Electricity Articles
On 20 January 2009, the NSW Treasurer Eric Roozendaal and Energy Minister Ian Macdonald announced that the March 2009 roll-off of the Electricity Tariff Equalisation Fund (ETEF) has been deferred until 27 September 2009. This is the second time in six months that ETEF has been deferred.
ETEF commenced operation on 1 January 2001, and its goal is essentially to mitigate the cost to state-owned electricity retailers of having to perform a social duty. Prior to ETEF, NSW had vesting contracts between generators and retailers, which were agreements to supply electricity at a fixed price to ‘non-contestable’ customers who were on a fixed tariff.
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On 1 July 2009, the NSW Energy Savings Scheme (ESS) commences operation. Formerly known as the NSW Energy Efficiency Target (NEET), the new scheme will run in parallel to the Federal Government’s Carbon Pollution Reduction Scheme (CPRS). The existing NSW Greenhouse Gas Reduction Scheme (GGAS) covers demand side abatement, however GGAS will be phased out at the beginning of CPRS. The Energy Savings Scheme continues coverage of demand side abatement in parallel with CPRS.
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The Australian Federal Government’s Carbon Pollution Reduction Scheme (CPRS) is currently scheduled to begin on 1st July, 2011. Originally slated for 1st July 2010, the scheme was delayed on 4th May 2009, along with a number of other changes.
On 15th December 2008, the Federal Government released the CPRS white paper, and on 10 March, 2009 posted the draft legislation.
Matt Zema, former CEO of VENCorp has been appointed the CEO of the Australian Energy Market Operator (AEMO). Commencing operations on 1 July 2009, the AEMO takes over the roles of NEMMCO, VENCorp, the Electricity Supply Industry Planning Council (ESIPC), the Retail Energy Market Company (REMCO), the Gas Market Company (GMC) and the Gas Retail Market Operator (GRMO). Brian Spalding, current CEO of NEMMCO, becomes the AEMO’s head of Operations.
TTA is a Bronze sponsor at this year’s Energy Risk & Trading Conference to be held at the Sydney Harbour Marriot in Sydney from the 24th to the 26th of October 2006. TTA’s Chief Quantitative Analyst, Dr. Alex Radchik will be presenting a research paper outlining an elegant model for the credit adjustment of Electricity Swaps. Extensive study by TTA has uncovered pitfalls in current methodologies and TTA proposes some simple remedies. For a full copy of the presentation please contact TTA.
Before starting the discussion on the advantages or disadvantages of various modelling approaches in the Australian electricity market, let’s make a philosophical intermission. What should be the purpose of mathematical modelling? There is another, rather unrelated question to ask: why is there no Nobel Prize in Mathematics when even lifetime enemies may win a Noble Peace Prize?
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It is the Year 2020. Just one week ago Bob Carr Junior abolished the Electricity Tariff Equalisation Fund (ETEF). All technically developed nations (including Zimbabwe and Ukraine) have signed the Basel V International Accord establishing regulatory capital rules for energy producers and traders. Those who do not comply are not allowed to deliver energy to their customers or trade on the spot market and NEMMCO is forced to wipe them out of their dispatch software. (more…)
Recently, global financial markets have witnessed a rapid escalation in the popularity and the trading of weather derivatives. These derivatives are predominantly temperature-based but can include derivatives written against other weather phenomena such as precipitation, wind, frost and snowfall.
The weather derivative market in the U.S. has grown from around US$500 million in 1998 to over US$ 12 billion in 2003, and is still growing. Such growth has been attributed to the deregulation of energy markets and the significant effect that weather risk has on the volatility of revenue generated by a large number of companies. Significantly, these companies include electricity generators and retailers. Indeed, the weather derivative market in the U.S. was stimulated by the mild winters of 1997 and 1998, the consequence of the ‘El-Nino’ phenomenon. The associated potential for corporate earnings decline signalled the need for a hedge against abnormal weather behaviour.
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