AERE Reading Group: Alan Rai (Australian Energy Market Commission)
The School of Economics invites you to a AERE Reading Group seminar by Alan Rai (Australian Energy Market Commission).
Australia’s National Electricity Market after twenty years
The Hilmer reforms introduced competition into electricity generation and retailing, with the natural monopoly elements economically regulated and structurally separated. For the first decade post reform, these reforms served consumers well. However, three key issues emerged from the early 2010s: (i) a significant and largely unnecessary rise in network expenditures; (ii) emissions policy discontinuity; and (iii) a large increase in wholesale prices from the confluence of rising fuel prices and unexpected and sudden exits of generators.
The consequence was a doubling in retail prices. Also, deficiencies in cost recovery mechanisms have meant price increases have disproportionately affected low-income customers. We propose three key reforms as rectification: (i) integrating emissions reduction and energy policies; (ii) measures to boost network capacity utilisation;