Glossary

A gas access arrangement is required for every gas pipeline that is subject to regulation by the Australian Energy Regulator or the Economic Regulation Authority for Western Australian Pipelines. The access arrangements sets out charges, terms and conditions for access to gas pipelines and must be approved by the relevant regulation authority.

Services that ensure the reliability and safety of the electricity supply system. Electricity market operators purchase ancillary services to control frequency and maintain system voltage within precisely specified limits during sudden and unexpected changes in supply or demand, and to allow for ‘black start’ in the unlikely event of total system failure. Market rules allow users to provide ancillary services, but most of these services must be provided at extremely short notice (within seconds) or are otherwise beyond the capability of end users’ installations. The cost of ancillary services is passed to energy retailers by the market operator and recovered from end users through a component of their retail energy bills.

The maximum level of gas transmission capacity that Victorian network operators will supply without imposing penalties when there is high demand and it is necessary to inject additional gas into the system.

A base load generator provides power at a more-or-less constant output level to the electricity system outside of temporary shut down for maintenance. In Australia, brown or black coal generation plants provide base load power. Base load generation can be contrasted to flexible generation, typically hydro or gas-fired generation in Australia (although some coal plant capacity can perform this function) which varies in response to the level of demand. Base load generation can also be contrasted against intermittent generation, which is available only when the underlying renewable resource is available (e.g. when the wind is blowing). See also Intermittent Generation.

Facilities whose operation have a fundamental bearing on the financial position or reputation of the relevant business.

In the Western Australian Wholesale electricity market, capacity credits are tradable certificates that Market Customers must purchase to ensure there is sufficient capacity to meet their actual peak demand.

Refers to a situation where customers are legally entitled to choose their energy retailer.

A financial hedging arrangement, where two parties agree to trade a certain volume of a product for a set price. These parties do not physically exchange this product in the ‘hedge market’. The product is purchased in a separate ‘physical market’ (e.g. a wholesale electricity ‘spot market’). If the price is higher or lower than the agreed price, then the parties settle the difference between the ‘hedge contract’ and ‘physical market’ prices. See also Electricity Futures Contract and Spot Market.

An approach that seeks to align tariff prices with an estimate of actual costs attributed to particular tariff components. There is no uniformly accepted methodology for achieving this objective, although the National Electricity Rules and National Gas Rules specify general pricing principles for network service tariffs that reflect generally accepted attributes of the approach.

A mechanism where end users can benefit by changing their consumption in response to real-time electricity prices or short-term network constraints. Depending on how end users set up their demand-side response, it can provide them with additional revenue or a saving on their electricity bill that is substantially more than the cost of providing demand-side response.