The Australian Energy Regulator today issued its fourth annual report on the market impacts of transmission congestion in the National Electricity Market (NEM). This report covers the 2006/07 financial year. It follows three previous reports covering the period 2003/04 to 2005/06.
"The indicators measure the impact of transmission network congestion on electricity market outcomes," AER Chairman, Mr Steve Edwell, said.
"They show an upward trend in total transmission congestion costs in the NEM over the past four years. The market impact of congestion was $107 million in 2006/07, up from $66 million in 2004/05, $45 million in 2004/05 and $36 million in 2003/04.
"In part the congestion is due to the inherent limitations of the transmission network, although an increasing portion is the result of transmission outages. The AER's indicators show that in 2006/07 outages accounted for around a half of total congestion costs, up from around 25% in 2003/04.
"While electricity demand growth remains strong, particularly in Queensland, TNSPs are investing heavily. Total transmission investment spending for 2006-07 was around $800 million, up from $540 million just four years ago. The investment will add to transmission capacity and reliability and is likely to temper the upward trend in the market impact of transmission over the next few years.
"The data in this and previous reports has been used to develop a new service standards incentive scheme for the transmission network businesses. The scheme will reward the businesses for improving transmission congestion outcomes through improved operational practices."
The report for 2006/07 and the proposed service standards incentive scheme will be available on the AER website.