Keynote: A new wholesale electricity market for Western Australia

An electricity market to serve the south west of Western Australia is scheduled to commence in July 2006. A new industry structure and arrangements for electricity trading have been under development for the last few years. With the 4000 MW south west system relatively small compared to other power systems, and isolated by distance from the much larger power system of eastern and southern Australia, there has been substantial effort to ensure that the market design addresses these constraints and is workable. The incumbent state government owned utility, Western Power Corporation, currently dominates electricity trading but is scheduled in April 2006 to be split into four entities: ´state networks´, ´state generation´, and ´state retail´. The successor entities will remain, for the meantime, government owned. The market will be based on bilateral trading and will also have separate energy and capacity trading mechanisms. The proposed market design illustrates, in the context of a small isolated power system, the need to gradually introduce competition to mitigate the risk of market failure and interruption to supply