Australia's Power Deregulation Experience

Australia's Power Deregulation Experience

By
Steven Callander, Jeffrey Conn, Hencye Sights
2018|Case No.P96| Length 31 pgs.

This note examines the economic and political impact of the Australian government’s deregulation and climate change policies, as well as a slew of additional corresponding market factors, on Australia’s energy and electricity markets. Since the Australian government began its concerted effort to deregulate the power generation industry in the 1990s, prices for electricity and natural gas have risen significantly faster than either automotive fuel or the broader Australian consumer price index. As a result, Australia’s energy and electricity markets and the government’s intervention (or lack thereof) in these markets have become an extremely important and divisive political issue for the country.

Learning Objective

Learning objectives include developing a greater understanding for how non-market players such as regulators can significantly influence market behaviors, how companies’ rational response to regulatory incentives can lead to dysfunctional markets, how appealing long term policy goals can lead to potentially damaging short term political consequences, and how political analysis can play a key role in determining appropriate strategic action.

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