The Victoria Energy Policy Centre (VEPC) is a research centre focussing on policy challenges in energy in Australia, with a particular focus on Victoria.
The VEPC's core research discipline is economics, but we encourage collaboration between experts from different academic traditions. We combine academically rigorous research and analysis, with a practical understanding of government processes.
Recent Reports and Working Papers MORE >
Do households respond to Time-Of-Use tariffs? Evidence from Australia
A Working Paper by Kelly Burns, Senior Research Fellow, VEPC and Bruce Mountain, Director, VEPC
We estimate the elasticity of substitution for households on Time-Of-Use (TOU) tariffs using a sample of 6,957 electricity bills from households in Victoria, Australia. Across the full sample we find the difference between peak and off-peak prices has little influence on the difference between peak and off-peak consumption and is not affected by access to rooftop photovoltaics. Households in the lowest socio-economic areas do not respond to differences in peak and off-peak prices. Our findings of the elasticity of substitution are remarkably similar to previous studies of TOU tariffs in the United States of America in the 1980s. This suggests retail market deregulation, the installation of smart meters, consumers’ access to their consumption data and enduring policy support for TOU tariffs has not been rewarded with any measurable improvement in consumers’ responsiveness to time-varying prices. While freedom to select TOU tariffs is valuable, these findings do not support the imposition of TOU tariffs as a default pricing policy.
Download the working paper (535kbs) by clicking on the image (left).
Rooftop photovoltaics and electricity distributors: who wins and who loses?
A Working Paper by Bruce Mountain, Director, VEPC, Steven Percy, Senior Research Fellow, VEPC, and Kelly Burns, Senior Research Fellow, VEPC.
We analyse 48,677 residential electricity bills of which 7,212 have installed rooftop photovoltaics (PV) to determine the impact of rooftop PV on network charges and on wholesale market prices. We find rooftop PV pushes down prices in wholesale markets far more than it raises prices for the provision of network services. This was somewhat unexpected and might be explained by Victoria’s extraordinarily high wholesale market prices and also by the fact that despite the high penetration of rooftop solar, the amount of grid-supplied electricity that is displaced by rooftop supply is not large.
Download the working paper (239kbs) by clicking on the image (left).
A model for the estimation of residential rooftop photovoltaic capacity
A Working Paper by Bruce Mountain, Director, VEPC, Amine Gassem, AG-Study, Kelly Burns, Senior Research Fellow, VEPC, and Steven Percy, Senior Research Fellow, VEPC
Estimates of rooftop photovoltaic (PV) capacity, by region and postcode, is publicly available in Australia. However, data on individual households’ rooftop PV capacity is not publicly available. This is valuable in price comparison and research, for example analysing the impact of rooftop solar in wholesale markets and on networks. We develop a model to estimate an individual household’s rooftop PV capacity, using data on the household’s estimated annual rooftop PV exports to the grid and its volume of annual grid electricity purchases. The model relies on simulated data of hypothetical rooftop PV systems, which are then used to estimate relationships between the variables.
Download the working paper (577kbs) by clicking on the image (left).
Loyalty taxes in retail electricity markets: not as they seem?
A Working Paper by Bruce Mountain, Director, VEPC, and Kelly Burns, Senior Research Fellow, VEPC
A common view in retail electricity markets is that retailers discriminate based on consumers’ loyalty: loyal consumers pay more. The premium is colloquially known as a “loyalty tax” or “loyalty premium”. Reflecting this understanding Australia’s governments, regulators and consumer advocates have encouraged consumers to switch electricity retailers. Our findings suggest the loyalty tax is (typically) smaller than widely considered, that it varies across tiers of retailers and that even engaged consumers typically do not select the lowest priced offers. This raises the question of whether switchers are motivated by other factors as well as lower bills or whether the main challenge is difficulties in search.
Download the working paper (523kbs) by clicking on the image (left).
Ensuring reliable electricity supply in Victoria to 2028: suggested policy changes
A report by Bruce Mountain, VEPC Director, and Dr Steven Percy, VEPC Research Fellow.
This report looks at whether markets and regulations will ensure reliable electricity in Victoria over the coming decade, and examines the power system to understand the effect of renewable electricity expansion, and the possible closure of Alcoa's Portland smelter.
Download the report (2.3mb) by clicking on the image (left).