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The sorry state of WA’s electricity market reform

McHugh, A. (2012) The sorry state of WA’s electricity market reform. The Conversation, 30 October .

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It should have led to lower electricity prices; that was the theory at least. But the 2006 disaggregation of Western Australia’s vertically-integrated electricity utility, Western Power Corporation, into four separate state-owned entities – Verve Energy (generation), Western Power (networks), Synergy (retail sales) and Horizon Power (the state’s regional power supply entity) – has not met the expectations of the policy pundits who pushed for the reform.

The disaggregation of Western Power was expected to lead to increased efficiency due to the introduction of competition, which would in turn bring about lower electricity prices. However this has not transpired. Rather, between 2008 and 2012, retail electricity prices for households connected to the Western Power Network in the south west of the state rose by 48%, and this does not even include the comparatively small (and mostly compensated for) impact of the carbon tax.

On the surface, it was almost a direct application of text-book economics: full disaggregation, creation of an independent regulator and a Ministerial Direction which put a 3000 MW cap on the generation capacity of Verve Energy.

Item Type: Non-refereed Article
Murdoch Affiliation(s): School of Engineering and Energy
Publisher: The Conversation Media Group
Copyright: The Author
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