We began our first review of the Wholesale Electricity Market (WEM) in 2007, a little under a year after the WEM came into operation. We reviewed a range of market data and analysis provided by the Independent Market Operator (IMO). We noted that:
- since the WEM commenced, new participants entered the market, bringing about a fall in the share of capacity in the WEM that is provided by Verve Energy from around 90 per cent to around 60 per cent over the years to 2009/10
- despite Verve Energy currently accounting for the overwhelming majority of capacity in the WEM, other Market Participants have been active in the short term energy market (STEM) since commencement of the WEM
- with the entry of new generation facilities operated by Market Participants other than Verve Energy over the next few years, there will be a broader range of Market Participants scheduling bilateral quantities and participating in the STEM
- outcomes indicate that prices tended to decline and become less volatile in both the STEM and the balancing market
- outcomes indicate that prices in the STEM and the balancing market have provided useful signals to Market Participants, with prices responding to scarcity in the market.
The 2007 review also included the first of a triennial review we undertake looking at the extent to which the market objectives set out in the Electricity Industry Act 2004 have been, or are being, achieved.
Our discussion paper was published in August 2007 and we received 12 submissions from the public. Our report was delivered to the Minister for Energy where it was tabled in Parliament on 19 March 2008.