The regulation of electricity networks in Australias National Electricity Market: user charges, investment and access

Paul Simshauser

Chapter Chapter 9 in Handbook on Electricity Regulation, 2025, pp 200-230 from Edward Elgar Publishing

Abstract: Australia’s National Electricity Market and associated structural reforms triggered the separation of networks from generation and retail during the 1990s. The economic framework governing networks is based on the British model and Littlechild’s (1983) RPI-X incentive regulation. This framework was designed to correct overcapacity, a characteristic of the pre-reform era. The NEM experienced one episode of network over-investment (viz. 2007-2015). Investment mistakes in retrospect were driven by policy and forecast errors - noting this period was preceded by strong growth in demand, followed by the Global Financial Crisis (2007-2009), and Australia’s rapid uptake of rooftop solar PV. From 2015, the regulatory framework proved effective in correcting the 2007-2015 cycle. However, while NEM regulation was effective in dealing with overcapacity, whether the highly prescriptive Rules are capable of dealing with the task of accelerating decarbonisation is an open question. State Governments are legislating outside the Rules to meet their own policy objectives.

Keywords: Microeconomic reform; Electricity networks; Network regulation; Network investment; Network gold-plating; Network access (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035314348
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