McHenry, M.P., Schultz, M. and O'Mara, K. (2011) Wholesale electricity markets and electricity networks: balancing supply reliability, technical governance, and market trading in the context of Western Australian energy disaggregation and marketisation. In: Acosta, M.J., (ed.) Advances in Energy Research, Vol 5. Nova Science Publishers, Hauppauge, New York, pp. 311-329.
Disaggregation and marketisation of government owned electricity utilities can deliver private sector confidence, investment, increased competition and reduce the reliance on distortionary taxpayer-funded subsidies. However, the transition from command and control to designed competitive electricity markets may be at odds with the physical realities of specific network infrastructure, network operator technical requirements, and a dominance of large generators or retailers. This work explores these transitional nuances in the context of the disaggregation of Western Australia’s (WA’s) electricity sector towards a Wholesale Electricity Market (WEM), including bilateral contracts, the WEMs Short Term Electricity Market (STEM), and the Balancing Market (BM) operating within the largest WA network, the South West Interconnected System (SWIS). While market-based instruments offer a range of flexible designs to policymakers, this work primarily focuses on the how these market mechanisms are progressing from the perspective of ensuring supply reliability, participant certainty, and good governance in the continued expansion of the electricity supply system.