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The Consequences of Retail Electricity Price Rises: Rethinking Customer Hardship

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  • Paul Simshauser
  • Tim Nelson

Abstract

type="main" xml:lang="en"> The Australian energy sector is nearing the end of an investment megacycle, which has driven above-trend electricity tariff increases. In this article, we combine energy market and demographic data and find that the dominant thought on customer hardship, aged pensioners, pales into insignificance by comparison to those in the Family Formation cohort, those known as Australia's ‘working poor’. Our modelling results are clear in their implications: hardship policy for energy customers requires re-engineering. The structure of electricity tariffs requires an overhaul—shifting to interval meters, time-of-use pricing and monthly billing to redress the investment megacycle and the incidence of hardship.

Suggested Citation

  • Paul Simshauser & Tim Nelson, 2014. "The Consequences of Retail Electricity Price Rises: Rethinking Customer Hardship," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 47(1), pages 13-43, March.
    • Handle: RePEc:bla:ausecr:v:47:y:2014:i:1:p:13-43
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    Cited by:

    1. Farrell, Lisa & Fry, Jane M., 2021. "Australia's gambling epidemic and energy poverty," Energy Economics, Elsevier, vol. 97(C).
    2. Esplin, Ryan & Davis, Ben & Rai, Alan & Nelson, Tim, 2020. "The impacts of price regulation on price dispersion in Australia's retail electricity markets," Energy Policy, Elsevier, vol. 147(C).
    3. Hammerle, Mara & Burke, Paul J., 2022. "From natural gas to electric appliances: Energy use and emissions implications in Australian homes," Energy Economics, Elsevier, vol. 110(C).
    4. Esplin, Ryan & Nelson, Tim, 2022. "Redirecting solar feed in tariffs to residential battery storage: Would it be worth it?," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 373-389.
    5. Paul Simshauser, 2022. "Fuel Poverty and the 2022 Energy Crisis," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(4), pages 503-514, December.
    6. Kenneth G. H. Baldwin & Bruce Chapman & Umbu Raya, 2015. "Using Income Contingent Loans for the Financing of the Next Million Australian Solar Rooftops," CCEP Working Papers 1508, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    7. Paul Simshauser & David Downer, 2016. "On the Inequity of Flat-rate Electricity Tariffs," The Energy Journal, , vol. 37(3), pages 199-230, July.
    8. Dodd, Tracey & Nelson, Tim, 2022. "Australian household adoption of solar photovoltaics: A comparative study of hardship and non-hardship customers," Energy Policy, Elsevier, vol. 160(C).
    9. Simshauser, Paul & Whish-Wilson, Patrick, 2017. "Price discrimination in Australia's retail electricity markets: An analysis of Victoria & Southeast Queensland," Energy Economics, Elsevier, vol. 62(C), pages 92-103.
    10. Paul Simshauser, 2022. "The 2022 energy crisis: horizontal and vertical impacts of policy interventions in Australia's national electricity market," Working Papers EPRG2216, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    11. Nelson, Tim & McCracken-Hewson, Eleanor & Whish-Wilson, Patrick & Bashir, Stephanie, 2018. "Price dispersion in Australian retail electricity markets," Energy Economics, Elsevier, vol. 70(C), pages 158-169.
    12. Simpson, Genevieve & Clifton, Julian, 2015. "The emperor and the cowboys: The role of government policy and industry in the adoption of domestic solar microgeneration systems," Energy Policy, Elsevier, vol. 81(C), pages 141-151.
    13. Danias, Nikolaos & Swales, J. Kim, 2018. "The welfare impacts of discriminatory price tariffs," Energy Economics, Elsevier, vol. 71(C), pages 321-331.
    14. Simshauser, Paul, 2023. "The 2022 energy crisis: Fuel poverty and the impact of policy interventions in Australia's National Electricity Market," Energy Economics, Elsevier, vol. 121(C).
    15. Alan Rai & Tim Nelson, 2020. "Australia's National Electricity Market after Twenty Years," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 53(2), pages 165-182, June.
    16. Chai, Andreas & Ratnasiri, Shyama & Wagner, Liam, 2021. "The impact of rising energy prices on energy poverty in Queensland: A microsimulation exercise," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 57-72.
    17. Lavinia Poruschi & John Gardner, 2022. "Energy Disadvantage and Housing: Considerations Towards Establishing a Long Run Integrated Analysis Framework," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(4), pages 530-540, December.
    18. Simshauser, P., 2023. "Fuel poverty in Queensland: horizontal and vertical impacts of the 2022 energy crisis," Cambridge Working Papers in Economics 2257, Faculty of Economics, University of Cambridge.
    19. Simshauser, Paul & Miller, Wendy, 2023. "On the impact of targeted and universal electricity concessions policy on fuel poverty in the NEM's Queensland region," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1848-1857.
    20. Nelson, Tim & McCracken-Hewson, Eleanor & Sundstrom, Gabby & Hawthorne, Marianne, 2019. "The drivers of energy-related financial hardship in Australia – understanding the role of income, consumption and housing," Energy Policy, Elsevier, vol. 124(C), pages 262-271.
    21. Nelson, Tim & Dodd, Tracey, 2023. "Contracts-for-Difference: An assessment of social equity considerations in the renewable energy transition," Energy Policy, Elsevier, vol. 183(C).
    22. Crawford, Garth, 2015. "Network depreciation and energy market disruption: Options to avoiding passing costs down the line," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 163-171.

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