Economic Issues Facing Electricity Supply Authorities

The slowing in the growth of electricity consumption in the early 1980s was accompanied by a significant increase in real unit costs in all Australian states. This article examines the economic issues facing government-owned electricity supply authorities under four headings: policy objectives including the question of whether the authorities should act as agencies to redistribute incomes; the estimation of future demand, especially the need to relate future demand estimates to likely changes in costs; supply aspects, including internal efficiency, cost of capital and size and reliability of generating plant; and pricing policies, particularly the need for time-of-use tariffs to improve capacity factors.