Economics Assignment on Australian Energy Market, Environmental Policy and Pricing Strategies

0Running head: ECONOMICS ASSIGNMENT
Economics Assignment
Name of the Student
Name of the University
Author note

1ECONOMICS ASSIGNMENT
Table of Contents
Answer1...........................................................................................................................................2
A..................................................................................................................................................2
B...................................................................................................................................................3
Answer 2..........................................................................................................................................3
A..................................................................................................................................................4
B...................................................................................................................................................5
C...................................................................................................................................................5
Answer3...........................................................................................................................................6
A..................................................................................................................................................6
B...................................................................................................................................................6
C...................................................................................................................................................7

2ECONOMICS ASSIGNMENT
Answer1.
A. The Australian Energy Market Operator operates Australia’s gas and energy markets
which also consist of the two types of market, one is National Electricity Market and the other is
Wholesale Electricity Market. The Council of Australian Governments were behind the creation
of The Australian Energy Market and was developed under the guidance of Ministerial Council
of Energy. Energy is bought and sold in the National Energy Market which is a wholesale
market is a wholesale market which supplies electricity to the retailers in Queensland, Victoria,
New South Wales an d the other parts of Australia( Australian Energy Market Operator, 2018).
The National Energy Market The retailer then usually buys energy from NEM and the consumers
then buy it from them (Burby et al., 2013). When the demand for energy will be high then the
market price for energy will subsequently go up. The grid though transport energy it does not
store it. It has been noted that when Australia experiences extreme hot weather, there can be a
result of strain on the grid and there had been a setting up of AEMO for this reason (McConnell,
Forcey & Sandiford, 2015). The electricity generators each day usually bids to AEMO. The
dispatching process of this kind turns out to be one of the most effective generation mix. The
Australian Energy Market operator started its operations on 1st July 2009. Establishment of
Short Term Trading Market for Gas is responsible for AEMO.

3ECONOMICS ASSIGNMENT
Figure 1: Wholesale price of electricity and gas
(Source: Council &Whitlock, 2018)
B. The energy price in Australia usually tends to rise when the demand. The prices of
electricity can hamper the Australian business which is also a leading affecting the politicians
and business. The power system of National Energy Market is the longest interconnected power
system. It runs from Port Douglas in Queensland to Port Uncoln (Australian Energy Market
Operator, 2018). As storing electricity for future use is not possible, therefore there is dynamic
variation in demand. Providing genuine infrastructure to the wholesale market is one of the main
objective of Australian Energy Market Operator. The wholesale electricity market is the power
system in Western Australia (McConnell et al., 2013). The trading in wholesale electricity is
known as spot market real time demand and supply instantly matches through a centrally
coordinated dispatch process. By the year 2005, National Electricity of Laws and Rules replaced
the National Electricity code.
Answer 2. Market failure arises when there will be absence of efficient distribution of
services and also goods in the free market. Market failure also leads to net loss in social welfare