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On the impact of targeted and universal electricity concessions policy on fuel poverty in the NEM's Queensland region

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  • Simshauser, Paul
  • Miller, Wendy

Abstract

In Australia's National Electricity Market (NEM), households have faced markedly higher electricity prices following the 2022 war in Ukraine and subsequent energy crisis. Forward prices for coal and gas increased sharply, trading at multiples of historic averages. While initially sheltered to wholesale price shocks through regulatory lag, retail electricity tariffs rose by more than 30 % for the 2024 financial year. Impacts of this magnitude warrant adjustment to hardship policy given electricity is an essential service. In the NEM's Queensland region, hardship policy payments for vulnerable households were more than doubled, and a one-off universal payment was made to all households. In this article, we model the number of households that meet a definition of fuel poverty before, and after, the tariff increases and changes to policy. We find the underlying levels of fuel poverty rose from 6.2 % to 11.6 % over the period 2022 to 2023. From a horizontal and vertical policy efficiency perspective, the suite of policy initiatives improve outcomes with the headline result being a material reduction in fuel poverty, falling from 11.6 % to 5.4 % of households.

Suggested Citation

  • Simshauser, Paul & Miller, Wendy, 2023. "On the impact of targeted and universal electricity concessions policy on fuel poverty in the NEM's Queensland region," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1848-1857.
    • Handle: RePEc:eee:ecanpo:v:80:y:2023:i:c:p:1848-1857
    DOI: 10.1016/j.eap.2023.11.015
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    More about this item

    Keywords

    Fuel poverty; Electricity tariffs; Targeting efficiency;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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