Consumer electricity and gas prices across Australian capital cities

structural breaks, effects of policy reforms and interstate differences

Abbas Valadkhani, Jeremy Nguyen, Russell Smyth

Research output: Contribution to journalArticleResearchpeer-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 languageEnglish
Pages (from-to)365-375
Number of pages11
JournalEnergy Economics
Volume72
DOIs
Publication statusPublished - 1 May 2018

Keywords

  • Australia
  • Consumer energy prices
  • Electricity price
  • Gas price
  • Structural break

Cite this

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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.",
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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 journalArticleResearchpeer-review

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AU - Smyth, Russell

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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.

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