Home' Future Building Australian Infrastructure Review : Volume 3 Number 1 Contents futurebuilding 37
Volume 3 Number 1
Back on the reform
Energy market reform has had a chequered history
in Australia. Now, with Australia's governments
facing a substantial infrastructure investment
task, and with growing cost of living pressures,
governments will need to get back on the reform
horse, writes Domini Stuart.
At the start of the 1990s, Australia's electricity
utilities were largely single, vertically integrated
units fully owned by state governments. The 1995
Competition Principles Agreement brought the
states together in an undertaking to restructure the
sector, apply competitive neutrality and review the
regulation that restricts competition. They also agreed
to separate transmission from generation activities,
and to segregate the retail and distribution businesses.
Southern and eastern states established the
National Electricity Market (NEM) -- a compulsory
wholesale pool into which generators sell their
electricity. While Western Australia and the Northern
Territory are too distant and remote to be part of the
network, the NEM remains the largest interconnected
power system in the world, with more than $11
billion of electricity traded annually, meeting the
needs of around eight million end users.
But while Australia has come a long way since
the days of single, vertically integrated utilities under
full government ownership, reform momentum
has stalled -- with signi cant differences remaining
between the states in respect of the ownership,
ef ciency and overall energy sector performance.
Just two NEM states have delivered on the
agreement for wholesale privatisation. Victoria
privatised generation, network and retail businesses
between 1995 and 1997, while South Australia did
the same between 2000 and 2001.
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