Australia's National Electricity Market after Twenty Years. (1st December 2019)

• Record Type: Journal Article
• Authors: Rai, Alan; Nelson, Tim
• Is Part Of: Australian economic review. Volume 53:Number 2(2020:Jun.)
• Page Start: 165
• Page End: 182
• Publication Date: 2019-12-01
• Subjects: Economics -- Periodicals; Australia -- Economic conditions -- Periodicals; Australia -- Economic policy -- Periodicals; Australia -- Economic conditions -- 1945-; Économie politique -- Périodiques; Australie -- Conditions économiques -- Périodiques; Australie -- Politique économique -- Périodiques; Australie -- Conditions économiques -- 1945- -- Périodiques; 330.994005
• DOI: 10.1111/1467-8462.12359
• Languages: English
• ISSNs: 0004-9018

Abstract

Abstract: The Hilmer reforms served electricity consumers well over the first post‐reform decade. However, three key issues emerged from the mid‐2000s: (i) a significant and largely unnecessary rise in network expenditures; (ii) emissions policy discontinuity; and (iii) a large increase in wholesale prices due to rising fuel prices and the sudden exit of generators. The consequence was a doubling in retail prices. Deficiencies in cost‐recovery mechanisms have meant price increases have disproportionately affected low‐income households. We propose three key reforms as rectification: (i) integrating emissions reduction and energy policies; (ii) boosting network capacity utilisation; and (iii) improving cost recovery mechanisms.