Bluff AGL 45 Wind turbine Wind Hallett -
Tungketta Hill Ausker Energie/ ANZ 55 Wind turbine Wind near Elliston -
Infrastructure Services
Vincent North Pacific Hydro 59.4 Wind turbine Wind Yorke Peninsula 2008
Western Australia
Bluewaters 1 Griffin Group 200 Steam Black coal Collie 2008
Centauri 1 Eneabba Gas 168 Gas turbine Natural gas Dongara -
DESTEC Energy DESTEC Energy 660 Gas turbine Natural Gas Dampier -
Kwinana NewGen Power 320 Gas turbine Natural gas Kwinana 2008
Muja D upgrade Verve Energy 52 Steam Black coal Muja -
Siemens AG Siemens AG 400 CCGT Natural gas Pilbara -
Telfer Gold Mine Newcrest Mining 135 Gas turbine Natural gas Telfer Mine -
TransAlta TransAlta 470 CCGT Natural gas Oakajee -
Wagerup Alinta Stage 1 Alinta 140 Cogen Natural gas Wagerup 2007-08
Wagerup Alinta Stage 2 Alinta 140 Cogen Natural gas Wagerup 2008-09
Tasmania
Bell Bay Pulp Mill Gunns Limited 80 Steam Black Liquer Bell Bay 2009-10
Musselroe Hydro Tasmania 150 Wind turbine Wind North-east Tas 2009
Tamar Valley Power Babcock and Brown 210 CCGT Gas Bell Bay 2008
180 OCGT

Attachment D: OWEN INQUIRY INTO ELECTRICITY
SUPPLY IN NSW- Key Points and Recommendations
The Owen Inquiry noted:
¾ NSW needs to prepare for new base load supply by 2013-2014. Given the
typical 6 year gestation period for major power plant preparation for such
plant needs to start now.
¾ Coal or gas will meet most of the new baseload generation needs.as other
technologies can only contribute on a relatively small scale or will not mature
until 2020 at the earliest.
¾ There in an additional need for peaking capacity in NSW to provide for
changing commercial and residential useage patterns. Hydro and open cycle
gas turbines are the main providers for peak demand in NSW. Future peak
demand is likely to be satisfied by combined cycle gas turbine plant (CCGT)
and to a lesser extent, renewable options.
¾ While NSW is experiencing a declining rate of growth in consumption
(projected growth over the next decade is 1.8% per annum compared to 2.5%
per annum over the previouis decade), NSW should be prepared for
additional baseload demand by 2013-2014.
¾ The establishment of the National Energy Market has meant that new
investment in generation must be delivered with commercial discipline. The
cost of new investment in new generating capacity over the next 10-15 years
is estimated at A$7 to A$8 billion. Additionally, the inquiry found evidence
suggesting that State owned retail businesses will need to invest A$2 billion
to A$3 billion in order to compete in the NEM. Finally, the cost of retrofitting
existing plant with carbon reduction technology could be as high as
A$3 billion to A$4 billion.
¾ In addition to new investment of A$12 billion to A$15 billion to ensure future
competitiveness and regulatory compliance over the next 10-15 years,
another A$10 billion will need to be spent over the next 4 years on the State's
transmission and distribution networks.
¾ The combined impact of both the divestment of generation and retail and the
avoidance of new generation investment means that total State net debt
would be up to $26 billion lower in 2020 compared to a ‘retain and invest’
scenario. The report maintained Government ownership of transmission
assets, the "poles and wires" could be continued.
¾ Overall, the Owen report concluded that private sector investment could
ensure security of supply and achieve appropriate price, social and
environmental outcomes.
The Owen Inquiry recommended:
1. Divest the retail arms of EnergyAustralia, Integral Energy, and Country
Energy.
2. Divest or lease the State’s generation businesses: Macquarie Generation,
Delta Electricity, and Eraring Energy, including their development sites.
3. Ensure efficient, timely, and co-ordinated development application and
environmental planning processes for generation stations and new resources
of fuel, such as coal and coal seam methane projects.
Electricity Infrastructure Market Intelligence Report

28
4. Commence the process of obtaining development approval for the
development sites of existing generators.
5. The Commonwealth should design a set of guiding principles to reduce some
of the uncertainties regarding the impact of the introduction of emissions
trading on investment in the electricity generation sector and to facilitate the
adoption of ultra low CO2 emissions technologies. Specifically, as soon as
possible it should: establish the economy-wide greenhouse gas emissions
caps and associated time frames; establish the penalty price for non-
compliance; announce the criteria upon which emissions permits will be
allocated; and, announce trade – exposed exemptions.
A full copy of the inquiry's findings is available at:

http://www.premiers.nsw.gov.au/WorkAndBusiness/DoingBusinessInNSW/OwenInq
uiryIntoElectricitySupplyInNSW.htm
Electricity Infrastructure Market Intelligence Report

29

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Market Intelligence Report

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Australian Electricity Markets ........................................................................................ 2

Electricity Generation .................................................................................................... 4

Electricity Transmission ................................................................................................ 8

Australian Government policy and programs .............................................................. 17

State & Territory Government Policies and Programs ................................................ 21

Attachment A: Ownership of Australia’s major energy companies ............................. 23

Attachment B: Major Electricity Generation Businesses ............................................. 25

Attachment C: Proposed Electricity Generation Projects, as at April 2007 ................. 26

Attachment D: Owen Inquiry - Key Points and Recommendations ............................. 28

Of Australia’s 42 major electricity generation, transmission and distribution

Figure 1: Projected Electricity Demand for Australia 1

Aging Infrastructure and Meeting Peak Demand

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Figure 2: Australia’s Projected Energy Mix 2

Natural gas is playing an increasingly significant role in Australia’s energy market.

Australian Electricity Markets

Up to A$7 billion in electricity is traded annually through NEMMCO, to supply almost

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Energy trading is facilitated through a system of bilateral contracts, a day-ahead

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As at April 2007, there were 57 electricity generation projects scheduled for

Figure 5: Electricity Generation by State, 2005-06 5

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New South Wales

Figure 6: NSW Power Generation Outlook

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Figure 7: Queensland Generation Outlook

Victoria & South Australia

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Figure 9: Wholesale Energy Market Generation Outlook 11

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The National Electricity Market Management Company (NEMMCO) has prioritised

Figure 10: Transmission augmentation priorities in the NEM 12

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TransGrid is responsible for the management of the high voltage electricity

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Table 3: Forecast gas transmission augmentation projects in Victoria

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Western Power has also developed a scenario based on increased generation

Table 5: Ownership of electricity distribution networks 17

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Table 6: Licensed Retailers of Electricity and Gas in Australia 30

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Full retail contestability

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Australian Government policy and programs

To achieve these policy objectives, the Australian Government, in partnership with

Energy Market Reforms

To facilitate new investment and secure future energy supplies, Australian

Electricity Reform is being progressed by the Council of Australian Governments

Energy Reform targets in 2007-08 include:

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Greenhouse Gas Abatement Measures

An Emissions Trading Scheme 33

National Emissions Trading Taskforce (NETT)

The Low Emissions Technology Demonstration Fund is an A$500 million

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