Lessons from Australia's National Electricity Market 1998-2018: strengths and weaknesses of the reform experience

Simshauser, Paul

doi:10.4337/9781788979955.00015

Cited by 4 publications

(2 citation statements)

References 54 publications

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“…What's more, any capital invested by a network company over and above the 5-year regulatory allowance could be automatically rolled into the RAB at the next regulatory reset without any prudency or efficiency review (Simshauser, 2019, p. 25). In this sense, Simshauser (2019) argues that the more fundamental institutional reason behind the escalating network cost may lie in the de jure but not de facto regulatory independence of AER, resulting in the absence of any regulatory threat to electric distribution companies.…”

Section: Source：productivity Commission Ofmentioning

confidence: 99%

Catch-up effects and incentive effects: Evidence from regulatory reform in Australian electric distribution utilities

Li,

Yin,

Kopsakangas-Savolainen

2024

Preprint

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Theoretically, incentive regulation should induce all regulated companies to reduce costs by making them residual claimants. In particular, it should stimulate relatively lower performance companies to cut more costs by an additional "stretch factor" (differentiated efficiency improvement target). This study terms the first as incentive effects and the second as catch-up effects. Using panel data from Australian electric distribution companies, the study aims to identify whether these two effects exist and assess the outcomes of the regulatory reform implemented in 2012. To achieve this, the paper adopts convergence indexes developed by Horta & Camanho (2015) and Camanho et al. (2023), substituting their DEA-based framework with the StoNEZD framework. The newly proposed convergence indexes account for environmental heterogeneity and stochastic error, reflecting purely performance changes due to management efforts in daily operations. Empirical results confirm the existence of both effects, implying that the 2012 reform has produced the expected results. JEL classification C13 · C14 · L51 · L94

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Section: Source：productivity Commission Ofmentioning

confidence: 99%

Catch-up effects and incentive effects: Evidence from regulatory reform in Australian electric distribution utilities

Li,

Yin,

Kopsakangas-Savolainen

2024

Preprint

View full text Add to dashboard Cite

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“…There is considerable evidence that the NEM has performed well, with a very high market price cap (currently at A$15,100/MWh) ensuring that the missing‐money problem that prevailed in many electricity markets around the world did not manifest itself in the NEM. For example, Simshauser (2019c, p. 1) concludes that:…”

Section: Introductionmentioning

confidence: 99%

Market‐Wide Impact of Renewables on Electricity Prices in Australia*

Gonçalves

Menezes

2021

Economic Record

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This paper estimates the market‐wide impact of utility‐scale renewables on Australia's National Electricity Market (NEM) wholesale prices from 2009 to 2020. The goal is to understand the medium‐run impact of renewable generation, as opposed to the short‐run impact of weather‐driven changes in renewable output. The focus is, therefore, on the relationship between renewable generation (and its growth) and wholesale prices over a long period of time. In particular, we exploit the half‐hourly nature of wholesale price setting in the NEM to uncover the impact of solar and wind daily production on the distribution of prices throughout the day. In contrast to the merit‐order effect literature, which focuses on the short‐run (contemporaneous) impact of renewables, our results suggest that the total daily solar production has a positive, although not always significant, impact on wholesale prices throughout the day during an early development stage of solar generation. For a more recent period, following a substantive increase in utility‐scale solar generation, the results are more in line with the merit‐order effect literature with total daily solar production reducing wholesale prices for most of the day. This impact, however, is of several orders of magnitude lower than that predicted in the literature. We also show that the daily production of wind has a small negative impact on wholesale prices for most of the day, throughout the entire period of analysis.

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The Challenge of Climate Change—Complete Energy Systems Transformation: No Nuclear, No Net Zero

Stone

2022

Nuclear Law

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To achieve Net Zero, natural gas, gasoline, diesel, and fuel oils must be replaced with another source. However, most of the current low-carbon energy sources will also need to be replaced as almost none have more than about 25 years remaining of useful life. The pace and scale of the needed change is unprecedented: almost the whole of the world’s primary energy supply must be replaced. The (re)development of the entire energy system is inherently a sovereign risk and it can only be governments who set national energy policy. There is no doubt that markets will continue to play a part in future energy systems, but at the top level, the pace and scale of change to achieve Net Zero is simply far too fast for markets to adapt properly. This chapter is a call to action to the national policy makers and presents this challenge as an opportunity for creating higher-quality jobs and potentially highly attractive and long-dated investment options. The chapter also outlines some risks, including political indecisiveness and policy volatility as potential impediments to making the most of this opportunity and achieving the Net Zero.

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Lessons from Australia's National Electricity Market 1998-2018: strengths and weaknesses of the reform experience

Cited by 4 publications

References 54 publications

Catch-up effects and incentive effects: Evidence from regulatory reform in Australian electric distribution utilities

Catch-up effects and incentive effects: Evidence from regulatory reform in Australian electric distribution utilities

Market‐Wide Impact of Renewables on Electricity Prices in Australia*

The Challenge of Climate Change—Complete Energy Systems Transformation: No Nuclear, No Net Zero

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