Fiona Orton and I have had a new piece published in the Australian Economic Review. The abstract is:
In this article, we outline the recent reductions in electricity sector capital productivity and higher end use prices. Unsurprisingly, policy-makers are now examining ways to encourage greater levels of consumer participation to improve capacity utilisation and outcomes for consumers. We find that consumers are likely to be better off by responding to retail, rather than wholesale generation, pricing. Retail prices reflect potential savings across all supply chain costs including the primary driver of recent price increases, capital-intensive networks. Conversely, the wholesale electricity generation market is currently heavily oversupplied and savings for consumers are likely to be scarce.