Victoria has lead the way in the establishment of the National Electricity Market. In October 1994 the Victorian Government announced the introduction of a competitive electricity market administered by VPX, the Victorian Power Exchange. The Victorian market has since been superceded by the National Electricity Market.
The National Electricity Market (NEM) was established in May 1996. The National Electricity Code Administrator (NECA) administers the Electricity Code. The National Electricity Market Management Company ( NEMMCO) is responsible for managing the National Electricity Market.
A key feature of the competitive market is that customers have a choice
of energy retailer. Customer choice of electricity supplier is known as
contestability. The dates for entry into the competitive market are shown
below.
| Customer
Size |
ACT | NSW | Queensland | SA | Victoria |
| Above 5 MW
or 40 GWh per annum |
October 1997 | October 1996 | January 1998 | - | December 1994 |
| Above 1 MW
or 4 GWh per annum |
March 1998 | April 1997 | October 1998 | Market start | July 1995 |
| Above 750 MWh per annum | May 1998 | July 1997 | - | 6 mths after
market start |
July 1996 |
| Above 160 MWh per annum | July 1998 | July 1998 | July 1999 | January 2000 | July 1998 |
| All customers | July 1999 | January 2001 | January 2001 | January 2003 | January 2001 |
Contestable customers can also buy electricity at the spot price from the electricity pool but the pool is nearly exclusively used by the generators and retailers. A spot price for wholesale electricity is calculated for each half hour period during the day and is the clearing price to match supply and demand. Generators and retailers also trade in financial instruments known as hedge contracts outside the pool to hedge the fluctuations in spot prices.
Contestable customers who buy their electricity from a retailer other than the "host" retailer, the retailer to whose network they are connected have "smart" meters which register and store half hourly electricity readings.
Electricity costs now consist of unregulated
energy charges and regulated network charges.
NECA: http://www.neca.com.au
NEMMCO: http://www.nemmco.com.au