Want electricity reform? Start by giving power back to the states

Bruce Mountain: Electricity reform begins
by giving power back to the states.

In 1999, Australians were paying some of the lowest electricity prices in the world. Now they are among the highest. What went wrong?

Back then, the electricity network in the southern and eastern states of Australia had just been reformed to create a regional wholesale market, called the National Electricity Market. 

Some states – Victoria and then South Australia – privatised their industry. All states then progressively deregulated their retail electricity markets, and transferred the regulation of their remaining network monopolies to two quasi-federal regulatory agencies, the Australian Energy Regulator and the Australian Energy Markets Commission.

These reforms replaced the state governments’ electricity commissions – derided by some as Soviet-style relics – with what was purported to be a dynamic new arrangement of competition and private risk-taking.

The reforms were bolstered by reports by the Industry Commission (now the Productivity Commission) predicting that even though electricity prices were already low, they would fall further as the pressure of competition drove the industry to become more efficient and customer-focused.

Read the piece on The Conversation by the Director of Carbon and Energy Markets at the Victoria University, Bruce Mountain - “Want electricity reform? Start by giving power back to the states.”