Simshauser and Whish-Wilson (2017) examined the restructured Victorian retail electricity market and found it to be efficient as the marginal unit produced was sold at marginal cost. This article extends their analysis of price dispersion by considering the heterogeneous nature of electricity consumption when measured by volume sold (kWh). We find that customers on 'standing offer' tariffs use 18% less electricity than customers on 'high discount' products, indicating the presence of market segmentation and implicit second-degree price discrimination. Climate change policy and the emergence of new technologies such as household solar PV, battery storage and home energy management systems will create further price dispersion in Australian electricity markets due to even greater product heterogeneity. We contend that policy makers will need to facilitate, rather than prevent, both price and tariff structure dispersion with the objective of improving consumer outcomes.
The drivers of energy-related financial hardship in Australiaunderstanding the role of income, consumption and housing Saunders and Bedford (2017) demonstrated that income levels are inadequate for some Australian households to maintain a basic standard of living. Analysing utility bills can extend this consideration of income adequacy issues given the essential nature of services such as electricity, telephony and water. This article builds on the work presented by Simshauser and Nelson (2014) about key demographic cohorts in Australia that have a high incidence of energy-related financial hardship. Our analysis indicates that energy related financial hardship is likely to be related to a combination of the following: family formation demographics; low-income (often reliant upon government income support); higher household size; and higher than average consumption. Our policy recommendations are relatively straightforward: development of tools to allow easier 'shopping around' by energy customers; cessation of credit-checking by energy retailers as a means of restricting access to energy offers; reform of state-based concessions frameworks; a lifting of income support for some key cohorts (e.g. unemployed); improvements to energy-efficiency standards; and amendments to tenancy laws to overcome potential principal-agent issues associated with uptake of new products and services such as embedded solar PV and battery storage.
The electricity supply industry has historically offered a homogenous good supplied via economically regulated transmission and distribution networks. Competition was introduced into the contestable generation and retail supply chain components as part of the 1990s Hilmer reform process. After a century of incremental technological developments, the industry is now being transformed by new distributed energy technologies and a global focus on reducing anthropogenic greenhouse gas emissions. Policy-makers did not anticipate these changes. A number of key reforms are likely to be required. These include: assessing whether the return on capital provided to network operators is appropriate given changing economic conditions; determining the role of competition in the provision of "behind the meter" energy services; and integration of climate change policy with wholesale energy market design.
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