The True Story of Energy Privatisation in Australia

POSTED ON October 22, 2018 BY

How Privatisation Happened

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To some privatisation is a dirty word.

To others, the privatisation of Australia’s energy market was a big step in the right direction.

Was it the right move for Australia? The debate is still ongoing.

Everyone’s got their own opinion on the matter, but here we’re big fans of informed debate. 

That’s why today we’re going to take a thoughtful and objective look at just how deregulation happened.

Whether you’re for it or against, after this article, you’ll crush the next argument you have about it.

So now we turn the clocks back nearly thirty years and see how it all started. 

The Start of Privatisation

The year is 1990.

The Australian electricity market is bracing for some pretty controversial solutions, to some pretty big problems.

It started when, then treasurer, Paul Keating commissioned a report into the public ownership of various utilities.

While the report touched on a number of sectors, it was energy that would go on to cause continued controversy.

Firstly, the report concluded that Australia electricity industry could stand to make significant gains to its GDP by restructuring the supply side.

Most importantly, the report recommended the introduction of competition into both the generation and retail aspect of the energy industry.

For many years, these recommendations represented a massive upheaval of the established order.

The rationale was that making these reforms would allow consumers to find the cheapest electricity price for themselves.

Finally, the report recommended the establishment of a nationwide electricity grid, that would allow for energy to supplied across state borders.

Read More: Small business owner? You must check this article out.

The National Electricity Market

The idea of establishing a national market had a number of goals.

The government didn’t want to see one state advantaged over another.

This, of course, necessitated the construction of a nationwide interconnected grid.

One where energy generated in Victoria could power homes in Queensland.

It also wanted to maximise any benefits that could arise from the establishment of a national grid.

And of course to create the right conditions for private entities to compete against publically owned assets.

“Competition” was the key word here.

However, the market, of course, wasn’t established then and there.

Due to this, it took many more years for a bill from the government declaring the project was real to even pass in parliament.

That was in 1996, the NEM didn’t even commence until 1998.

However, the NEM didn’t take long to make an impact.

Nowadays it’s one of the largest electricity grids on the planet.

It snaked its way across the country, from Port Douglas in the Far North of Queensland, to Port Lincoln in South Australia.

All and all, that adds up to about 5000 km of cabling stretching across the country.

Read More: So… the NEG is dead. What now for Australians?

State of Origin

That’s what went on a large, nationwide, scale.

As often happens in a federation like Australia, the states moved at a different pace.

Sometimes they were anticipating the rise of the NEM, other times they were acting under their own guidance.

Both Victoria and New South Wales made moves to deregulate their markets right around the time Keating commissioned his report.

For many years, every aspect of the Victorian electricity industry was handled by a single entity, the State Electricity Commission of Victoria.

However, in 1994, this long-standing institution split into five different bodies.

From the ashes of the SECV arose a number of distribution, transmission and generation companies.

Then between 1994 and 1998, they were privatised. All of them.

Meanwhile, in New South Wales, similar moves were being made to deregulate their electricity market.

The Electricity Commission of New South Wales (Elcom) was a very similar entity to the SECV.

It handled electricity generation and bulk transmission from the 1950s until about 1995.

Eventually, Elcom was transformed into Pacific Power, and slowly but surely new companies were split off the remaining state assets.

Surprisingly, one of the companies formed out of former NSW electricity assets was called TRUEnergy, which trades today as Energy Australia.

In addition to that Integral and Country Energy eventually became part of Origin Energy.

Fast forward to 2009 and Victoria has completely privatised its electricity market, and before long NSW, and elsewhere, followed suit.

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Privatisation today

Nowadays nearly every state in Australia is deregulated to some extent, especially the big ones.

New South Wales, Victoria, South Australia and South East Queensland are privatised both in terms of price and competition.

So if you live in those states the situation is likely to be that there are a number of retailers for you to choose from.

In states such as NSW and Victoria, this had lead to there being upwards of 20 retailers to choose from.

If you’re ever finding it difficult to make sense of it all, get in touch with Electricity Monster.

We can help you navigated a deregulated market and slide into a sharper rate.

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