PROJECTS

Review of the Electricity Pricing Commissioner’s Power, Australia

The problem

The Government of the State of New South Wales (Australia) planned to privatize the state-owned electricity networks. To assure the public, the government instituted the Electricity Price Guarantee stating that network charges would not increase as a result of privatization, and created an independent Electricity Price Commissioner to ensure that the promise was kept. However, concerns were expressed that the Commissioner would not have the powers it needed to be effective, reducing public support for the privatization.

How we helped

Castalia was engaged to provide an independent opinion on whether the Commissioner’s powers were adequate and appropriate and a second opinion on the impact of privatization on network charges. We consulted with stakeholders and the Price Commissioner, reviewed the law, and the powers it conferred, and analyzed the methodology used to assess whether network charges increased as a result of the privatization. We found that the Commissioner’s powers and analytic tools were adequate for the task. After the privatization, our independent analysis of network charges found that they had not increased as a result of privatization.

Impact

The State government placed our report before parliament to assure law-makers and the public that the mechanisms designed to protect consumers against price increases were sound. The privatization of the electricity networks was successfully completed, and network charges did not increase as a result.