This first webinar in the Australian Electricity Market Initiative series explored implications of the disconnect between time-varying wholesale electricity prices and households fixed-price electricity tariffs. It uncovered hidden cross-subsidies between households and suggests a remedy to this issue, which is also economically efficient.
In this webinar, Dr Gordon Leslie (Lecturer, Department of Economics) presented new work completed with Armin Pourkhanali (Postdoctoral Researcher, AEMI, CGB, Monash Business School) and A/Prof Guillaume Roger (founder and coordinator of the AEMI, Centre for Global Business (CGB) at Monash Business School and Associate Director, Theme Leader of Markets and Policy, Monash Energy Institute). This paper highlights that households that predominantly use energy when wholesale prices are low implicitly cross-subsidise households whose energy use is more weighted to high-price periods. It finds that households in areas with lower house prices and higher rental rates are more likely to fund this cross-subsidy, and presents evidence that cross-subsidy magnitudes have been growing in recent years, coincident with rapid solar generator penetration.
Watch the video
Meet the speaker
Dr Gordon Leslie Lecturer, Department of Economics, Monash University
Gordon’s fields of study are industrial organisation and energy economics. His current research examines issues relating to competition, policy and consumer engagement in a selection of energy and energy derivative markets.
Meet the co-authors
Associate Professor Guillaume Roger Founder and Coordinator of the AEMI, Centre for Global Business, Monash Business School Associate Director, Theme Leader of Markets and Policy, Monash Energy Institute
Guillaume’s research focuses on incentive design, which finds applications in market design and in the economics of regulation. His work is published in international academic journals such as the American Economic Journal: Microeconomics, Games and Economic Behaviour or the Journal of Mathematical Economics.
Armin Pourkhanali Postdoctoral Researcher, AEMI, Centre for Global Business, Monash Business School
Armin's research aims to improve data modelling and forecasting. This ranges from exploratory data analysis to statistical modelling, calculating diagnostics, and how we draw inferences and make decisions from data. He is currently working as a research fellow on a project to model and understand electricity consumption in the modern city.