Economists at The Brattle Group contributed to the Australian Energy Market Commission’s (AEMC) final Power of Choice review, which sets out a substantial reform package for the Australian energy market.
The report makes recommendations on how households, businesses, and the industry can make more informed choices about the way they use electricity and manage expenditure. The report recommends a package of reforms designed to increase the responsiveness of the demand side to evolving market, technological developments, and changing consumer interests over the next 15 to 20 years. These reforms act to facilitate efficient demand side participation by enabling consumers to see and be rewarded for taking up demand side options and by enabling the market to support consumer choice through better incentives to capture the value of demand side participation options and through decreasing transaction costs and information barriers. The final report for the Power of Choice review was presented to federal and state officials for consideration in November 2012, following 18 months of investigation and consultation with industry and consumers. A Brattle report, “Managing the Costs and Benefits of Dynamic Pricing,” which was authored by Dr. Ahmad Faruqui and associate Neil Lessem, examined the costs and benefits of dynamic pricing in the Australian energy market and was used by the AEMC when drafting the final review.
The AEMC report is available on the AEMC website. The Brattle report is available for download below.