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Competition policy dilemmas: time for a new direction

By Mark Christensen - posted Thursday, 28 September 2006


Our electricity industry will never be truly efficient with an artificial interface imposed between network and those that rely upon it. Rather than a single point of resolution for vital trade-offs, optimising decisions in electricity involves a gaggle of disparate interests, herded together by a regulator who can never be as well informed as the industry it’s expected to control.

The policy framework attempts to deal with this limitation by establishing public interest criteria. The regulator puts in place pricing and investment arrangements designed to make transparent the relative value of different options from a community-wide perspective. If a new transmission link is more efficient than additional generation capacity, then it should be readily apparent.

It’s not this simple, of course. Complex assessments require expert judgment. At this point, the regulator attempts to become a proxy CEO for a virtual, vertically-integrated industry, but without the corporate support of those in the know and without the same commercial exposures. One suspects this is what fires up Sol Trujillo and his amigos.

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For various reasons, the Queensland coal system still has only one vertically-integrated rail operator. There is no head-to-head competition or separate corporate interfaces between track and train operations, as in the Hunter Valley coalfields.

The pressing issue now is will stakeholders in Queensland continue to put their faith in NCP to deliver the much-anticipated next tranche of improvement in the export coal supply chain, or will they break out of the existing policy paradigm?

Such vision is needed if Australia’s infrastructure industries are to capitalise on the success of NCP and move onto a sustainable efficiency-based model.

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First published in the Australian Financial Review on September 25, 2006.



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About the Author

Mark is a social and political commentator, with a background in economics. He also has an abiding interest in philosophy and theology, and is trying to write a book on the nature of reality. He blogs here.

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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