Gas and electricity is provided to consumers via the distribution infrastructure. Electricity is distributed through overhead power lines and also via underground cables. Gas is distributed to end-users via underground pipelines.
The total length of Victorias electricity distribution lines is around 200,000 km. The gas reticulation pipeline network is around 25,000 km in length. The transmission networks feed high voltage electricity and high pressure gas into the lower voltage or lower pressure distribution lines.
There are five electricity distribution areas in Victoria Three areas encompass Melbourne and the inner suburbs, and two cover the outer suburban areas and regional Victoria. The price and quality of electricity distribution services are regulated by the Essential Services Commission (ESC).
There are three natural gas distribution areas across the State (although the natural gas network is not as extensive as the electricity network). The price and quality of gas distribution services are also regulated by the ESC. In June 2003, the Government commenced the Natural Gas Extension Program, an assistance program to extend the natural gas distribution network to unserviced rural and regional areas.
Maps of the gas and electricity distribution areas, and contact details for the distributors are available from Essential Services Commission.
Liquefied petroleum gas (LPG) is normally sold in bulk to large users and in cylinders to smaller users. There are currently several large suppliers of LPG and on account of the geographically dispersed nature of the market, many smaller suppliers of LPG. As LPG distribution does not have the same monopoly characteristics as either electricity or gas distribution, there is no significant economic regulation of this activity.
Electricity Generation and Consumption
Victorias 6,000 kilometre high-voltage electricity transmission system is owned and maintained by SPI AusNet. However, the transmission system is subject to the operational control of the Australian Energy Market Operator (AEMO), a state-owned market and system operator.
AEMO's role is to ensure the integrity of the system and to operate the National Electricity Market (NEM). This is a wholesale spot market covering the south-east of Australia, so that electricity is efficiently and reliably generated and transported to the point of consumption.
Transformers reduce the transmission voltage to allow it to be transmitted via lower voltage distribution networks. The majority of electricity transported in Victoria is from the brown coal generators in the Latrobe Valley to Melbourne, the largest demand centre in the state.
Victorias electricity transmission network is interconnected with South Australia, New South Wales, Tasmania and indirectly with Queensland. This allows the transportation of electricity from the states when electricity demand in Victoria is relatively high, or from Victoria when demand is relatively low.
The AEMO is responsible for planning for the Victorian electricity transmission system to ensure existing and expected demands are met. This excludes the transmission connection facilities that connect the distribution networks and the generators to the high voltage network. Proposals for the development of transmission connection facilities are typically undertaken by distribution companies and generators.
The majority of Victorias electricity requirements are supplied by brown coal generators in the Latrobe Valley. At current production rates, brown coal reserves are adequate to satisfy Victorias demand for several hundred years.
Other electricity supply comes from gas-fired generators and from renewable energy sources including hydro-electric, wind power, solar and biomass. Further information on Victoria's renewable energy resources can be obtained from the Sustainability Victoria.
Electricity can also be supplied to meet Victorian demand via transmission interconnectors with other States. In addition, demand can be reduced through agreements the State has with Alcoa and through privately negotiated contracts between energy retailers and large (mostly industrial) customers.
Although rare, power restrictions can be used to ensure continuity of supply in situations of supply emergencies.
Gas Production and Consumption
The majority of Victorias natural gas is sourced from the Gippsland Basin and is produced at the Longford processing plant. A growing amount of gas is supplied from other gas fields in the Gippsland, the Otway Basins, offshore from the Bass Coast area and interstate.
At projected consumption rates, Victorian natural gas reserves that are currently known are expected to meet demand for at least the next 15 to 30 years.
Further information on Victoria's natural gas reserves can be obtained from the Earth resources webpage.
Victoria consumed a total of 213 petajoules (PJ) of natural gas in 2006. Victoria has the highest rate of access to natural gas in Australia, with reticulated natural gas available in most Victorian cities and large towns. The Government is facilitating the expansion of the natural gas network to other regional and rural areas through the Natural Gas Extension Program.
Share of Victorian Gas Consumption by Sector - 2004
Consumption shares for natural gas by sector in Victoria as at 2004 are 34% for residential use, 34% for manufacturing, 11% for gas fired power generation, 11% for commercial use, 8% for mining, and the balance of 2% is used by transport and agriculture.
Victorias 1,900 km Principal Transmission System (PTS), covering Melbourne and central Victoria, is owned by GasNet and operated by AEMO. The majority of gas is supplied from the Longford facility in the Gippsland basin, with storage facilities that help meet demand during peak demand periods.
Victoria is also a net exporter of gas to other states via the gas transmission network.
As well as the PTS, other gas transmission networks in Victoria include the Eastern Gas Pipeline that transports natural gas from Longford to Sydney, the SEA Gas pipeline from Western Victoria to Adelaide, and the Longford - Tasmania Gas Pipeline.
AEMO is responsible for transmission planning in the Victorian gas market through its Annual Gas Planning Review. The information is provided to allow gas market participants to make informed decisions for their own planning and market strategies.
The Australian Energy Regulator (AER) is the economic regulator for Victorias electricity and gas transmission networks.
In the 1990s energy industry reforms led to the of privatisation of the government-owned monopoly. This introduced competition into Victoria's energy production and retailing market.
Victoria's energy retailers provide customers with their energy services. The retailers deal with energy producers, transmission and distribution companies, and provide a "bundled" service to their end consumers. There are approximately 2.2 million residential and small business customers that use electricity and around 1.5 million that use gas in Victoria.
Since the introduction of Full Retail Contestability in electricity and gas in 2002, all Victorian energy consumers have been able to choose their own retailer. More than half a million consumers have taken advantage of greater competition in the gas supply market since competition was first opened up. Almost one in three Victorian small energy consumers, or 750,000 households and small businesses, have now taken advantage of their right to choose their electricity retailer.