A huge amount of generation will be built in the national electricity market in the coming years, taking the place of ageing coal-fired power. With more generators seeking to connect, the transmission network is expected to become increasingly congested.

To help deliver the right amount of new transmission infrastructure to meet future network needs, while keeping costs to consumers as low as possible, the AEMC has proposed reforms to the framework for transmission network and charging. Our review on Coordination of generation and transmission investment –access and charging includes:

  • reforms to the way generators access and use the transmission network
  • a review of the charging arrangements which enable transmission businesses to recover the costs of building and maintaining transmission infrastructure, both within and between regions.

Dynamic regional pricing is one possible reform to how generators access and use transmission infrastructure. It is a different way to settle the market when transmission congestion arises.

This presentation by Tom Walker, Senior Economist, gives a high level overview of what dynamic regional pricing is, and how it addresses congestion problems in the market.