A wave of investment, renewal and precinct growth continues to shape the northern edge of Macquarie Park, where daily life is supported by a rare combination of university activity, corporate employment, major retail, and expansive green corridors. It’s this convergence of amenity and connectivity underpins the setting for <a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a>’s <a href="https://www.apartments.com.au/new-apartments/la-vera-94-talavera-road-macquarie-park-nsw-2113">La Vera</a>, which has now topped out and is tracking toward completion in mid-2026.

Within this pocket of the precinct, residents move easily between the area’s key anchors. Macquarie Centre, home to more than 360 retailers, fresh food offerings, dining and entertainment, sits at the heart of local convenience and functions as a major transport interchange. The Metro, T1 rail line and extensive bus network place much of Sydney within quick reach, while surrounding arterial links support direct access to neighbouring districts.

[smartcode_project:default project_id=134951 project_image_fid=5829]

Green space remains a defining feature of the immediate environment. Lane Cove National Park stretches along the northern boundary of the precinct, offering bushland trails, cycling routes and quiet riverfront pockets. Shrimptons Creek and the campus grounds of Macquarie University extend these recreational networks, softening the urban setting and creating a daily connection to nature that informs the project’s architectural response.

<a href="https://www.apartments.com.au/architects/cox-architecture">Cox Architecture</a> have shaped La Vera around these contrasts. The building’s northern elevation adopts an organic, curvilinear form that mirrors the natural topography of the national park. Three sculpted forms soften the tower’s profile and encourage a stronger transition between indoor living areas, balconies and the broader landscape.

[smartcode_project:default project_id=134951 project_image_fid=223737]

Cox Director Felipe Miranda says the building’s outlook played a central role in the design process.

“The vision for the project was to conceive a building that adopted an organic and curvilinear form to the northern portion that faces the Lane Cove National Park… The residents that reside in the northern portion of the building benefit by having beautifully crafted curved balconies that speak to the natural context and heighten the relationship of their internal living spaces to the external balconies,” Felipe Miranda of Cox Architecture said.

Toward the city-facing side, the design shifts to a more urban expression. A gridded facade and extensive glazing capture CBD views, creating a dual strategy that blends ecological outlooks with metropolitan orientation.

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La Vera delivers 169 residences across one- to four-bedroom layouts, reflecting the needs of young families, downsizers, first-home buyers and investors seeking long-term certainty within a high-amenity location. From the project, residents can walk to Macquarie University, Macquarie Hospital and nearby corporate offices, reach national park trails within minutes, and enjoy retail and dining without relying on a car.

The project is delivered by Urban Property Group, a 4.5-star iCIRT-rated developer-builder with more than three decades of experience. The company has become a leader in adopting 10-Year Latent Defects Insurance (LDI), first introduced on its Parq Bexley development and now embedded into its pipeline.

[smartcode_project:default project_id=134951 project_image_fid=223727]

La Vera is the first development in Macquarie Park approved to offer this 10-year LDI policy, adding another layer of protection for purchasers and reinforcing the transparency of the construction process.

Urban Property Group CEO Patrick Elias says this assurance has become increasingly important for buyers navigating the off-the-plan market.

“Consumers are a lot more weary and a lot more concerned in buying off the plan than they ever have been… Having LDI is a tool to portray the confidence that we have in our product, and a confidence we want buyers to share,” Urban Property Group CEO Patrick Elias said.

Urban Property Group's in-house construction team is forecasting a mid-2026 completion, with <a href="https://www.apartments.com.au/project-marketer/home789">HOME789</a> appointed as the project marketer.

[smartcode_project_cta:default project_id=134951]

Staff Writer

La Vera delivers a nature-connected address within Macquarie Park’s core

<a href="https://www.apartments.com.au/buildings/aura-by-aqualand-north-sydney-168-walker-street-north-sydney-nsw-2060">AURA</a>&nbsp;doesn’t just rise over North Sydney, it redefines it. Now in its final release, <a href="https://www.apartments.com.au/developers/aqualand-australia">Aqualand</a>’s $1 billion architectural statement is not just complete, but already reshaping the way people live, connect and dine in this rapidly evolving harbourside CBD.

Positioned beside the new Victoria Cross Metro Station and boasting panoramic views across Sydney Harbour, Aura’s 386 residences crown a mixed-use precinct designed with unapologetic ambition. The curvaceous sandstone-inspired form by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a>, paired with <a href="https://www.apartments.com.au/interior-designers/richards-stanisich">Richard Stanisich</a>’s understated interiors, sets a design tone that’s both monumental and intimate.

At its peak, literally, the two penthouses so spectacular they command their own names; La Davina and Il Magnate. The residents are spread across the&nbsp;entire top floor, offering what many consider the most refined residences ever built in North Sydney. Designed by Richard and Kirsten Stanisich, each four-bedroom home is meticulously crafted to evoke calm, space, and permanence.&nbsp;

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/VB70993aG-I?si=adRBlXQliYmYvaSz" title="YouTube video player" width="560"></iframe>

The kitchens are fully wrapped in natural stone, with integrated Gaggenau appliances, Sub-Zero fridges, concealed sculleries, and even a zip hydro tap delivering boiling, chilled and sparkling water on demand. A linear stone fireplace anchors the open-plan living space, dividing lounge and dining zones with quiet sophistication.&nbsp;

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The master suite, meanwhile, feels more like a private retreat, complete with a custom stone makeup vanity, walk-through dressing area, and spa-inspired ensuite with heated stone floors, a freestanding Villeroy &amp; Boch tub, and timber veneer joinery throughout.

Kirsten Stanisich, Director of Richards Stanisich, said the penthouses offer incredible scale reflective of a single residence.&nbsp;

“We sought inspiration for these remarkable residences from the classic top-floor Parisian apartment," Stanisich said.

"We looked at what made these French apartments so elegant and found it really came down to their scale. It was ultimately this generosity of space that we used for the AURA penthouses, where we’ve designed considered rooms with deep large-scale proportions."

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Everyday living at Aura feels no less elevated. A dedicated 24-hour concierge, Technogym fitness centre, sky dining terraces, and a resort-style pool serve a lifestyle designed to rival luxury hotels.

At street level, Aqualand’s own hospitality arm, Etymon Projects, curates a precinct of LA-style bistros, Japanese fine dining, and local wine bars, all seamlessly integrated into the building’s sculptural podium.

[smartcode_project:default project_id=30959 project_image_fid=310337]

This final chapter, aptly dubbed The Finale, is more than a sales phase, it’s an invitation to two of the most exclusive apartments ever to be built in North Sydney.

With limited residences remaining, buyers can access curated incentives including stamp duty rebates, rental guarantees, legal fee coverage, and even $20,000 towards dining within the precinct.

From generous one-bedders to The Icons, two singular penthouses priced well into prestige territory, Aura’s offerings reflect a scale and calibre rarely seen in urban Sydney. And with move-in now immediate, this is no longer a promise of future luxury. It’s happening.

[smartcode_project_cta:default project_id=30959]

Aqualand unveils penthouse collection at AURA By Aqualand in North Sydney

There’s no sign of the development wave that began several years ago slowing along Old Burleigh Road.

Around 10 new apartment developments are either underway or preparing to launch along the 800-metre strip stretching from the southern edge of Surfers Paradise towards the heart of Broadbeach, collectively adding just shy of 1,000 new apartments to the beachfront corridor.

The latest plans propose a further 30 apartments to replace an original six-unit walk-up on a 658 sqm site at <a href="https://www.apartments.com.au/new-apartments/20a-old-burleigh-road-surfers-paradise-qld-4217">20A Old Burleigh Road</a>. The 14-storey building has been designed by Ferro Chow Architecture, which recently joined the Elevation Architecture Group.

The developer behind the project is Geoffrey Booth, whose Future Liv In has focused on delivering rental accommodation across regional Australia.

<img alt="Old Burleigh Road" data-entity-type="file" data-entity-uuid="99d393e7-d404-43bc-80cb-6255c39b83d6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-01-05%20at%2012.28.44%E2%80%AFPM.png?VersionId=ZFT8F3mOny4M4ut.kFF3woC9WH9oR5gT" />

The Old Burleigh Road development will comprise 18 two-bedroom apartments, 10 three-bedroom apartments, and a single four-bedroom residence occupying the entirety of level 12. Above, the building will be crowned by a two-storey penthouse with its own private lift, several multi-purpose rooms, and two rooftop terraces — one featuring a puppy lawn and spa, the other offering a private swimming pool, sunset deck, and built-in barbecue.

Resident amenities will be located on the second level and include a pool with adjoining spa, cabana, and pool deck, along with an indoor residents’ lounge featuring a bar and an alfresco barbecue kitchen.

In the architectural statement submitted by Elevation Architecture, the project is referred to as “UMI”, which the firm says has been “inspired by the majestic hinterlands and shaped by the coastal climate”.

“It is an exemplar of how community living can still feel at one with nature, breathable, and deeply connected in place,” the architects noted.

They added that the site benefits from established building separation to adjoining towers, helping to maintain privacy, sunlight, and residential amenity, while still offering direct beach access within an urban setting.

“Drawing inspiration from the Gold Coast hinterlands and the region’s natural landscape, the podium and tower detail highlights the contrasting elements of treetop green and cliff-face peach. The vibrant texture and materiality shaped by time has a richness in depth and character.”

<img alt="Old Burleigh Road" data-entity-type="file" data-entity-uuid="b3d6c923-a0ab-4d74-86da-177313447e8e" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-01-05%20at%2012.28.38%E2%80%AFPM.png?VersionId=i2fygmoVQM6hWpbATTAW_yTitoMTrnI1" />

Old Burleigh Road has become a hotspot for developers, with the three-tower Jewel development kickstarting a wave of projects up and down the strip when it was completed in 2020.

Currently under construction and approaching completion is <a href="https://www.apartments.com.au/new-apartments/faro-broadbeach-123-old-burleigh-road-broadbeach-qld-4218">FARO Broadbeach</a> by 5Point and Bottega, 21 large-scale half- and full-floor apartments. 5Point is also behind the recently launched <a href="https://www.apartments.com.au/new-apartments/lumara-108-old-burleigh-road-broadbeach-qld-4218">Lumara</a>, another 37 apartments to add to the pipeline.

Luxury builder GRAYA is progressing construction on <a href="https://www.apartments.com.au/new-apartments/enclave-by-graya-118-old-burleigh-road-broadbeach-qld-4218">Enclave</a>, its first Gold Coast tower, while Polycell remains the most active developer on the street. They are preparing to launch <a href="https://www.apartments.com.au/new-apartments/sandpiper-broadbeach-155-old-burleigh-road-broadbeach-qld-4218">Sandpiper</a>, a 50-storey redevelopment of the former Sandpiper Holiday Resort that will deliver around 200 apartments alongside extensive resident amenity. The group also has another 130-apartment project approved nearby, as does <a href="https://www.apartments.com.au/news/qld/dvb-approved-for-second-broadbeach-apartment-development">Dean Gallagher’s DVB Projects</a>.

Joel Robinson

First look: Old Burleigh Road apartment development wave continues

Sunshine Coast developer Habitat Development Group continues to position itself as one of the region’s largest new apartment developers.

Its latest project is in Maroochydore, where it is currently delivering <a href="https://www.apartments.com.au/new-apartments/the-millwell-2-millwell-road-east-maroochydore-qld-4558">The Millwell</a>. Adjacent to the new 53-hectare Maroochydore City Centre project, Habitat is planning a further 180 apartments on a 3,468 sqm site at <a href="https://www.apartments.com.au/new-apartments/132-136-aerodrome-road-maroochydore-qld-4558">132–136 Aerodrome Road</a>. The site was purchased with approval for a smaller 13-storey, 103-unit building.

Habitat will demolish the two existing retail centres, currently home to the Salvation Army Family Store and Neighbours Aid, and replace them with an 18-storey building featuring the significant rooftop amenities that have become a hallmark of Habitat developments in recent years. The rooftop will include both indoor and outdoor spaces, anchored by an infinity swimming pool.

<img alt="Maroochydore" data-entity-type="file" data-entity-uuid="ad434d07-666b-4614-b33e-530ad6a2d261" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-01-05%20at%2010.12.33%E2%80%AFAM.png?VersionId=7pyLsPWKQuwv0us3_v.9DmbzEc2VZe9Z" />

There will be a mix of one- to four-bedroom apartments.

The Development Assessment Report, submitted to the Sunshine Coast Council, says the proposal&nbsp;is not speculative, but a response to both zoning intent and demonstrated housing need.

“The proposed development represents an appropriate and logical intensification of the site, consistent with the planning framework and the intended urban outcomes for the locality.”

Across the Sunshine Coast, councils are increasingly scrutinising not just height or yield, but whether new projects genuinely align with the long-term structure plans underpinning growth corridors. The&nbsp;ASTP Planning Report&nbsp;reinforces the approach, noting that the project has been shaped around site responsiveness rather than generic typology.

“The development has been designed to respond to the physical constraints and opportunities of the site, while delivering a high-quality residential outcome that integrates with the existing and emerging urban context.”

<img alt="Habitat" data-entity-type="file" data-entity-uuid="3a03fc54-4ca5-4868-88d0-eeced70604e2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-01-05%20at%2010.12.28%E2%80%AFAM.png?VersionId=1pkK3lJrrZjkghTLBReM2zatcas4Nc4B" />

In mid-2025, Habitat, a developer that also builds its own projects, commenced construction on The Millwell, located just over one kilometre from the new proposal. The Millwell will comprise more than 200 apartments across two eight-storey buildings.

Habitat also has two projects on Lake Kawana in Birtinya: <a href="https://www.apartments.com.au/new-apartments/st-clair-birtinya-930-931-waterside-retreat-birtinya-qld-4575">St Clair</a>, a 200-unit, two-building development launched last year and set to welcome buyers this year; and Esperance, a 175-apartment project currently progressing through the development approval process.

First look: Habitat continues to bolster Sunshine Coast apartment pipeline with Maroochydore development plans

John Camilleri, the breeder of legendary racehorse Winx, is set to deliver a landmark two-tower beachfront development that would redefine the Surfers Paradise skyline.

Camilleri, who spent around $100 million acquiring development sites across the Gold Coast in 2025, has lodged plans for two new towers on the dress-circle stretch of Garfield Terrace, just two days before Christmas.

In assembling the site, Camilleri's Celestino Developments has effectively acquired the 71 Garfield project by Iris Capital and AALTO by Weiya Holdings, creating an unrivalled <a href="https://www.apartments.com.au/new-apartments/63-79-garfield-terrace-surfers-paradise-qld-4217">4,000 sqm beachfront holding along Garfield Terrace</a>.

The proposal comprises two residential towers of 55 and 48 storeys, linked by a dramatic skybridge which will home “exclusive VIP and wellness amenities.”

In total, the development would deliver 275 two-, three- and four-bedroom apartments across the two towers, rising above a shared landscaped podium that incorporates a central green space and a beachfront swimming pool stretching more than 90 metres.

<img alt="DBI" data-entity-type="file" data-entity-uuid="097900f3-6bef-4919-b168-b08f2f762876" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-30%20at%209.37.58%E2%80%AFAM.png?VersionId=et0SpmcvaPPVrexI_zWi46BVFtZBxAzx" />

Architecture firm DBI, in documents submitted to Gold Coast City Council, said the project at 63–79 Garfield Terrace would “establish a new benchmark for beachfront residential living on the Gold Coast.”

"The project occupies a rare, uninterrupted oceanfront site and has been shaped by a design philosophy that merges architectural elegance with environmental responsiveness and a carefully curated lifestyle experience. Together, the 48-storey North Tower and 55-storey South Tower form a distinctive twin-tower composition whose dynamic silhouette will make a significant contribution to the Surfers Paradise skyline."

DBI said the architectural language draws inspiration from the fluidity and movement of the coastal landscape.

"Each tower is defined by organic, curving forms and continuous balcony ribbons that wrap the buildings, providing deep shading, enhancing environmental performance, and reinforcing the rhythmic, sculptural expression of the façade. These balcony forms also reduce the apparent mass of the towers while maintaining strong visual continuity from podium to summit. Sculpted reflective downturns run along the western spine of both towers, shifting and lifting as they extend upwards to frame service zones and open eastward to maximise ocean views."

<img alt="Garfield" data-entity-type="file" data-entity-uuid="a2a00ce3-a0e9-45d6-b4b5-b7baed592ac5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-30%20at%209.53.40%E2%80%AFAM.png?VersionId=DnruWV1dhLrtXOeElwekyd7vPq2gw55t" />

The project’s most striking feature is the skybridge at level 45, which will house executive lounges, formal dining spaces, wellness facilities and panoramic ocean-facing views.

“The skybridge enhances the identity of the development, promotes social interaction, and delivers a lifestyle experience not found elsewhere on the Gold Coast,” DBI added.

The podium will host an extensive suite of recreational amenities, including resident lounges, private dining rooms, a large open green lawn, and the signature 90-metre pool stretching along the beachfront. The pool is divided into lap, lounge and children’s zones.

The southern end of the podium will accommodate additional wellness facilities, including a gymnasium, plunge pools, treatment rooms and a dedicated yoga lawn.

<img alt="Garfield" data-entity-type="file" data-entity-uuid="ee1b4f25-231f-4804-83b1-a573a1481962" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-30%20at%209.55.47%E2%80%AFAM.png?VersionId=zObzIA3D5w7EwqPsHjr2pKrA4vbB28zL" />

There will be 127 apartments in the North Tower and 148 in the South Tower, including multiple penthouses, while the Enderley Avenue and Oceanway frontages will be activated by a series of food and beverage tenancies.

Camilleri emerged as the most active site acquirer on the Gold Coast in 2025. He spent just over $30 million acquiring Pacific Point, a 10-level Surfers Paradise apartment block and an adjoining three-level duplex, from fellow racing identity and Aquis billionaire Tony Fung. Plans are now underway for a 93-apartment, 40-storey tower on the 1,682 sqm site.

He also paid $53.65 million for the 1,500 sqm Garfield Terrace site previously marketed as AALTO by Weiya Holdings, before acquiring the adjoining parcel from hotel billionaire Sam Arnaout’s Iris Capital, the developer behind V&amp;A Broadbeach.

First look exclusive: Billionaire Winx breeder’s bold two-tower Surfers Paradise play with 45th-storey skybridge

Electricity Cost

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The Federal Court has ordered iSelect to pay $8.5 million in penalties for misleading consumers comparing energy plans.
Between November 2016 and December 2018, iSelect misled consumers by representing on its website that it would compare all electricity plans offered by its partners and recommend the most suitable or competitive plan.
However, its commercial arrangements with partner electricity retailers restricted the number of electricity plans those retailers could upload.
The recommended plans were therefore not necessarily the most suitable or competitive.
The ACCC instituted proceedings against iSelect in April 2019 as a result of this conduct.
“iSelect was not upfront with consumers that it wasn’t comparing all plans offered by its partner retailers”, ACCC chair Rod Sims said.
“In fact, about 38 per cent of people who compared electricity plans with iSelect at that time may have found a cheaper plan if they had shopped around”, he said.
The comparison service also admitted that, due to an error in its website and call centre code, some of the plans it recommended to almost 5,000 customers was underestimated by up to $140 per quarter.
According to the Court, iSelect, who received commissions from the retailers when those consumers selected a plan via iSelect, was responsible for ensuring that their algorithms were correct.
“This is particularly so when they generate significant revenue in commissions from those recommendations,” Sims said.
iSelect admitted liability and made joint submissions with the ACCC to the Federal Court consenting to the orders sought, including penalties.
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j.ballantyne1990-6AQqhLzZaK

iSelect cops $8.5 million fine for misleading energy rates

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New guidelines, published by the ACCC, will assist electricity retailers and generators to comply with laws aimed at protecting consumers and businesses from excessive electricity prices.
The laws prohibit electricity retailers from keeping consumer and small business prices unnecessarily high when costs fall, and prohibit generators from inflating wholesale prices or blocking access to critical contracts, which could increase retail prices. The laws will form part of the Competition and Consumer Act and come into effect on 10 June 2020.
The guidelines provide examples and information to help industry comply with the laws and were prepared after consultation with stakeholders.
“These new laws commence at a time when the affordability of energy is particularly pressing for so many Australian businesses and households, as communities are impacted by the COVID-19 pandemic. Our guidelines help electricity companies to comply with these laws aimed at achieving fairer prices for consumers,” ACCC Chair Rod Sims said.
“Wholesale prices have reduced significantly over the past couple of months, so retailers should be assessing their prices and ensuring that they are prepared when the new laws come into effect in June.”
The ACCC’s role is to enforce compliance with these laws. Competition and consumer issues in electricity are key compliance and enforcement priorities for the ACCC.
The ACCC will continue to closely monitor the behaviour of companies in the electricity markets and has a range of enforcement tools available, including public warning notices, infringement notices and commencing legal proceedings in the Federal Court alleging that companies have breached these laws.
“These new laws will enable us to take electricity companies to court if we have evidence that they are engaging in prohibited conduct in breach of these new provisions,” Mr Sims said.
The new laws prohibit the following conduct:
- The ‘retail pricing prohibition’ prohibits electricity retailers from charging small customers prices which are not adjusted to reflect sustained and substantial cost reductions in their underlying costs.
- The ‘electricity financial contract liquidity prohibition’ prohibits generators from restricting access to electricity hedging contracts for an anti-competitive purpose.
- The ‘electricity spot market prohibitions’ prohibit bidding practices by generators which are engaged in fraudulently, dishonestly or in bad faith and/or for the purpose of distorting or manipulating prices in an electricity spot market.
The new guidelines are available at <a href="https://www.accc.gov.au/publications/guidelines-on-part-xica-prohibited-conduct-in-the-energy-market">Guidelines on Part XICA - Prohibited conduct in the energy market</a>.
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New guidelines to protect consumers and businesses from excessive electricity prices: ACCC

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The latest figures from the Essential Services Commission (ESC) reveal that more than 1,000 requests have been made to disconnect Victorians from electricity for not paying their bills since late March this year.
According to the Consumer Action Law Centre, by continuing to request for people’s power to be shut off, energy retailers are failing to do their part in keeping Victorians safe during the Covid-19 crisis.
The disconnection requests are being made despite energy retailers promising there would be no disconnections for people receiving hardship assistance if they are unable to afford their energy bills.
More than 65 community organisations and service providers have called on federal and state governments, and energy retailers to implement a proactive moratorium on all disconnections during the Covid-19 health crisis. This should include people having difficulty paying their bills.
Only two energy retailers have ruled out disconnections entirely: the state-owned Ergon Energy (Queensland) and Aurora Energy (Tasmania), with some electricity networks  attempting to block requests from energy retailers to disconnect households who have been unable to pay their bills. It is unclear if gas networks are doing the same.
"Energy retailers have existing financial hardship policies in place, but these put the onus on the households to keep in contact with their retailer. People can easily fall through the gaps when they are required to navigate large call centres to seek assistance – we’re hearing of people spending hours on the phone to contact basic utilities," Senior Policy Officer with Consumer Action Law Centre Jake Lilley says.
“Many people don’t even realise their energy retailer is required to help them, especially where energy retailers fail to reach out and discuss the assistance that’s available. Often, a person’s energy bill might not be top of mind when they’re worrying about a sick family member or putting food on the table. Energy retailers need to do what’s right for the community.”
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Requests to disconnect Victorians for unpaid electricity bill during Covid-19 crisis

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GUEST OBSERVER
State-owned power networks have spent up to A$20 billion more than was needed on the electricity grid, and households and businesses in New South Wales, Queensland and Tasmania are paying for it in sky-high power bills.
A new Grattan Institute report, Down to the Wire, shows that electricity customers in these states would be paying A$100-A$400 less each year if the overspend had not happened.
The problem is that state governments, worried about blackouts and growing demand for electricity, encouraged the networks to spend more in the mid-2000s. But the networks overdid it, and now consumers are paying for a grid that is underused, overvalued, or both.
Why we built too much
The grid includes high-voltage transmission lines that carry electricity over large distances, as well as low-voltage poles and wires that connect to homes and businesses. Networks are built to cope with those times of highest demand for electricity. Yet the growth in the value of network assets has far exceeded growth in customer numbers, total demand, or even peak demand.
Demand for electricity did grow rapidly in the early 2000s, but since then it has slowed substantially as more and more households have installed solar panels, and appliances have become more energy efficient. Networks may have overbuilt because they expected that demand would continue to grow.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/31/98edb1e166db49868ef680f5ccf36d38.jpg" alt="">
Yet the overbuilding has occurred almost exclusively in the public networks. Why would government ownership lead to such high costs?
There are two main reasons. First, investment in electricity networks boosts state government revenues because public networks pay a fee to the state to neutralise their lower borrowing costs (as well as the dividend they pay to the state as the owner). Second, a government-owned business might come under political pressure to prioritise goals such as reliability or job creation over cost.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/31/b9da7622811849d68bd8e5ef96b47b0e.jpg" alt="">
Of course governments worry about reliability – they cop the blame if anything goes wrong. In 2005, the NSW and Queensland governments required their network businesses to build excessive back-up infrastructure to protect against even the most unlikely events. Reliability did improve a bit in some networks, but at significant cost: on average, customers got an extra 45 minutes of electricity a year at a cost of A$270 each.
State governments should take responsibility
Successive state governments in NSW, Queensland and Tasmania are responsible for overinvesting in their networks and, in NSW and Queensland, for setting reliability standards too high.
State governments can’t turn back the clock but they can still fix the mistakes of the past. And they should, because if they don’t, consumers will be paying for decades to come.
Households and businesses that can afford to buy solar panels and batteries will reduce their reliance on the grid. Meanwhile, those left behind – including the most vulnerable Australians – will be stuck with the burden of paying for the grid.
In Down to the Wire we recommend that where network businesses are still in government hands, the government should write down the value of the assets. This would mean governments forgoing future revenue in favour of lower electricity bills. For recently privatised businesses in NSW, a write-down could create more issues than it solves, so in those cases the state government should refund consumers the difference through a rebate.
At a time when governments are concerned about energy affordability, NSW, Queensland and Tasmania have a real opportunity to do something about it. They should seize it.
How to prevent this happening again
There will always be pressure to spend more. At the moment, concerns about South Australia’s reliability could very well lead to further investment in network infrastructure.
Policymakers must also deal with the risk that, in future, parts of the network may no longer be needed. The grid may need to be reconfigured as new technologies emerge, some communities go off-grid, and new energy sources arise in new locations.
For now, consumers bear this risk: they are locked into paying for assets whether or not they are needed. In future, the risk should be shared between consumers and businesses; this would encourage businesses to avoid overbuilding in the first place and instead consider alternative solutions.
With the focus on reliability right now, governments are at risk of repeating mistakes of the past. The truth is that Australia already has a very reliable grid.
On average across the National Electricity Market, consumers experience less than two-and-a-half hours in unplanned outages per year. Reducing that by a few minutes of supply each year is very expensive. Politicians typically value reliability more than consumers, but ultimately it is consumers who foot the bill.
<img src="https://counter.theconversation.com/content/93654/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">State governments now have an opportunity to reset the clock – to pay off the mistakes of the past and let consumers guide choices about our future grid.
Kate Griffiths, Senior Associate, Grattan Institute
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/youre-paying-too-much-for-electricity-but-heres-what-the-states-can-do-about-it-93654" target="_blank">original article</a>.
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You're paying too much for electricity, but here's what the states can do about it: Kate Griffiths

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GUEST OBSERVER
Across most of Australia, the electricity industry is in the midst of a major rollout of so-called “smart meters” led by retailers – your household may very well have one already.
With the exception of Western Australia and the Northern Territory (and Victoria which has them already), all new and replacement meters will now be smart. This means that instead of simply recording electricity use for later checking, they can give retailers detailed consumption data, measured at 30-minute intervals or less – and also allow the supply to be turned on or off remotely.
Retailers can also offer to upgrade select customers’ existing meters to smart meters (again with the exception of Victoria, which has a blanket rollout), and consumers are free to accept or decline (except where a broken or ageing meter is being replaced).
This is an important testing ground for the soon-to-be legislated Consumer Data Right, which aims to give consumers better access to their own data, which in turn will help them save money.
But our research has found that under the current policy settings consumers are not getting the full range of benefits from the smart meter rollout, for a few main reasons.
Getting smart on bills
The main consumer benefit of a smart meter is to reduce electricity bills. But to do this, consumers need easy access to their daily electricity usage data, which can then be translated into useful information that enables them to compare tariffs. Consumers ought to be able choose such value-added services from third party providers by granting access to this data.
But consumers cannot currently access their daily electricity usage data when they need it free of charge. There is no common data format nor a simple way to authorise third-party access to the data, thus creating extra costs for third parties.
Retailers can charge a fee to access consumer data, effectively blocking rival companies that might be offering cheaper retail tariffs. But if consumers themselves could allow third parties to access their metering data, subject to security and privacy protections, it would give those consumers a much wider choice of tariffs and services.
Currently the federal government’s Energy Made Easy website (run by the Australian Energy Regulator) does not let consumers compare tariffs and services in a timely and user-friendly way. There are proposals to reform the website, and there is no shortage of good existing examples on which it might be modelled, such as the Victorian government’s Switch On and the North American Green Button initiative.
Getting involved
It is not enough that these tools simply exist; consumers must be actively encouraged to use them. This involves a wide-ranging, effective and ongoing consumer education campaign.
While there are highly active energy “prosumers” who generate and sell their own power and actively monitor and manage their energy use, most households do not fall into this category.
Most customers need information and encouragement to take up opportunities arising out of smart meter data. This will require much better communications by governments, retailers, networks, consumers and community organisations as an integral part of the smart meter rollout.
No one left behind
Electricity is an essential service, and policymakers need to ensure that the benefits of smart meters flow to everyone, not just the most switched-on customers.
Even with the help of the tools and campaigns described above, there are those who may still miss out on the benefits – such as, for example, vulnerable consumers who engage with smart meters but end up making poor choices through a lack of financial or digital literacy.
What’s more, remotely read meters make it easier to disconnect users, which again is likely to disproportionately affect the most vulnerable members of the community. Adequate consumer protections need to be built into the smart meter rollout. This involves ensuring that hardship provisions in the National Energy Customer Framework, concessions, and information provision keeps pace with developments in the metering market.
The retailer-led rollout is likely to be slow and could lead to a highly uneven patchwork of meters across Australia, and therefore uneven customer benefits. There are many reasons for this. Existing “dumb” meters have a long useful life and regularly last more than 30 years (some are more than 40 years old!); there is a lack of scale in the deployment by retailers who do not have contracts with all customers in a local area; certain customer groups may be deemed “uneconomic” by retailers and not offered new meters; and households in areas with poor mobile network coverage (most likely rural and regional areas) are unlikely to be offered a smart meter.
Such a large-scale rollout of new meters, which is piecemeal in some places and not in others, is bound to be difficult and there is no perfect model. The market for smart meters is in its infancy and needs careful monitoring and evaluation as it develops. But policymakers nevertheless need to get on the front foot and guarantee simple access to smart meter data and services for all consumers; actively encourage and demonstrate to consumers how these services can lower their electricity costs; and most of all ensure that no one is left behind in this emerging market.
Sangeetha Chandrashekeran, Lecturer in Geography and Deputy Director Melbourne Sustainable Society Institute, University of Melbourne
<img src="https://counter.theconversation.com/content/92029/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">This article was coauthored by Gavin Dufty, Policy and Research Manager, St Vincent de Paul, and Dr Martin Gill, an independent energy consultant and consumer advocate who has previously developed smart metering products.
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/smart-electricity-meters-are-here-but-more-is-needed-to-make-them-useful-to-customers-92029" target="_blank">original article</a>.
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Smart electricity meters are here, but more is needed to make them useful to customers

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The key economic event next week will be the release of the September quarter Consumer Price Index. 
Westpac’s forecasts are: 0.74% for headline; 0.27% for Trimmed Mean; and 0.32% for weighted median. 
The jump in the headline is largely driven by sharply rising electricity prices. They are expected to increase by 18% in Sydney; 5% in Melbourne; 12% in Brisbane; 10% in Perth and 20% in Adelaide. The more modest increase in Melbourne is due to the increases being spread over the September and March quarters while Perth is not on the national grid. In the other states energy prices are generally adjusted in the September quarter. 
The direct impact of the rise in electricity prices adds 0.46 percentage points to the headline inflation measure. 
Of course, policy is impacted by the movements in the underlying measures: the Trimmed Mean and the Weighted Median. 
Our estimates indicate that momentum in these core measures is slowing. The six month annualised rate would slow from 2.1% three months ago to 1.7%. Underlying inflation for the first 9 months of the year would be printing 1.3%, making it likely that the actual result will settle below the mid- point of the Reserve Bank’s forecast range of 1.5%-2.5% (already 0.5% below the mid- point of the target range). 
Key assumptions behind our forecasts include the expectation that margins in food retailing; clothing and footwear ;household goods; and recreation will remain under pressure. Health costs are expected to continue to fall while the softening in the Sydney and Melbourne housing markets is likely to take some pressure off housing construction costs (usually the largest component of the Trimmed Mean). 
We also note that in the minutes of the October meeting of the Reserve Bank Board it was noted that "liaison with businesses had suggested that a number of firms, particularly in the retail and manufacturing sectors, were largely absorbing increases in energy costs into margins rather than passing them through to final prices.” 
The surprise 0.6% fall in nominal retail sales in August and the downward revision to the July number (0% to -0.2%) also point to subdued price pressures in the retail sector in the September quarter. 
The other issue challenging the outlook for inflation is the expected revisions to the weights to be used in the Consumer Price Index. The revised weights (reviewed every 6 years) are aimed at a more accurate mix of the expenditure patterns of consumers. The net impact is typically negative since consumer spending tends to rise for items where relative prices have declined and vice versa. The Australian Bureau of Statistics estimates that previous changes in weights have lowered the CPI by around 0.2 percentage points. 
Our preliminary estimates point to a reduction in the measure of the CPI of a little more than this benchmark with the headline rate being reduced by up to 0.4% and the underlying by 0.3%.
So, if momentum in underlying inflation is slowing into 2018 and there is a technical need to lower the forecasts then the Bank will face a challenge in credibly maintaining its 1.5-2.5% forecast for underlying inflation in 2018 and its 2-3% forecast for underlying inflation for 2019. 
Recall the last time the Bank was confronted with the need to significantly revise inflation forecasts. In April 2016 the Bank was expecting an underlying CPI print of around 0.6% and the result was 0.2% and internally the Bank lowered its underlying forecast from 2.5% ( 2-3%) to 1.5% ( 1-2%). It cut rates in May by 0.25%. That move was followed by another cut of 0.25% in August. 
The result of that “pure” response to the inflation shock was to reignite house prices. Macro prudential policies , largely targeting investors, and a rate hike from the banks successfully deflated the booming housing market in 2015. House price inflation in Sydney slowed from 25% (6 month annualised) to -4.4% (April 2016).In response to the subsequent rate cuts house price inflation in Sydney lifted to 22.4% (January 2017). The recent “second round” of macro prudential policies has since slowed house price inflation in Sydney to 1.7% in September 2017. Comparable but less volatile trends were apparent in Melbourne. 
This would be a definitive lesson for the new Governor that rigid adherence to an inflation targeting policy is likely to create disturbances in asset markets if inflation is structurally slowing. 
We have seen central banks offshore take a similar approach by tending to look through the immediate data on inflation and pitch policy towards a medium term view (although the Bank of England seems poised to make a policy mistake). This is why we are confident that the FED will raise rates in December despite core PCE running at 1.4%. 
Chair Yellen continues to voice confidence in the medium term “achievability” of the 2% target, with a particular aim of holding up inflationary expectations. 
The FED also has a more difficult task in balancing risks around asset markets than we have in Australia. 
Consider the cumulative increases in the various national house price indices since 2010. 
Case Schiller (US): 35%; Core Logic (Australia) 43%; CREA (Canada): 68%. 
Australia has an effective macro prudential policy approach for dealing with housing markets. Four banks control around 90% of the housing assets and there is a central regulator ( APRA). In the US, the housing market is much less concentrated with the unregulated sectors also playing a significant role. 
The policy mix which the RBA has enunciated of targeting asset markets with macro prudential and growth/inflation with interest rates is, arguably, unavailable to the FED and policy needs to be set with an “eye” on asset markets. 
That does not mean that the RBA would risk financial stability in the light of a stubbornly low inflation print but it does mean that raising rates while growth and inflation underperform is also not an attractive or necessary option. Recall that in the October minutes the RBA Board specifically noted that moves towards higher interest rates in other economies did not have” mechanical implications” for the setting of policy in Australia. The timing of any changes in interest rates would be dependent on developments in domestic economic conditions. 
So, in conclusion, there is a significant risk that inflation falls short of the RBA’s current forecasts in 2018 and 2019. However financial stability risks preclude cutting rates. On the other hand raising rates in such an environment seems equally unnecessary while effective macro prudential tools are available to deal with unwelcome developments in asset markets.
Bill Evans is chief economist at Westpac.
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Inflation - an inconvenient truth

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GUEST OBSERVATION
The International Energy Agency (IEA) may be underestimating Australian household energy bills by 25% because of a lack of accurate data from the federal government.
The Paris-based IEA produces official quarterly energy statistics for the 30 member nations of the Organisation for Economic Cooperation and Development (OECD), on which policymakers and researchers rely heavily. But to provide this service, the IEA relies on member countries to provide it with good-quality data.
Last month, the agency published its annual summary report, Key World Statistics, which reported that Australian households have the 11th most expensive electricity prices in the OECD.
But other studies – notably the Thwaites report into Victorian energy prices – have reported that households are typically paying significantly more than the official estimates. In fact, if South Australia were a country it would have the highest energy prices in the OECD, and typical households in New South Wales, Queensland or Victoria would be in the top five.
A spokesperson for the federal Department of Environment and Energy, the agency responsible for providing electricity price data to the IEA, told The Conversation:
"Household electricity prices data for Australia are sourced from the Australian Energy Market Commission annual Residential electricity price trends report. The national average price is used, with GST added. It is a weighted average based on the number of household connections in each jurisdiction.
"The Australian energy statistics are the basis for the Australia data reported by the IEA in their Key world energy statistics. The Department of the Environment and Energy submits the data to the IEA each September. Some adjustments are made to the AES data to conform with IEA reporting requirements."
But it is clear that the electricity price data for Australia published by the IEA is at least occasionally of poor quality.
The Australian household electricity series in the IEA’s authoritative Energy Prices and Taxes quarterly statistical report stopped in 2004, and only resumed again again in 2012.
Between 2012 and 2016, the IEA’s reported residential price series data for Australia showed no change in prices.
Yet the Australian Bureau of Statistics’ electricity price index, which is based on customer surveys, showed a roughly 20% increase in the All Australia electricity price index over this period.
Australia is also the only OECD nation not to report electricity prices paid by industry.
This year’s reported household average electricity prices are almost certainly wrong too. The IEA reports that household electricity prices in Australia for the first quarter of 2017 were US20.2c per kWh.
At a market exchange rate of US79c to the Australian dollar, this puts Australian household electricity prices at AU28c per kWh. Adjusted for the purchasing power of each currency, the comparable price is AU29c per kWh.
By contrast, the independent review of the Victorian energy sector chaired by John Thwaites surveyed the real energy prices paid by customers, as evidenced by their bills. In a sample of 686 Victorian households, those with energy consumption close to the median value were paying an average of AU35c per kWh in the first quarter of 2017. This is 25% more than the IEA’s official estimate. At least part of this difference is explained by the AEMC’s assumption that all customers in a competitive retail market are supplied on their retailers’ cheapest offers. But this is not the case in reality.
Surveying real electricity and gas bills drastically reduces the range of assumptions that need to be made to estimate the price paid by a representative customer. Indeed, as long as the sample of bills is representative of the population, a survey based on actual bills produces a reliable estimate of representative prices in retail markets characterised by high levels of price dispersion, as Australia’s retail electricity markets are.
Pointing to a reliable estimate of Victoria’s representative residential price is, of course, not enough to prove that the IEA’s estimate is wrong. It could just as easily mean that Victorians are paying way more than the national average for their electricity.
But the idea that Victorians are paying more than average does not stack up when we look at the state-by-state data, which suggests that Victoria is actually somewhere in the middle. Judging by the prices charged by the three largest retailers in each state and territory, Victorian householders are paying about the same as those in New South Wales and Queensland, less than those in South Australia, and more than those in Tasmania, the Northern Territory, Western Australia and the Australian Capital Territory.
<img src="https://images.theconversation.com/files/187510/original/file-20170926-25765-1cdi55t.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
Residential electricity prices. Author provided
The IEA can not reasonably be blamed for the inadequate residential data for Australia that they report, and the nonexistent data on electricity prices paid by Australia’s industrial customers. The IEA does not do its own calculation of prices in each country, but rather it relies on price estimates from official sources in those countries.
An obvious question that arises from this is where Australia really ranks internationally if we used prices that reflect what households are actually paying.
This is contentious, not least because prices in New South Wales, Queensland and South Australia increased – typically around 15% or more – from July this year. We do not know how prices have changed in other OECD member countries since the IEA’s recent publication (which covered prices for the first quarter of 2017). But we do know that prices in Australia have been far more volatile than in any other OECD country.
Assuming that other countries’ prices are roughly the same as they were in the first quarter of 2017, our estimate using the IEA’s data is that the typical household in South Australia is paying more than the typical household in any other OECD country. The typical household in New South Wales, Queensland or Victoria is paying a price that ranks in the top five.
It should also be remembered that these prices are after excise and sale tax. Taxes on electricity supply in Australia are low by OECD standards – so if we use pre-tax prices, Australian households move even higher up the list.
<img src="https://counter.theconversation.com/content/84681/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">There are serious question marks over Australia’s official electricity price reporting. Policy makers, consumers and the public have a right to expect better.
Bruce Mountain is director, carbon and energy markets at Victoria University.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/australian-household-electricity-prices-may-be-25-higher-than-official-reports-84681" target="_blank">original article</a>.
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Australian household electricity prices may be 25% higher than official reports: Bruce Mountain

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EXPERT OBSERVER<img src="https://counter.theconversation.edu.au/content/76866/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
A new roadmap for Australia’s electricity networks outlines a national plan to keep the lights on, make sure bills are affordable, and decarbonise our electricity industry by mid-century.
The plan, by CSIRO and Energy Networks Australia, sets out measures that could save households A$414 a year on average, by generating their own electricity through “distributed” technologies such as solar panels and batteries. It envisages that Australia could save a total of A$101 billion by 2050, while also bringing net greenhouse emissions to zero.
As described in an earlier draft report last December, Australia’s electricity networks can be transformed to give millions of customers more choice and control over their energy, while also meeting Australia’s international climate change commitments.
The roadmap calls for a coordinated approach, but how will that play out in practice?
<a href="https://www.propertyobserver.com.au/images/2017/05/05/Screen%20Shot%202017-05-05%20at%2012.53.50%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/05/Screen%20Shot%202017-05-05%20at%2012.53.50%20PM.png" alt="">
Regional analysis
While it is a national plan, each state and territory will play its own distinct role.
Each faces different circumstances in terms of electricity demand growth, renewable resources, state renewable energy policies, and the age and fuel mix of their existing electricity infrastructure.
The full report outlines what each state and territory can expect.
New South Wales
The renewable electricity generation share in NSW is expected increase steadily to 28 percent by 2030. Thereafter, new generation capacity building is expected to accelerate to fill the gap left by more rapid coal capacity retirement.
NSW’s rooftop solar panel capacity will increase by more than 400 percent by 2030, with more than 6,000 megawatt hours in small-scale battery storage. These changes will be driven largely by falling costs, which will encourage wider customer adoption and the use of larger system sizes.
NSW customers will become a significant player in Australia’s overall energy system, with the capacity of the state’s rooftop solar panels projected to exceed 11,000MW by 2030 - more than the state’s coal-fired capacity today.
Queensland
Similarly to NSW, were the lack of coal plant retirement to be the main driver, Queensland’s renewable electricity share would lag other states at only 12% by 2030, with more rapid transformation occurring in the period between 2030 and 2050. However, state government renewable energy schemes could modify this outcome.
Queensland will see a huge increase in rooftop solar panels, of more than 500 percent by 2030. By then, it is also forecast to have more than 10,000MWh of small-scale battery storage capacity – the equivalent of 760,000 residential battery storage systems. That will rise to the equivalent of more than 2 million household battery systems by 2050.
High levels of rooftop solar and other distributed generation will create challenges for Queensland’s electricity network. There is the potential for “reverse flow” (where local generation exceeds consumption) in many parts of the Queensland power system within 15 years.
Victoria
Victoria is assumed to meet its target of 40 percent renewable share of generation by 2025 and maintain that share for next 15 years before investment accelerates again in the 2040s.
Victoria is also set for a 500% increase in rooftop solar panels by 2030, and more than 6,000MWh in small-scale battery storage. These batteries would represent the equivalent of 440,000 residential battery storage systems installed by 2030, and more than 1 million by 2050.
South Australia
South Australia has the second highest share of renewables of all states at around 40 percent and is expected to steadily improve that position until other states accelerate their own building programs in the 2030s.
South Australia’s rooftop solar panels will increase by more than 300 percent by 2030, with 4,000MWh of small-scale battery storage.
While South Australia already leads the nation in the installation of new large-scale renewable generation and is set to become a leading installer of large-scale battery capacity, small-scale renewables and batteries will also play an important part in its future energy mix, as in other states.
SA will lead the way in large-scale solar installation, although rooftop solar is where the real nationwide growth will be. AAP Image/Lyon Solar
Western Australia
WA’s rooftop solar power capacity will triple by 2030, combined with a forecast 2,000MWh of small-scale battery storage.
More than 40 percent of the states’s electricity is projected to come from renewable sources by 2030, as is the case in South Australia today.
Tasmania
Tasmania is the leading renewable generation state and its hydro generation and storage capacity could support grid stability in the broader National Energy Market into the future.
Residential battery storage would play a small but significant role in supporting the energy transformation in Tasmania. More than 1,000MWh in onsite battery capacity could be installed in Tasmania by 2030, and more than 2,000MWh by 2050.
Paul Graham is chief economist, CSIRO energy, CSIRO and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/paul-graham-1898" target="_blank">here</a>.
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The solar panel and battery revolution: how will your state measure up?

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<img src="https://counter.theconversation.edu.au/content/75310/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">GUEST OBSERVER
Australia’s residential electricity prices are amongst the highest in the world so it’s not hard to see why customers have been up in arms about high prices.
Comparing the charges for electricity retail services in Australia and in other countries, we find Australia’s charges are much higher. The difference is particularly stark when comparing retailer charges in New South Wales with those in Denmark, Germany, Italy and Britain which have the highest electricity prices in Europe.
<a href="https://www.propertyobserver.com.au/images/2017/04/4/energy.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/4/energy.jpg" width="600" height="513">
 
Residential electricity prices in Canada and the United States are typically less than half those in Australia and so the situation in Australia is even more damning in that comparison.
The prime minister’s recent request to the ACCC to review the retail end of the electricity market will put this part of the industry under the spotlight. This request follows the Victorian government’s appointment of a panel to review the Victorian retail energy market.
But rising concern about retail markets is not unique to Australia. In Britain, retail energy markets have received prime ministerial attention for many years. In what the British government described as the most significant review of its industry in the 30 years since privatisation, their Competition and Markets Authority concluded that significant changes needed to be made, although some ex-regulators disputed their estimates of the problem.
These reviews indicate changing attitudes in government. The Australian Energy Markets Commission reviews Australia’s retail energy markets every year and has consistently concluded that they are working well. Similarly, the Independent Pricing and Administrative Tribunal advised the New South Wales government last year that their retail energy market is working well. Evidently the Commonwealth and Victorian government are now seeking a second opinion.
<h2 class="caption">How Australia’s electricity retail market is set up</h2>
The business of retailing electricity is really finding out what customers want and then offering deals that meet those requirements. More specifically, it’s the business of procuring electricity and network services, acquiring retail customers, selling to those customers and then metering, billing and collecting revenue.
Analysis of regulatory filings shows that around 6.5 million of Australia’s 10 million households and small business customers (those in New South Wales, South Australia, South East Queensland and Victoria) can choose their retailer. These four deregulated markets are dominated by three retailers that also own sufficient generation to supply those customers.
After more than a decade of retail competition, the three big retailers typically still supply at least 80% of all customers in each regional market. While in some of the regional markets, customers can choose amongst 24 retailers, the new entrant retailers have invariably grown their customer base slowly, if at all, despite powerful incentives to the contrary.
Social services organisations, customer advocates and some independent energy economists have long voiced concerns about retail energy markets. Their concerns centre on the amount that the retailers’ charge, that customers are not happy and that electricity is becoming increasingly unaffordable.
The Grattan Institute recently published a blunt critique that went one step further. It suggested that not only are retailers charging a great deal, but that this is explained not by high costs but by excessive profits.
<h2 class="caption">Competition and consumer choice</h2>
The official reviews in Australia hitherto have taken the line that if customers don’t engage in the market they can’t complain. But electricity is complex and customers need skill and a great deal of effort to reliably evaluate the market.
Since it’s a repeat purchase, active engagement means ongoing effort. Even customers with the necessary skills seem to often conclude they have better things to do with their time, as evidenced in switching rates. Pervasive advertising and the profitability of the commercial switching websites provides additional evidence of the challenge new entrant retailers face in acquiring customers.
Why would it be so hard and expensive for new entrant retailers to attract customers if they were not loyal? Therein lies an explanation for Australia’s incumbent retailers’ apparently extraordinary profits.
Andy Vesey, the chief executive of Australia’s largest electricity retailer AGL described the retail market as one that penalises customer loyalty. While such candour is admirable, even hardcore market economists question the effectiveness of a market in which retailers profit most from their most loyal customers.
The issue is non-trivial: in its cost of living surveys, customer advocate Choice has found that electricity prices are consistently the top cost of living concern for households. Electricity poverty payments to deal with affordability problems, are understood to now be costing state governments several hundreds of millions of dollars each year.
<h2 class="caption">Next steps</h2>
While it has been a long time coming, the ACCC’s review in addition to the Victorian government’s review, is to be welcomed.
A great deal of effort will need to be made to get to the heart of the matter. Retail energy markets are complex and the amount that a retailer charges a customer for its services is not known for certain – it has to be estimated by subtracting the charges for network services, wholesale production, metering and environmental charges from the customer’s actual bill.
Not only do customers’ bills differ greatly but the components of the bill differ greatly for different customers and so obtaining reasonable estimates of retailers’ charges across the industry requires effort and care.
Fairly evaluating retailers’ offers and how much of their offers are explained by the retailers’ charge, is the place to start. Then finding out what customers are actually paying, and what retailers’ costs and profit margins are, is essential in assessing the nature and extent of market failure.
The reviews will need to cover tricky ground in assessing the economies of scale in retailing, and the value to electricity retailers of also owning electricity generation businesses that supply them. The extent to which high customer acquisition costs provide an advantage to the dominant incumbent retailers who don’t incur those costs unless they are seeking to expand their market share must also feature in the analysis.
There is reason to be hopeful about the ACCC and Victorian government reviews. Done well, they can allow sunlight into this part of the industry. As they say in regulatory circles, sunlight is the best disinfectant. 
Bruce Mountain is the director of Carbon and Energy Markets, Victoria University and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/bruce-mountain-141253" target="_blank">here</a>.
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Comparing Australia’s electricity charges to other countries shows why competition isn’t working: Bruce Mountain

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<img src="https://counter.theconversation.edu.au/content/63382/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Solar households in Victoria, South Australia and New South Wales will this year cease to be paid for power they export into the electricity grid.
In South Australia, some households will lose 16 cents per kilowatt-hour (c/kWh) from September 31. Some Victorian households will lose 25 c/kWh, and all NSW households will stop receiving payments from December 31.
These “feed-in tariffs” were employed to kick-start the Australian solar photovoltaic (PV) industry. They offered high payments for electricity fed back into the grid from roof-mounted PV systems. These varied from state to state and time to time.
For many householders, these special tariffs are ending. Their feed-in tariffs will fall precipitously to 4-8 c/kWh, which is the typical rate available to new PV systems. In some cases households may lose over A$1,000 in income over a year.
But while the windback may hurt some households, it may ultimately be a good sign for the industry.
<h2>What can households do?</h2>
At present, householders with high feed-in tariffs are encouraged to export as much electricity to the grid as possible. These people will soon have an incentive to use this electricity and thereby displace expensive grid electricity. This will minimise loss of income.
Reverse-cycle air conditioning (for space heating and cooling) uses a lot of power that can be programmed to operate during daylight hours when solar panels are most likely to be generating electricity. The same applies to heating water, either by direct heating or through use of a heat pump. For heating water, solar PV is now competitive with gas, solar thermal and electricity from the grid.
Batteries, both stationary (for house services) and mobile (for electric cars), will also help control electricity use in the future.
<h2>A boost for the industry?</h2>
The ending of generous feed-in tariffs is likely to modestly encourage the solar PV industry. This is because many existing systems have a rating of only 1.5 kilowatts (kW), which could not have been increased without loss of the generous feed-in tariff.
Many householders will now choose to increase the size of their PV system to 5-10kW – in effect a new system given the disparity in average PV sizing between then and now.
A new large-scale PV market is also opening on commercial rooftops. Many businesses have daytime electrical needs that are better matched to solar availability than are domestic dwellings.
This allows businesses to consume the large amounts of the power their panels produce and hence minimise high commercial electricity tariffs. The constraining factors in this market are often not technical or economic, and include the fact that many businesses rent from landlords and tend to have short terms for investment. Business models are being developed to circumvent these constraints.
The rooftop PV market also now has large potential in competing with retail electricity prices. The total cost of a domestic 10kW PV system is about A$15,000. Over a 25-year lifetime this would yield an energy cost of 7 c/kWh.
This is about one-quarter of the typical Australian retail electricity tariff, about half of the off-peak electricity tariff, and similar to the typical retail gas tariff. Rooftop PV delivers energy services to the home more cheaply than anything else and has the capacity to drive natural gas out of domestic and commercial markets.
According to the Australian Bureau of Statistics, there are 9 million dwellings in Australia, and the floor area of new residential dwellings averaged 200 square metres over the past 20 years. Some of these dwellings are in multi-storey blocks, others have shaded roofs and, of course, south-facing roofs are less suitable than other orientations for PV.
However, if half the dwellings had one-third of their roofs covered in 20 percent efficient PV panels then 60 gigawatts (GW) could be accommodated. For perspective, this would cover 40 percent of Australian electricity demand. Commercial rooftops are a large additional market.
<h2>Solar getting big</h2>
Virtually all PV systems in Australia are roof-mounted. However, this is about to change because ground-mounted PV systems are becoming competitive with wind energy. We can see the falling cost of solar in the Queensland Solar 120 scheme, the Australian Capital Territory wind and PV reverse auctions and the Australian Renewable Energy Agency Large Scale Solar program , which all point to the declining cost of PV and wind.
Together, wind and PV constitute virtually all new generation capacity in Australia and half of the new generation capacity installed worldwide each year.
The total cost of a 10-50 megawatt PV system (1,000 times bigger than a 10kW system) is in the range A$2,100/kW (AC). A 25-year lifetime yields an energy cost of 8 c/kWh. This is only a little above the cost of wind energy and is fully competitive with new coal or gas generators.
Hundreds of 10-50MW PV systems can be distributed throughout sunny inland Australia close to towns and high-capacity powerlines. Australia’s 2020 renewable energy target is likely to be met with a large PV component, in addition to wind.
Wide distribution of PV and wind from north Queensland to Tasmania minimises the effect of local weather and takes full advantage of the complementary nature of the two leading renewable energy technologies.
The declining cost of PV and wind, coupled with the ready availability of pumped hydro storage, allows a high renewable electricity fraction (70-100 percent) to be achieved at modest cost by 2030.
Andrew Blakers professor of engineering, Australian National University and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/andrew-blakers-3328" target="_blank">here</a>.
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