Open configuration options Bargaining under Monopoly: Negotiated Settlement, Customer Bargaining and Australian Energy Networks

Bruce Mountain

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper examines whether negotiated settlement has a larger role to play in the economic regulation of Australian energy networks. The argument does not suggest that monopoly has disappeared, or that regulation can sensibly be wished away. The question is more modest: where the assets are sunk, the relationship is repeated and the regulator is necessarily imperfectly informed, is it always best for the regulator to determine every material term? Settlement is best understood as a form of regulatory contracting, not as deregulation. It is valuable only where the gains from revealing customer preferences, trading across interdependent issues, securing commitment and adapting over time exceed the costs of representation, negotiation, verification and public -interest approval. Experience at FERC, in Florida, in Canada, in Australian access regimes, in GB energy and in Scottish water suggests that settlement requires capable representation, a credible adjudicative fallback and a regulator willing to review packages rather than relitigate every component. Australia’s Better Resets process has moved in a useful direction, but engagement is not the same as bargaining. The paper therefore proposes a cautious Australian pilot, beginning with agreed facts and partial settlements before any full revenue-package settlement is attempted.

Keywords: Negotiated Settlement; Energy Networks; Regulatory Contracting; Monopoly Regulation; Consumer Representation; Australia; Incentive Regulation; Energy Transition (search for similar items in EconPapers)
JEL-codes: D23 K23 L51 L94 L95 (search for similar items in EconPapers)
Date: 2026-07-29
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econ.cam.ac.uk/sites/default/files/pub ... pe-pdfs/cwpe2661.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2661

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().