The report commissioned by the Victorian branch of the Electrical Trades Union, written by Professor John Quiggen, suggests that privatisation within the National Electricity Market has failed to deliver benefits to customers finding that prices have not been kept down by market forces.

Members from the UQ Energy Economics and Management Group would agree with some of his findings but not all.  We have found that retail allowances, after privatisation, have increased over the last few years but heavily regulated network companies in NSW and QLD which are not subject to competitive forces have benefited from enormous network investment allowances and tariff increases sanctioned by the Australian Energy Regulator. Network and retail allowances have more than doubled since 2007.

The graphs below have been painstakingly constructed from thousands of report pages from a variety of regulatory bodies, none of which seek to provide a clear picture for consumers.

 Figure 1

Figure 2

This lack of transparency is perhaps the greatest failure of the regulatory regime since the National Electricity Market reforms more than a decade ago. Finding out prices and how regulatory prices have been set, is enormously time consuming when faced with the opacity of reports from the regulatory bodies.  In the case of Victoria, because of the total privatisation of their electricity system there is no guidance as to how prices have been set.  So, for a state with the lowest cost of generating power and the smallest distribution network, the indicative prices provided by the Australian Energy Market Commission (AEMC) indicate that Victorian electricity prices are higher than the average. Without details though, it is only possible to do little more than surmise why Victorian prices are so high.

Figure 3

In working through the documentation available from the Australian Energy Regulator, the Australian Energy Market Commission, the Queensland Competition Authority, New South Wales’ Independent Pricing and Regulatory Tribunal and the Victorian Essential Services Commission to seek out the detail, it appears to us that it is the regulatory bodies that have failed, not necessarily the privatisation process.

Despite falling demand, distribution companies have ratcheted up very attractive profits for cash-strapped state governments. 

Figure 4

Needless to say, state governments have been silent on the matter of distribution profits whilst noisily denouncing the costs of renewable energy. Perhaps it is regulatory bodies that we should be blaming, not privatisation.

Delivering a competitive Australian power system

Due to its reliance on fossil fuel, Australia's power system is now among the least resilient of its global competitors. The three part series, "Delivering a competitive Australian power system" seeks to address this issue.

This paper, the final in a three part series examining the competitiveness of Australia’s power system, seeks to identify a pragmatic strategy to transition Australia to a resilient power economy at reasonable cost and in an age of uncertainty. The resilience of a country’s power economy refers to its ability to meet power requirements while withstanding supply shocks and environmental constraints. For a country’s power economy to be competitive, it must be both affordable and resilient.

Delivering a competitive Australian power system Part 3: A better way to competitive power in 2030 Full Report (3 Mb)

Delivering a competitive Australian power system Part 2: The challenges, the scenarios Full Report (4 Mb)

Delivering a competitive Australian power system Part 1: Australia’s Global Position Full Report (16 Mb)

Media: For more information, contact Louise West, Manager, Marketing and International Relations: Email: louise.west@uq.edu.au Phone: (07) 336 54482, Professor John Foster, EEMG Director, Email: J.Foster@uq.edu.au, Lynette Molyneaux L.Molyneaux@uq.edu.au