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The Impact of Carbon Pricing on Wholesale Electricity Prices, Carbon Pass-Through Rates and Retail Electricity Tariffs in Australia

Phillip Wild (), William Bell () and John Foster ()

No 5-2012, Energy Economics and Management Group Working Papers from School of Economics, University of Queensland, Australia

Abstract: The purpose of this article is to investigate the impact that the introduction of a carbon price signal will have on wholesale electricity prices, carbon-pass-through rates and retail electricity rates in the states making up the Australian National Electricity Market (NEM). In order to assess this, we employ an agent based model of the NEM called the ANEM model which contains many of the salient features of the NEM: intra-state and inter-state transmission branches, regional location of generators and load centres and accommodation of unit commitment features. A DC OPF algorithm is used to determine optimal dispatch of generation plant and wholesale prices within the ANEM model. We utilise ANEM model scenario runs to examine the impact of carbon prices on wholesale prices and carbon passthrough rates. This information is then used to assess the impact on retail electricity tariff rates and shares of cost components making up residential retail tariff rate structures for different states in the NEM.

Keywords: Electricity Markets; Carbon Trading (search for similar items in EconPapers)
JEL-codes: Q40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-ene, nep-env and nep-res
Date: 2012-03
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