Transmission loss factor reform in the Australian electricity market

The investment case for an alternative approach to calculating loss factors in the Australian National Electricity Market (NEM).

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Baringa helps Baltic and Finnish regulators to agree on a common gas network charging approach

Having a common gas network charging regime in the Baltic and Finnish region – where gas can be transported freely between different parts of the region – is a key first step to setting up a common regional gas market and introducing competition to challenge market power of a regional dominant supplier.

How can agreement on a single charging model be facilitated among a group of regional regulators and what kind of analysis may assist in their decision-making process?  

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Baringa provides an assessment of different gas transmission charging methodologies for Ofgem

Gas networks have a high up-front cost that needs to be recovered from the users of the network. Charges that are levied on users can have a significant impact on their business, with consequences for their behaviour in the market and wider gas market dynamics.

If reforms to the charging regime are required for legal reasons, how can this be done to avoid disruption and negative economic consequences for the gas market?

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Baringa demonstrates how inappropriate regulatory design can distort competition

Having a lower cost base enables an energy supplier to offer lower prices to its customers and to gain market share from less efficient suppliers. However, if the cost difference results from government policy or regulation rather than company efficiency, are consumers really made better off when the lower cost firm gains market share?

Significant differences in average cost to serve between energy suppliers can also result from suppliers having a different mix of customers, with some customers having a much higher associated cost to serve than others. With a cap on retail tariffs that does not reflect such differences, can competition still work effectively for the customers with a higher cost to serve?

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Trustpower - Baringa provides an overview of past regulatory interventions in energy retail market

Competition in the energy retail market can result in attractive deals being offered to customers who are prepared to shop around, but it can also result in unequal outcomes for different customer groups, with those less willing or able to shop around paying higher prices.

As a result of this feature of retail market competition, the GB retail energy market has experienced a number of regulatory inquiries and interventions over the last decade. With similar interventions being contemplated in some other markets, can the experience in GB provide lessons for other markets?

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