Consumer electricity and gas prices across Australian capital cities: structural breaks, effects of policy reforms and interstate differences

Abbas Valadkhani; Jeremy Nguyen; Russell Smyth

doi:10.1016/j.eneco.2018.04.038

Consumer electricity and gas prices across Australian capital cities

structural breaks, effects of policy reforms and interstate differences

Abbas Valadkhani, Jeremy Nguyen, Russell Smyth

Department of Economics

Research output: Contribution to journal › Article › Research › peer-review

3 Citations (Scopus)

Abstract

We detect, and analyze, the most significant structural changes in the quarterly growth rate of consumer electricity and gas prices in Australia and estimate their corresponding seasonal effects. To do so, we apply the general modelling framework of the Bai-Perron breaking regression to all available quarterly data for capital cities, individually, and Australia as a whole (1989Q3–2017Q2). Retail energy prices in most Australian states were deregulated in the 2000s. We find that increases in average quarterly growth rates of electricity and gas prices consistently occurred in the third (September) quarter, and find very few instances of increases in any other quarters of the year. In the post-deregulation period, price increases are significantly higher than in the pre-deregulation era. Results for some capital cities are stark: in Perth, third-quarter growth in electricity prices has been five times higher after the structural break. In Australia, as a whole, third-quarter growth in gas prices has been three times higher after the structural break. We discuss several possible explanations for energy price rises in the period since deregulation.

Original language	English
Pages (from-to)	365-375
Number of pages	11
Journal	Energy Economics
Volume	72
DOIs	https://doi.org/10.1016/j.eneco.2018.04.038
Publication status	Published - 1 May 2018

Keywords

Australia
Consumer energy prices
Electricity price
Gas price
Structural break

Cite this

Valadkhani, A., Nguyen, J., & Smyth, R. (2018). Consumer electricity and gas prices across Australian capital cities: structural breaks, effects of policy reforms and interstate differences. Energy Economics, 72, 365-375. https://doi.org/10.1016/j.eneco.2018.04.038

Valadkhani, Abbas ; Nguyen, Jeremy ; Smyth, Russell. / Consumer electricity and gas prices across Australian capital cities : structural breaks, effects of policy reforms and interstate differences. In: Energy Economics. 2018 ; Vol. 72. pp. 365-375.

@article{1ed55d24397143ffaa66586cdb1f1034,

title = "Consumer electricity and gas prices across Australian capital cities: structural breaks, effects of policy reforms and interstate differences",

abstract = "We detect, and analyze, the most significant structural changes in the quarterly growth rate of consumer electricity and gas prices in Australia and estimate their corresponding seasonal effects. To do so, we apply the general modelling framework of the Bai-Perron breaking regression to all available quarterly data for capital cities, individually, and Australia as a whole (1989Q3–2017Q2). Retail energy prices in most Australian states were deregulated in the 2000s. We find that increases in average quarterly growth rates of electricity and gas prices consistently occurred in the third (September) quarter, and find very few instances of increases in any other quarters of the year. In the post-deregulation period, price increases are significantly higher than in the pre-deregulation era. Results for some capital cities are stark: in Perth, third-quarter growth in electricity prices has been five times higher after the structural break. In Australia, as a whole, third-quarter growth in gas prices has been three times higher after the structural break. We discuss several possible explanations for energy price rises in the period since deregulation.",

keywords = "Australia, Consumer energy prices, Electricity price, Gas price, Structural break",

author = "Abbas Valadkhani and Jeremy Nguyen and Russell Smyth",

year = "2018",

month = "5",

day = "1",

doi = "10.1016/j.eneco.2018.04.038",

language = "English",

volume = "72",

pages = "365--375",

journal = "Energy Economics",

issn = "0140-9883",

publisher = "Elsevier",

}

Valadkhani, A, Nguyen, J & Smyth, R 2018, 'Consumer electricity and gas prices across Australian capital cities: structural breaks, effects of policy reforms and interstate differences', Energy Economics, vol. 72, pp. 365-375. https://doi.org/10.1016/j.eneco.2018.04.038

Consumer electricity and gas prices across Australian capital cities : structural breaks, effects of policy reforms and interstate differences. / Valadkhani, Abbas; Nguyen, Jeremy; Smyth, Russell.

In: Energy Economics, Vol. 72, 01.05.2018, p. 365-375.

Research output: Contribution to journal › Article › Research › peer-review

TY - JOUR

T1 - Consumer electricity and gas prices across Australian capital cities

T2 - structural breaks, effects of policy reforms and interstate differences

AU - Valadkhani, Abbas

AU - Nguyen, Jeremy

AU - Smyth, Russell

PY - 2018/5/1

Y1 - 2018/5/1

N2 - We detect, and analyze, the most significant structural changes in the quarterly growth rate of consumer electricity and gas prices in Australia and estimate their corresponding seasonal effects. To do so, we apply the general modelling framework of the Bai-Perron breaking regression to all available quarterly data for capital cities, individually, and Australia as a whole (1989Q3–2017Q2). Retail energy prices in most Australian states were deregulated in the 2000s. We find that increases in average quarterly growth rates of electricity and gas prices consistently occurred in the third (September) quarter, and find very few instances of increases in any other quarters of the year. In the post-deregulation period, price increases are significantly higher than in the pre-deregulation era. Results for some capital cities are stark: in Perth, third-quarter growth in electricity prices has been five times higher after the structural break. In Australia, as a whole, third-quarter growth in gas prices has been three times higher after the structural break. We discuss several possible explanations for energy price rises in the period since deregulation.

AB - We detect, and analyze, the most significant structural changes in the quarterly growth rate of consumer electricity and gas prices in Australia and estimate their corresponding seasonal effects. To do so, we apply the general modelling framework of the Bai-Perron breaking regression to all available quarterly data for capital cities, individually, and Australia as a whole (1989Q3–2017Q2). Retail energy prices in most Australian states were deregulated in the 2000s. We find that increases in average quarterly growth rates of electricity and gas prices consistently occurred in the third (September) quarter, and find very few instances of increases in any other quarters of the year. In the post-deregulation period, price increases are significantly higher than in the pre-deregulation era. Results for some capital cities are stark: in Perth, third-quarter growth in electricity prices has been five times higher after the structural break. In Australia, as a whole, third-quarter growth in gas prices has been three times higher after the structural break. We discuss several possible explanations for energy price rises in the period since deregulation.

KW - Australia

KW - Consumer energy prices

KW - Electricity price

KW - Gas price

KW - Structural break

UR - http://www.scopus.com/inward/record.url?scp=85046649714&partnerID=8YFLogxK

U2 - 10.1016/j.eneco.2018.04.038

DO - 10.1016/j.eneco.2018.04.038

M3 - Article

VL - 72

SP - 365

EP - 375