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Australia's failed energy policy needs more than just a bandaid

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For the handful of us who have criticised the national electricity market since its emergence from the Hilmer Review of Competition Policy in 1993, reading the latest report of the Australian Competition and Consumer Commission (ACCC) produces a mixture of feelings. Certainly no one would disagree with:

There are many causes of the current problems in the electricity market. At all stages of the supply chain decisions have been made over many years by many governments that set the NEM on the wrong course.

Going right back to the beginning of this fiasco, the ACCC repeats the standard line that:

For a long period the NEM produced relatively low wholesale prices and affordable prices for end users.

but finally concedes the argument that the cause of this outcome was not the merits of the NEM, but the fact that it was introduced at a time when

the market was over-supplied with generation, which was itself an unsustainable situation.

It’s good to see the ACCC catching up with the obvious. As I wrote 17 years ago in the Economic and Labour Relations Review:

The Australian National Electricity Market commenced operation in a period of oversupply so that problems of market power and excessive prices have not emerged until recently. It remains unclear whether an electricity auction market can produce adequate incentives for investment while generating appropriate prices for consumers.

Also welcome is the fact that retail competition, the........

© The Guardian