The following summary of Australia's creation of a deregulated electricity market seemed particularly pertinent.
Despite reams of consultants' advice to the contrary, prices went up after privatisation and deregulation. In general, the owners of the transmission and distribution networks have made very large profits, much higher than have been earned by most listed companies in Australia. This has been at the expense of consumers.
Apart from householders, the environment appears to be another loser. The amount of electricity generated by brown coal plants, the most polluting in terms of greenhouse gases and other emissions, has increased from about 23 per cent to 31 per cent of sources since 1992. The increasing dependence on brown coal is because deregulation causes companies to seek the cheapest source of electricity with no consideration for environmental impacts. Brown coal is cheap, and dirty, old brown coal plants that have paid off their loans can produce electricity at low marginal costs.
A report commissioned by electricity distributor Origin Energy found that this meant that Victorian brown coal plants had, to a certain extent, displaced the cleaner NSW black coal plants and SA gas plants in electricity generation. Even outside Victoria baseload electricity tends to be generated by old coal plants rather than the newer gas-fired plants that emit less carbon dioxide. The latter tend to be used for peak loads because marginal costs are higher. As a result, greenhouse emissions have increased in Australia. Additionally, Australia remains "one of the least energy efficient countries in the world", according to John Connor, from the Australian Conservation Foundation.
Whether the new carbon price will change any of these dynamics remains to be seen. They are still promising to buy out and close the most polluting brown coal generators (Hazelwood in Victoria and Playford B in SA). One would think after all these years of extortionate profits we could just let them go, but the commitment to private business of the Australian government knows no bounds.