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Consumer electricity and gas prices across Australian capital cities: Structural breaks, effects of policy reforms and interstate differences

Abbas Valadkhani (), Jeremy Nguyen and Russell Smyth ()

Energy Economics, 2018, vol. 72, issue C, 365-375

Abstract: We detect, and analyze, the most significant structural changes in the quarterly growth rate of consumer electricity and gas prices in Australia and estimate their corresponding seasonal effects. To do so, we apply the general modelling framework of the Bai-Perron breaking regression to all available quarterly data for capital cities, individually, and Australia as a whole (1989Q3–2017Q2). Retail energy prices in most Australian states were deregulated in the 2000s. We find that increases in average quarterly growth rates of electricity and gas prices consistently occurred in the third (September) quarter, and find very few instances of increases in any other quarters of the year. In the post-deregulation period, price increases are significantly higher than in the pre-deregulation era. Results for some capital cities are stark: in Perth, third-quarter growth in electricity prices has been five times higher after the structural break. In Australia, as a whole, third-quarter growth in gas prices has been three times higher after the structural break. We discuss several possible explanations for energy price rises in the period since deregulation.

Keywords: Electricity price; Gas price; Consumer energy prices; Structural break; Australia (search for similar items in EconPapers)
JEL-codes: D4 L5 Q41 Q48 Q50 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1016/j.eneco.2018.04.038

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