Australian energy market reforms that began in the 1990s created national frameworks for governance, network regulation, planning, pricing, demand-side participation and non-economic regulation (Figure 7.2). They were accompanied by structural changes, such as the increasing privatisation of energy assets. This process has largely been driven by the Council of Australian Governments (COAG) Ministerial Council on Energy, which has now been replaced by the Standing Council on Energy and Resources.
Two major reviews of electricity and gas market reforms were conducted under the auspices of COAG to deliver productivity improvements in the energy sector: the 2002 Parer Review (Parer 2002) and the 2007 Energy Reform Implementation Group Review (ERIG 2007).
Many of the reforms identified in the two reviews have been implemented, including the development of more independent and effective market governance arrangements and reforms to network and retail arrangements.
Figure 7.2: History of Australian energy market reform
However, a number of areas are yet to be completed:
- addressing issues related to government ownership, and potential problems from cross-ownership between generation and transmission (as identified in whole market reviews)
- promoting greater competition in retail markets through the introduction of full retail contestability in all jurisdictions and, where effective competition exists, the deregulation of retail prices
- improving the opportunities for efficient levels of demand response in the market
- determining frameworks for the efficient deployment and use of interval meters, smart meters and smart grids
- applying uniform non-economic regulation across jurisdictions
- further optimising network regulation
- reviewing derogations and differences between jurisdictional arrangements and the national regime
- applying reforms in non-National Electricity Market (NEM) jurisdictions, most notably in Western Australia’s electricity and gas markets, for which the current Western Australian Strategic Energy Initiative is the key.
Some of these matters are beyond the jurisdiction of any single government and require a sustained, cooperative commitment over time. Despite differences in views between jurisdictions on some matters, the Australian Government considers that the COAG structure remains the most appropriate mechanism to advance these reforms, as demonstrated by its success in energy reform to date.
A number of market overview activities by the energy market bodies in the NEM and the non-NEM jurisdictions are underway, along with a range of market- and jurisdiction-specific reviews and development actions (outlined in chapters 8, 9, 10 and 11).