Some electricity links
The Australia Institute has a report out making the point that the growth in the administrative and marketing costs of electricity companies, following the reforms of the 1990s, has added more to electricity prices than has the carbon price.
Also, the Centre for Policy Development has a nice piece on solar PV coming out soon. Look for it.
Finally, here’s a piece I wrote for the The Economic and Labour Relations Review in 2001. Conclusion over the fold. I think it stacks up pretty well, certainly compared to the gushing praise for reform that was commonplace at the time.
The National Electricity Market is still developing. Some problems that have emerged in the early stages such as the disparity between the substantial price reductions for large customers and the largely unchanged prices paid by households will fade away as the market matures. Other issues such as the structure of the industry and the degree of horizontal and vertical integration will be resolved by a mixture of market processes and regulatory interventions.
Some problems, however, are likely to become more rather than less acute. The Australian National Electricity Market commenced operation in a period of oversupply so that problems of market power and excessive prices have not emerged until recently. It remains unclear whether an electricity auction market can produce adequate incentives for investment while generating appropriate prices for consumers.
Similar problems are emerging in relation to the regulated monopoly component of the industry, the transmission and distribution sector. Regulators must set prices that do not reward inefficiency or allow monopoly profits, but nevertheless provide appropriate incentives for new investment. This is a delicate balance.
In the longer term, the problem of the environmental impact of an industry relying predominantly on carbon-based fuels remains to be addressed. A market solution would involve the creation of emissions credits that could be traded along with electricity in national markets. Although limited steps have been taken in this direction, much remains to be done.
Quiggin, j.Market-oriented reform in the Australian electricity industry, The Economic and Labour Relations Review in 2001, 12 (1), 126-150