<a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> has lodged plans for a $750 million, three-tower mixed-use precinct that would complete the long-running redevelopment of Carlton's former Carlton United Breweries site.

The proposal at <a href="https://www.apartments.com.au/new-apartments/185-195-queensberry-street-carlton-vic-3053">46-78 Bouverie Street and 185-195 Queensberry Street</a> spans a 6,468 sqm site, the last remaining undeveloped parcels within the former brewery's 2007 masterplan.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the development will comprise two purpose-built student accommodation towers and a third build-to-sell apartment tower above a shared commercial podium and basement.

Across the three towers, SP Setia is proposing 606 build-to-sell apartments and 1,499 student accommodation units containing 2,009 beds.

The apartments will sit in the tallest tower, which will rise nearly 200m and 55 storeys. It will become&nbsp;one of the more substantial new build-to-sell apartment projects at the northern edge of Melbourne's CBD.

The apartment mix is weighted toward smaller inner-city product, with 188 studios, 206 one-bedroom apartments, 192 two-bedroom apartments and 20 three-bedroom apartments

<img alt="First look: SP Setia plans three-tower finale for Carlton’s former CUB precinct" data-entity-type="file" data-entity-uuid="8271bc87-1b0a-41b7-ac73-a425ee375261" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/3_2.png?VersionId=G4lw23o90B1boX4k4dj7rdz2ZEajS9wy" />

Part of the precinct will be a large-scale&nbsp;3,684 sqm supermarket and a further 2,198 sqm of speciality retail, creating close to 5,900 sqm of new commercial space within the precinct.

But one of the biggest components of the proposal is what sits between the buildings.

Around 4,650 sqm, or roughly 72 per cent of the site, will be publicly accessible open space, incorporating plazas, pedestrian connections, landscaped laneways and retail spill-out areas.

The ground plane is intended to finally complete pedestrian connections envisaged when the CUB masterplan was first approved nearly two decades ago, stitching together Victoria Street, Queensberry Street, Bouverie Street and Swanston Street through the former brewery precinct.

Urbis said the development would "complete the CUB precinct", with the public realm providing important north-south and east-west connections through what is currently the final undeveloped portion of the masterplanned site.

SP Setia is also exploring a new linear park within the Bouverie Street road reserve, with the concept to be developed further with the City of Melbourne through the planning process.

The proposal is being pursued through the Victorian Government's Development Facilitation Program under Clause 53.23 for significant residential development with affordable housing.

The planning report acknowledges the proposed heights exceed those contemplated under the original Comprehensive Development Plan and masterplan, but argues the built-form context has changed considerably over the past two decades.

Urbis said the three towers would instead create a stepped transition between Carlton and the Hoddle Grid, rising progressively from the 94.1-metre Tower One along the Queensberry Street edge to the 199.44-metre Tower Three closer to the established CBD-scale buildings to the south.

<img alt="SP Setia" data-entity-type="file" data-entity-uuid="e885a07a-592c-40fc-bf82-e6dbaf32da54" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.52.24%E2%80%AFAM.png?VersionId=7s_ErUkSKAdY1mAWp3GRZgMNCGtwhk5m" />

SP Setia plans to deliver the development across three stages.

Stage One would deliver the basement, podium and retail areas for the entire precinct alongside the first student tower. Tower Two would follow in Stage Two, before the 606-apartment Tower Three is delivered as the final stage.

If approved and delivered, the project would close out a redevelopment process that has been underway since the former brewery masterplan was approved in 2007, adding more than 2,600 student beds and apartments to a precinct already home to Swanston Central, the Barak Building, RMIT Design Hub and several large student accommodation developments.

&nbsp;

&nbsp;

Joel Robinson

SP Setia plans three-tower finale for Carlton’s former CUB precinct

Melbourne developer Lowe Living is seeking to add to its growing bayside apartment pipeline, filing plans for a boutique eight-residence development in tightly held Middle Park.

Lowe Living, which has built much of its development portfolio across Melbourne's affluent bayside and south-east suburbs, is behind the plans for the 730 sqm site at <a href="https://www.apartments.com.au/new-apartments/123-125-erskine-street-middle-park-vic-3206">123-125 Erskine Street</a>, just off Armstrong Street and within the Armstrong Street Neighbourhood Activity Centre.

The developer is seeking approval for a five-storey residential building above two basement levels, with just eight large-format apartments and 18 car spaces.

“This is a deliberately very different proposition for us,"&nbsp;Tim Lowe, Co-Founder of Lowe Living, said.

"Eight residences is exceptionally boutique, but that's precisely what this site calls for.

“There is a strong community in Middle Park and the surrounding suburbs who have spent decades building a life here. They no longer want the maintenance of a large period home, but they aren't prepared to compromise on space, quality or location. We think there is a real opportunity to capture that hyper local market. A site like this rarely comes to market.”

<img alt="Lowe " data-entity-type="file" data-entity-uuid="875fe572-0f14-4d90-9e11-55b28dd07731" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.42.49%E2%80%AFAM.png?VersionId=GDNQRv9BfpR9r1zkZ5UDyUM4ZvpIksut" />

The low-density proposal has been designed by Cera Stribley and is being progressed through the Victorian Government's Great Design Fast Track pathway, having already secured eligibility from the Minister for Planning.

The Office of the Victorian Government Architect supported its eligibility after finding the proposal demonstrated consistency with the program's seven design principles, while the project's financial feasibility has also been independently confirmed by Invest Victoria.

The project is targeting the downsizer market, with the planning documents describing the homes as larger-format residences and noting the two penthouses could otherwise have been configured as four separate apartments.

<img alt="Lowe 2" data-entity-type="file" data-entity-uuid="60ab0987-2da6-4175-adac-315dcf6053c6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.43.15%E2%80%AFAM.png?VersionId=bOCPH0B2MFwlmaRW.TTCF9TzyifgVoQI" />

The site has dual frontage to Erskine Street and Canterbury Place and currently comprises a collection of commercial buildings used as offices, including a former heritage bakehouse, a former stable, a later gabled addition and a central courtyard.

It sits within the Commercial 1 Zone and the Armstrong Street Commercial Precinct heritage overlay, with the existing property classified as a contributory heritage place.

Heritage has subsequently played a significant role in Cera Stribley's design.

The front section of the former bakehouse facing Erskine Street will be retained, including its return walls, street-facing hipped roof and chimneys, while the Erskine Street façade and part of the western return wall of the former stable will also be incorporated into the new development.

Levels four and five will be set back five metres from the retained stable façade, while bricks removed through demolition are proposed to be salvaged and reused within the new building where possible.

<img alt="Lowe 3" data-entity-type="file" data-entity-uuid="e97927a9-a2de-4a0f-83b6-65451238abfa" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.43.06%E2%80%AFAM.png?VersionId=VR44AChLrX9q1XPB9GvVQV.ALXXbe4gC" />

Rather than presenting as a single five-storey building to Erskine Street, Cera Stribley has broken the development into a series of distinct forms.

A three-storey infill element will sit between the retained bakehouse and stable façades, with the upper levels recessed behind the heritage fabric. Canterbury Place will similarly feature two three-storey podium forms, separated by a central pedestrian accessway, before the upper two levels step back from the street.

A pedestrian through-link will run through the centre of the project between Erskine Street and Canterbury Place, creating entrances from both sides of the site and introducing landscaping and communal areas through the ground plane.

Landscape architect Acre has designed planting across the ground level, private terraces and upper levels, including a feature canopy tree at level three and integrated planting and arbours across the level four terraces. Five existing Erskine Street trees are proposed to be retained.

Sustainability is also a significant component of the Great Design Fast Track application. The apartments are targeting an average eight-star NatHERS rating, with no residence below 6.5 stars, while the project has achieved a 75 per cent BESS score. Seven of the eight apartments are designed for cross-ventilation, with the remaining residence using mechanically assisted natural ventilation.

The plans also incorporate an 8kWp rooftop solar system, a 5,000-litre rainwater tank and infrastructure allowing future electric vehicle charging for every residence.

Lowe has a strong portfolio across Melbourne's blue-chip suburbs. They recently launched <a href="https://www.apartments.com.au/new-apartments/jardin-house-by-lowe-living-camberwell-335-camberwell-road-camberwell-vic-3124">Jardin House by Lowe Living</a> in Camberwell, their first development in the Stonnington LGA.

Lowe Living unveils Middle Park apartment development

Article summary

<ul data-end="888" data-start="289">
	<li data-end="442" data-section-id="8tsh6o" data-start="289">DVB Projects is preparing to launch its second Gold Coast apartment development, with demolition now underway at 137 Old Burleigh Road, Broadbeach.</li>
	<li data-end="573" data-section-id="1nyxl3e" data-start="443">The 34-level tower will comprise just 49 ultra-luxury residences, including half-floor, full-floor and penthouse apartments.</li>
	<li data-end="717" data-section-id="oiyimj" data-start="574">The launch follows strong demand at DVB's nearby Sea Glass project, which is more than 50 per cent sold and currently under construction.</li>
	<li data-end="888" data-section-id="epk9o9" data-start="718">The development adds to the transformation of Old Burleigh Road, with premium beachfront apartment projects continuing to reshape the tightly held Broadbeach strip.</li>
</ul>

<a href="https://www.apartments.com.au/developers/dvb-projects">DVB Projects</a> is preparing to launch its second Gold Coast apartment development, with demolition now underway on the Broadbeach site as the Sydney developer moves closer to bringing the ultra-luxury project to market.

The 34-level tower at <a href="https://www.apartments.com.au/new-apartments/137-old-burleigh-road-broadbeach-qld-4218">137 Old Burleigh Road</a> will comprise just 49 residences, ranging from half-floor apartments through to full-floor homes and a penthouse. The launch follows the strong sales performance of DVB's nearby Sea Glass development. More than half of the apartments at Sea Glass, on the other side of Broadbeach, have been snapped up, well ahead of its late 2027 completion

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="2944b4be-c84e-4b54-8dc1-c712e76704c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E02_Exterior_Street%20Level%20Entrance.jpg?VersionId=YoNig7pRdrE3HCue7sUj78LzJteeQf3H" />

The start of demolition at 137 Old Burleigh Road signals DVB Projects’ underlying confidence in the Gold Coast’s luxury beachside apartment sector.

“We see the Gold Coast as one of the most compelling lifestyle markets in Australia, particularly at the premium end where demand continues to deepen,” said Dean Brown, Managing Director of DVB.&nbsp;

“This project has been carefully designed to respond to that demand - delivering large-format residences with a level of quality, privacy and amenity that is still relatively rare in the apartment market on the beachside."

Brown says the site itself is "exceptional."

"Old Burleigh Road is one of the most tightly held beachfront strips, and opportunities to deliver a project of this scale and calibre in this location are extremely limited.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="398f377a-c037-455e-9250-0c5e0d84c35b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/I12_FF%20Balcony.jpg?VersionId=NwOiRWGMubR1c8wthuEfggklcja7al9." />

The project will comprise 40 half-floor residences of approximately 260 sqm, alongside eight full-floor residences spanning around 524 sqm.

A single penthouse will crown the building, featuring a private pool, barbecue area, indoor gym and dedicated entertaining spaces.

Residents will have access to a resort-style suite of amenities, including a 20-metre pool with daybeds, a gymnasium, hot and cold plunge pools, a sauna, and private residents’ lounge and dining facilities.

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="d1642bb0-9a66-4427-a022-dfc0988c6287" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/A02_Pool%20to%20View.jpg?VersionId=c0IXPyn_Gp_Kn3XCwzMrqIVkAdCEwVXP" />

Sales agent Todd Matheson, of <a href="https://www.apartments.com.au/project-marketer/pezet-matheson">Pezet Matheson</a>, which is marketing both 137 Old Burleigh Road and Sea Glass, said 137 Old Burleigh Road would address a clear gap in the market for genuine luxury products.

“There are very few opportunities on the Gold Coast where buyers can secure a residence of this size and quality in a new building,” Matheson said.

“What we’re seeing is a growing cohort of downsizers and interstate buyers who still want space - they’re not willing to compromise on living area, entertaining or finishes.

“This project has been designed with that buyer in mind. It offers the scale of a home, combined with the convenience and security of apartment living, in one of the coast’s most desirable positions.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="59aae0ca-5639-4320-8aca-d0bf60f48e43" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E01_Exterior%20Hero.jpg?VersionId=DS8Zfy2WtgUEtdfe0TEUuf1W1GfcZq8S" />

Located on a 1,156 sqm site one block from the beachfront, the development will replace an ageing walk-up building and is expected to contribute to the ongoing transformation of the Old Burleigh Road strip into one of the Gold Coast’s most prestigious residential corridors.

With the development moving into the delivery phase, 137 Old Burleigh Road is slated to hit the market later this year.

[smartcode_project_cta:default project_id=145141]

DVB Projects to launch second Broadbeach apartment tower as demolition commences

<a data-end="327" data-is-only-node="" data-start="250" href="https://www.apartments.com.au/developers/norus-projects" rel="noopener" target="_new">Norus Developments</a> has lodged plans for a new apartment development in Clayton that would add further momentum to the suburb's emerging Green Street corridor.

Plans have been lodged for the consolidated site at <a href="https://www.apartments.com.au/new-apartments/1359-1365-centre-road-clayton-vic-3168">1359-1365 Centre Road</a>, where Norus is seeking approval for 218 apartments across a 12-storey apartment building designed by <a href="https://www.apartments.com.au/architects/life-architecture-and-urban-design">Life Architecture</a>.

The proposal sits within the Clayton Major Activity Centre at the threshold of the planned Green Street corridor, a landscaped pedestrian connection intended to improve links through the precinct towards Clayton Railway Station.

The development would replace the site's existing collection of low-scale residential and commercial buildings with a single consolidated building, introducing significantly greater housing density to this part of Centre Road.

A retail tenancy is proposed at ground level to activate the Centre Road frontage, accompanied by transparent street interfaces and landscaping intended to create a more pedestrian-focused edge to the development.

<img alt="First look: Norus Developments plans landscape-led apartment project for Clayton’s emerging Green Street" data-entity-type="file" data-entity-uuid="0a5a763a-d9e9-4253-af2f-88008de27ebf" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Clayton%20a.png?VersionId=S2WJJbat1XVkZwB9SnYtygirXgWHiklX" />

The building has been designed with stepped massing and upper-level setbacks to manage its transition towards surrounding residential properties. The planning report describes the approach as one that integrates the building into the landscape rather than treating landscaping as a secondary element.

"A strong landscape and public realm strategy underpins the proposal," Urbis states in the planning report.

"Public benefits include an affordable housing contribution, a new pocket park, generous landscaped setbacks, deep soil planting and integrated Water Sensitive Urban Design."

The report adds that these elements are intended to create "a permeable, pedestrian-focused ground plane that enhances walkability, supports urban cooling and reinforces the emerging Green Street character."

Biophilic and passive design principles extend through the residential levels, with planting, daylight, natural ventilation and views towards landscaped areas forming part of the amenity strategy.

Parking would be concentrated away from the public realm, with 145 car spaces proposed from the rear laneway rather than dominating the Centre Road frontage.

The proposal follows an extensive pre-application process with the City of Monash. Three formal meetings were held between the project team and Council from December 2025 to March 2026, with the scheme evolving through several concept iterations before the current design was lodged.

The project arrives as Clayton prepares for substantial change around its established activity centre and the wider Suburban Rail Loop precinct. Its position on Centre Road places the development within an existing concentration of shops, services and public transport, while the Green Street connection is intended to strengthen pedestrian access towards Clayton Railway Station.

First look: Norus plans landscape-led apartment project for Clayton’s emerging Green Street

<a href="https://www.apartments.com.au/developers/gardner-vaughan-group">Gardner Vaughan Group</a> has officially commenced construction on Bronze on Chevron, celebrating the sod turning of its first-ever Gold Coast development and marking a significant milestone in the company's continued expansion across South East Queensland.&nbsp;

Following the successful delivery of premium residential developments throughout Brisbane and the Sunshine Coast, <a href="https://www.apartments.com.au/new-apartments/bronze-on-chevron-8-mawarra-street-chevron-island-qld-4217">Bronze on Chevron</a> represents Gardner Vaughan Group's entry into the Gold Coast market. Bronze will deliver 119 one, two, three and four-bedroom apartments above two ground-level retail tenancies.

[smartcode_project:default project_id=107520 project_image_fid=367193]

The recent sod turning ceremony was attended by Deputy Mayor Mark Hammel, President of the Surfers Paradise Surf Life Saving Club, Cassandra Sedgman, project consultants, purchasers, project partners and invited guests to celebrate the commencement of construction.&nbsp;

Gardner Vaughan Group Chief Executive Officer Simon Betteridge said Bronze on Chevron represented an exciting new chapter for the business.&nbsp;

"We've spent almost four decades building homes that respond to the way people want to live, and we're excited to bring that experience to <a href="https://www.apartments.com.au/developments/chevron-island-qld-4217">Chevron Island</a>," Betteridge said.

"Bronze on Chevron is particularly significant because it marks Gardner Vaughan Group's first development on the Gold Coast following many successful projects across Brisbane and the Sunshine Coast."

[smartcode_project:default project_id=107520 project_image_fid=367183]

Betteridge said the ground breaking is a proud moment for the&nbsp;team and their purchasers, who can now see their future homes beginning to take shape.&nbsp;

"As both developer and builder, we're able to oversee every aspect of the project from design through to construction, ensuring the quality and attention to detail Gardner Vaughan Group has become renowned for."&nbsp;

Designed by acclaimed architectural practice <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker</a>, Bronze on Chevron has been thoughtfully designed to complement Chevron Island's evolving streetscape while embracing its relaxed coastal lifestyle.

The development will offer generous residences with refined interiors, premium finishes and resort-style amenities, with completion anticipated in early 2029.&nbsp;

[smartcode_project_cta:default project_id=107520]

The development will offer generous residences with refined interiors, premium finishes and resort-style amenities, with completion anticipated in early 2029

Gardner Vaughan Group breaks ground on first Gold Coast development, Bronze on Chevron

Energy Cost

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GUEST OBSERVER
The <a href="https://theconversation.com/power-bills-can-fall-but-the-main-attention-must-be-on-affordability-accc-85734" target="_blank">preliminary report on energy prices</a> released last week by the Australian Competition and Consumer Commission (ACCC) suggests that the consumer watchdog is concerned about almost every aspect of Australia’s electricity industry. It quotes customer groups who say electricity is the biggest issue in their surveys, and cites several case studies of outrageous price increases experienced by various customers.
The report is long on sympathy about the plight of Australia’s electricity users. But the true picture is even worse – in reality, the ACCC’s assessment of Australia’s energy prices compared to the rest of the world is absurdly rosy.
Australia has internationally high energy prices
The ACCC quotes studies from the Electricity Supply Association and the <a href="https://studylib.net/doc/6673393/category-analysis-rin---australian-energy-regulator" target="_blank">Australian Energy Markets Commission</a> (AEMC) to compare electricity prices in Australia with those in other OECD countries. But the ACCC’s comparison is based on two-year-old data, and badly underestimates the actual prices consumers are paying.
The AEMC’s analysis assumes all customers are on their retailer’s cheapest available offer. This is an obviously implausible assumption, and gives a favourable impression of the price that customers are paying.
As <a href="https://theconversation.com/australian-household-electricity-prices-may-be-25-higher-than-official-reports-84681" target="_blank">previously pointed out on The Conversation</a>, the Thwaites review – which looked at customers’ actual bills – found that in February 2017 Victorians were typically paying A35c per kilowatt hour (kWh) – 42% more than the AEMC’s estimate. What’s more, we know that Victoria’s electricity prices are lower on average than those in South Australia, Queensland and New South Wales, and hence below the Australian average.
A part of this 42% gap – around 15% – is explained by the latest price increases that are not included in the ACCC’s comparison. But this still leaves a 27% gap between what the AEMC assumes and the evidence of actual prices.
This begs the question: why did the ACCC not recognise the widely known flaw in the AEMC’s analysis?
<h2>The real problem is overbuilt network infrastructure</h2>
The report estimates that rising network charges account for more of the price increase than all other factors put together. There is no doubt that network charges are a real problem at least in parts of Australia, although their significance relative to retailers’ costs is contested territory.
But why would distributors build far more network infrastructure than they need? And why have government-owned distributors built far more infrastructure than private ones, despite having no more demand?
The answer to this perplexing question is to be found in part in Australia’s “competitive neutrality” policy. This is Orwellian doublespeak for an approach that is neither neutral nor competitive.
Under this policy, government-owned distributors are regulated as if they are privately financed. This means that when setting regulated prices, the Australian Energy Regulator (AER) allows government distributors to charge their captive consumers for a return on their regulated assets, at the same level as if they were privately financed. That is despite the fact that private financing is much more expensive than government funding.
It’s no surprise that when offered a rate of return that far exceeds the actual cost of finance, government distributors have a powerful incentive to expand their infrastructure for a profit. This “gold-plating” incentive is a well-known in regulatory economics.
Regulators, the industry and their associations have explained higher spending on networks in a variety of ways: higher reliability standards; flawed rules; flawed forecasting of demand growth; and the need to make up for historic underinvestment.
But was there ever historic underinvestment? A 1995 article co-authored by the current AEMC chair concluded that distribution networks had been significantly overbuilt. That was more than two decades ago, government distributor regulated assets are at least three times bigger per customer now.
The chart below – based on data from the AER’s website – examines how the 12 large distributors that cover New South Wales, Victoria, Queensland and South Australia spent their money on infrastructure between 2006 and 2013. This period covers the last five-year price controls established by the state regulators, and the first control established by the AER. It was during this time that expenditure ballooned. The monetary amounts in this chart are normalised by the number of customers per distributor.
<img src="https://images.theconversation.com/files/191134/original/file-20171019-1072-1b07x7v.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
 Distributor spending on infrastructure between 2006 and 2013. Author provided
The first five distributors from left to right (and Aurora) were owned by state governments and the others are privately owned. A clear pattern emerges: the government distributors typically built much more infrastructure than the private distributors. And the government distributors focused their spending on substations, which are much easier to build (or expand or replace) than new distribution lines or cables.
We also know that the distributors’ spending on substations far outstripped the increases in the peak demand on their networks. The figure below compares the change in the government and private distributors’ substation capacity (the blue bars) with demand (the red bars) over the period that most of the expenditure occurred. Again, the amounts have been normalised by number of customers.
<img src="https://images.theconversation.com/files/191133/original/file-20171019-1075-d1dvow.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
Substation capacity versus peak demand between 2006 and 2013. Author provided
The gap in spending between government and private distributors is stark. It is also obvious that in all cases, but particularly for the government distributors, the expansion of substation capacity greatly exceeded demand growth - which hardly changed over this period (and is even lower now, per connection).
To put it in more tangible terms, as an average across the industry, peak demand between 2006 to 2013 increased by the equivalent of the power used by one old-fashioned incandescent light bulb, per customer. But government distributors expanded their substation capacity by more than one 100 light bulbs, per customer. The private distributors did relatively better, but still increased the capacity of their substations by the equivalent of about 30 light bulbs per customer.
My PhD thesis included econometric analysis that shows government ownership in Australia is associated with regulated asset values that are 56% higher than private distributors, and regulated revenues that are 24% higher, leaving all other factors the same.
To some, this evidence supports a “government bad, private good” conclusion. Indeed it was this line of argument that the Baird government in New South Wales used to justify its partial privatisation of two network service providers.
But in international comparisons of government and private distributors in the United States, Europe and New Zealand, no such stark differences are to be found. The huge disparity between government and private distributors is a peculiarly Australian phenomenon.
<h2>How we got here</h2>
This Australian exception originates in chronic policy and regulatory failure. As far back as 2011, the Australian Energy Market Commission (AEMC) heard a proposal that government distributors should earn a return closer to their actual cost of financing – a suggestion that would have reduced prices significantly and removed the incentive to gold plate.
In response, the AEMC said the regulations were consistent with the “competitive neutrality” policy. But this is not true: in the policy’s own words, it was designed to stop government businesses from crowding out competitors. Distributors are protected monopolies; they do not have competitors.
The AEMC also argued, somewhat bizarrely, that it was good economics for a regulator to assume that government distributors are privately financed.
This represents the triumph of an idealistic “normative” regulatory model in which regulators act on the basis of how the regulated entity should behave rather than how they actually behave.
But it would wrong to blame the AEMC alone for this failure. All of Australia’s key institutions and governments have agreed that government distributors should be regulated as if they are privately financed. For governments that own their distributors, this has been a wonderfully profitable fiction.
Therein lies much of the explanation for what is effectively, if I may call a spade a spade, a racket.
It is an indictment of Australia’s polity and so many of its economists that the 2011 Garnaut Climate Change Review stands alone, in a library of reviews, as stating this problem clearly. In fact, if you review last week’s report from the ACCC, you will not find a single distinction between the impact of government and private distributors.
And if you thought this was yesterday’s war, you would be wrong. Despite the mass of evidence, our regulators persist in the fiction that ownership and regulation should be independent of one another.
It is difficult not to lapse into despair about Australia’s energy policy morass. Despite the valiant attempts by many, a deeply entrenched culture of half-truths, vested interests, ideology and wishful thinking still characterises all too much of what emanates from the political and administrative leadership of this industry.
Some energy consumers – Prime Minister Malcolm Turnbull among them – will buy their way out of this problem through solar panels and batteries. But the poorest households and many business customers will increasingly be left carrying the can.
<img src="https://counter.theconversation.com/content/86045/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">Australians are angry about electricity. Not unreasonably.
Bruce Mountain is director of 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/energy-prices-are-high-because-consumers-are-paying-for-useless-profit-boosting-infrastructure-86045" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

Energy prices are high because consumers are paying for useless, profit-boosting infrastructure: Bruce Mountain

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<img src="https://counter.theconversation.edu.au/content/63597/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The energy sector is dealing with a complex mix of relationships between consumer trends, global commodity markets, and state, federal and industry regulation.
Because large established companies in electricity generation and distribution and coal and natural gas export have a lot of influence in this process, Australian energy regulations reflect more traditional energy provision rather than global trends where renewable energy is becoming more prevalent.
State governments are currently coming to terms with the regulatory changes needed to accommodate public support for disruptive technology. One example is the ongoing adoption of ride-sharing company Uber. However this same pragmatism needs to be reflected in preparations for the provision and consumption of energy in Australia. The energy companies that are prepared for this disruption will survive and flourish, while those that cling to traditional structures will struggle.
<div id="responsive-iframe-0">Evidence of disruption</div>
Globally energy companies are already showing signs of being affected by the looming disruption. Coal miners have been subjected to multiple forces over the last decade, but the changing landscape associated with new forms of energy, is a strong influencer of their performance. Coal companies in the US are facing dwindling share prices or bankruptcy like Peabody Energy and Arch Coal.
Tesla’s share price, which increased from US$28.52 in August 2012 to US$220 in August 2016, is more than double that of more traditional vehicle company Toyota. Toyota has experienced moderate growth from US$79.62 in August 2012. With electric vehicles forcing themselves into the motor vehicle market, technological disruptors like Tesla are seen as more likely to succeed than traditional motor vehicle companies like Ford.
West Texas Intermediate, a benchmark international oil price, declined from US$133 a barrel in July 2008 to US$45 a barrel in July 2016. This followed a slowdown in global growth after the global financial crisis and increased production of oil in Saudi Arabia, which some claim is to gain market share. Coal prices for export from Australia have fallen from A$180 a tonne in July 2008 to A$63 a tonne in July 2016 as China’s voracious appetite for coal has declined.
International natural gas prices have also declined because in Europe the natural gas price has been referenced to the oil price. Separate to this, the US price of natural gas declined as a result of new drilling technologies which released huge quantities of natural gas onto the US market, dragging down the price.
Many of these global trends are apparent in Australia too. Coal export prices have caused concerns for existing companies to the extent that new mine development has been shelved since 2008. Coal mine profits have dwindled and job losses abound.
Ambitious plans for coal seam and natural gas extraction for export to Asian markets have been curtailed with some experts predicting still further price declines in response to oversupply.
While there have been recent small upticks in prices, the trend for Australian primary energy company share prices since early 2014 has been downwards.
<h2>Challenges facing the Australian electricity generation sector</h2>
The electricity sector in Australia is facing multiple challenges. Electricity consumption has declined since 2009 and is forecast to increase only slightly by 2035/6. The closing of large energy users like the Kurri Kurri aluminium smelter and the Clyde Oil refinery, and a shift by residential consumers to the consumption of electricity from solar panels have contributed to this trend.
This is coupled with increasing supply of energy from low marginal cost wind power which, if the Australian National Energy Market is working as designed, reduces the spot price for electricity.
Many electricity generators have launched or acquired retail businesses to market directly to customers. AGL and Origin are the two largest of these “gentailers”, with a combined 56% of the small customer market in the eastern states. However, there is potential for disruption to this existing industry model. 1.57 million households now have solar panels on their roofs, and residential batteries are expected to increase consumer control of residential electricity.
Startups like Sunverge, Reposit and Powerledger are looking to connect households with spare energy to households buying spare energy. Mojo Power is offering customers fixed price packages that are more reminiscent of mobile phone offers than electricity. At this stage it is unclear whether the National Electricity Market will play a part in, or hinder, these new business models.
A few retail companies, like Red, Lumo, Powershop and Infinite spruik their renewable energy credentials. Renewable energy is viewed very favourably by the public.
Recent polling suggests that 71% of respondents would favour a government that facilitated greater support for solar panels and batteries. Energy giant AGL has a larger renewable energy portfolio than Origin making it slightly more attractive to consumers with environmental concerns, but it is exposed to the risk of owning a large coal generation fleet.
Infigen is the only renewable, publicly listed company. Infigen faced torrid times during the multiple back-to-back reviews of the Renewable Energy Target, but since the target has been set at 33GWh, Infigen’s share price has been recovering.
Of note, is the share prices of domestic energy companies AGL and Origin who are both in the business of generating and retailing electricity and previously were both engaged in the development of coal seam gas. Origin has continued its coal seam gas investment while AGL exited the market. AGL has instead focused more on diversifying its electricity generation portfolio. Part of this strategy has involved formulating innovative plans for virtual power stations of consolidated rooftop solar panels and residential batteries.
Origin’s foray into the export of Liquid Natural Gas (LNG) has not been good for its share price. Concern over debt related to the investment in LNG and exposure to declining LNG prices has worried investors.
<h2>Electricity distribution also faces multiple challenges</h2>
Electricity distribution companies in Australia are regulated monopolies. Distribution companies in NSW and QLD have been government owned and as a result of hefty investment plans, large electricity price rises were passed through to customers after 2009. This was at the same time as environmental charges were being included in electricity tariffs.
Customers were angered by the rise in electricity prices, but the NSW and QLD governments have enjoyed the profits that have flowed back into state coffers.
The NSW government is now seeking to sell a large share of its distribution businesses, although the most promising buyers have been knocked back by the federal government due to security concerns. With the popularity of solar panels and the expectation about the benefits of battery storage to meet demand after sundown, investors buying into the electricity distribution sector will be facing disruption.
Origin and AGL have gambled on different strategies to face a future with carbon constraints and technological disruption. Origin has bet on natural gas being a transition fuel to a cleaner energy future, while AGL is betting on electricity from renewable sources with batteries as the preferred path.
Energy distribution companies need to wrestle with the technological disruption that is looming from decentralised, distributed generation from solar panels, batteries and peer-to-peer energy transactions. Coal miners should seriously consider diversification to face a carbon-constrained future. The energy sector is in a state of transition; profits and share prices may be volatile for a few years to come. It would be advantageous if regulation did not get in the way of the shifts already evident.
Lynette Molyneaux is researcher, Energy Economics and Management Group, Global Change Institute, The University of Queensland and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/lynette-molyneaux-9433" target="_blank">here</a>.
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