The Gains from the Microeconomic Reform of the Power Generation Industry in East-Coast Australia

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The Gains from the Microeconomic Reform of the Power Generation Industry in East-Coast Australia

Author Info

Simhauser, Paul (NewGen Power, Riverside Centre, Brisbane QLD 4000)

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Paul Edward Simshauser

Abstract

Power generators in the east-Australian states of Queensland, New South Wales and Victoria comprise the dominant part of a 40,000 MW power system and operate at world benchmark efficient levels. But it has not always seem this way. During the late 1980s, the states were grossly over-supplied and the cost structure of the generation sector was spiralling out of control. Microeconomic reform has since corrected pricing practices and capital allocation. But electricity reforms need to be carefully orchestrated. While gains in productive and allocative efficiency will invariably occur, dynamic efficiency gains are harder to achieve. Inadequate restructuring or a supply-demand imbalance at the start of reforms may result in high prices, which in turn can drive an excess entry result, following which emerge systemic faults in signalling for new plant. Poor starting blocks can set off a chain reaction of events which may take a power system more than a decade to recover from.

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Publisher Info
Article provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).

Volume (Year): 35 (2005)
Issue (Month): 1-2 (March/September)
Pages: 23-43
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Handle: RePEc:eap:articl:v:35:y:2005:i:1-2:p:23-43

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Keywords: Electricity;

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Find related papers by JEL classification:
L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

A. Michael Spence, 1977. "Entry, Capacity, Investment and Oligopolistic Pricing," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 534-544, Autumn. [Downloadable!] (restricted)
Simshauser, Paul, 2001. "Excess Entry in the Deregulated Queensland Power Market," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 31(1), pages 73-92, March. [Downloadable!]
Kay, J A & Thompson, D J, 1986. "Privatisation: A Policy in Search of a Rationale," Economic Journal, Royal Economic Society, vol. 96(381), pages 18-32, March. [Downloadable!] (restricted)
Paul Simshauser, 2006. "The Emergence of Structural Faults on the Supply Side in Deregulated 'Energy Only' Electricity Markets," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 39(2), pages 130-146, 06. [Downloadable!] (restricted)
Mark Armstrong & Simon Cowan & John Vickers, 1994. "Regulatory Reform: Economic Analysis and British Experience," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510790.

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