From First Place to Last: The National Electricity Market's Policy-Induced 'Energy Market Death Spiral'

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Simshauser, Paul
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2014
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Microeconomic reforms that established Australia's National Electricity Market during the 1990s were extensive. State-owned electricity commissions were vertically and horizontally restructured and many of the restructured businesses were privatised. A mandatory gross pool market was established to facilitate competition amongst generators and retailers and quickly became one of the best-performing wholesale electricity markets in the world. Networks remain regulated under unresponsive 5-year rate cases with flat-rate tariffs persisting, while inflexible 'subsidy schemes' proliferated and forced generation plant entry into an already-oversupplied market. End-use electricity tariffs have since doubled. Misguided and overlapping policy failures are primary causes.

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The Australian Economic Review

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47

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4

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© 2014 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research. This is the peer reviewed version of the following article: From First Place to Last: The National Electricity Market's Policy-Induced 'Energy Market Death Spiral', Australian Economic Review, Vol. 47 (4), 99. 540-562, 2014 which has been published in final form at http://dx.doi.org/10.1111/1467-8462.12091. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving (http://olabout.wiley.com/WileyCDA/Section/id-828039.html)

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Economics

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