September 2010

In 1998 Queensland Electricity customers exceeding 40GWH were given the opportunity to enter the National Electricity Market (NEM). This meant these customers could investigate opportunities in obtaining better energy charges as an alternative to Franchise Tariff Rates as gazetted by the Queensland Government.

Tariff equalisation policy operates in Queensland. This means similar customers will pay the same Notified Prices whether they are in Brisbane or Mt Isa.

Notified Prices are controlled and Gazetted by QLD Government. These are generally reviewed annually. Network Charges and Energy Charges are bundled together to form a Tariff Rate.

Queensland customers do however have the option to enter the NEM and take advantage of any cheaper energy costs if available in the NEM or stay on Notified Prices. Since the market opening in Qld all customers now have the opportunity to choose Contestability or stay on Safety Net Notified Prices.

Electricity markets have deregulated

Functions of generation, distribution and retail have been

separated

Electricity is now a commodity bought and sold like any other

Retailer may change each year with contracts but the

Network provider remains the same.

Franchise or notified priced customer’s new gazetted tariff

rates are published on the 1st July every year. This is a

Government determination.

GeneratorGeneratorRetailerRetailerYOUR YOUR BUSINESSBUSINESS

Distribution Distribution NetworkNetwork

Transmission Transmission GridGrid

PowerlinkPowerlinkCustomerCustomer Ergon Ergon

Energy Energy NetworkNetwork(EECL)(EECL)

CS EnergyCS Energy

StanwellStanwell

Tarong EnergyTarong EnergyEnertradeEnertradeOriginOriginIntergenIntergen

Ergon Ergon Energy Energy (EEQ)(EEQ)

EEQL is the Host Retailer for all EECL Notified Prices Customers still with EECL.

EEQL is still responsible for energy sales and associated services (Retail Franchise Tariffs, Green Credits, Green energy etc) to customers Connected to EECL.

As per Section 92 of the Electricity Regulations eligible customers may elect to stay on the safety net Notified Price structure or choose to become a Contestable customer. Except for those Small Customers consuming below 100MWh's/year, once a site is Contestable the site cannot elect to return to safety net Notified Price rates (See Regulations for details).

For Customers who have chosen to take up a Market Contract and go Contestable (Small Customers consuming less than 100MWh's/year) who then choose to revert back to a Non Market Contract they must remain with their current Retailer who are obliged to offer equivalent rates similar to Notified Price rates.

Should an eligible customer elect to become a Contestable Customer the customer will need to ensure Rules compliant metering is installed and an Electricity Retail Sales Contract is in place. This can be arranged through the Customer’s Retailer of Choice.

WholesaleMarket

RetailMarket

Pool

Retailer

Hedge $

Bill $

Energy $

Energy $ Pool $

Pool $

Connection $

Grid $

Network $

Generation

TransmissionGrid

DistributionNetwork

Retail Customer

Energy kWh

Energy kWh

Energy kWh

Overview of Market Structure

7

Markets ◦ Physical Spot market

Prices set every five minutes - settled on half hourly average basis.

◦ Contract Market Wholesale Market where ‘hedge’ contracts are

taken out to protect participants (users) from pool price volatility.

Standard hedges for future periods are available, which are reflected in the Australian Financial Markets Association (AFMA) daily published rates.

WholesaleMarket

RetailMarket

Pool

Retailer

Hedge $

Bill $

Energy $

Energy $ Pool $

Pool $

Connection $

Grid $

Network $

Generation

TransmissionGrid

DistributionNetwork

Retail Customer

Energy kWh

Energy kWh

Energy kWh

Overview Of Market Structure

SpotMarket

WholesaleMarket

RetailMarket

Pool

Retailer

Hedge $

Bill $

Energy $

Energy $ Pool $

Pool $

Connection $

Grid $

Network $

Generation

TransmissionGrid

DistributionNetwork

Retail Customer

Energy kWh

Energy kWh

Energy kWh

Overview Of Market Structure

ContractMarket

Understand market entry requirements Nominate your Company representative Review past electricity use data and provide forecast

future use data Identify any changes in future electricity usage Detail your electricity use patterns Conduct a review of your published tariff based price Engage Energy Consultant Tender for a competitive market price which best suits

your needs Compare your published tariff-based price with our

competitive market price Energy consultant delivers options Decide if it is more beneficial for your business to stay on

tariff-based pricing or move into the competitive market