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. 

Our latest working paper

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Loyalty taxes and search costs in retail electricity markets: have we got it wrong?

 

By Bruce Mountain, Director, VEPC, and Kelly Burns, Senior Research Fellow, VEPC

A common view in retail electricity market is that retailers discriminate based on consumers’ loyalty: loyal consumers pay more. The premium is colloquially known as a “loyalty tax”. Reflecting this understanding, Australia’s governments, regulators and consumer advocates have encouraged consumers to switch electricity retailers. We test whether the Victorian retail electricity market bifurcates on consumer loyalty using a sample of 48,088 household electricity bills to estimate the annual available saving if each consumer switched to the cheapest available offer. We find consumers that switched retailer in the previous year reduced their annual available saving by AU$45 relative to consumers who remained with their retailer. The small difference (around 3% of the typical annual bill) suggests that the loyalty tax, while statistically significant, is not large. Evidently search costs are far higher than hitherto assumed. Reducing search costs is essential for effective consumer participation in retail markets.

Download the working paper (1mb) by clicking on the image (left).

Our latest report

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Ensuring reliable electricity supply in Victoria to 2028: suggested policy changes

 

By VEPC Director, Associate Professor Bruce Mountain 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. The report recommends that the Victorian Government ask the Australian Energy Market Operator (AEMO) to develop an appropriate reliability standard and strategic reserve and that the Government prepares the administrative arrangements to implement this.

Download the report (2.3mb) by clicking on the image (left).

VEPC in the News

Australian Beyond Coal Campaign Launches

Michael Bloch, Solar Quotes, 22 Nov 2019

Renewable investors fear new AEMC rules will prop up fossil fuels

Giles Parkinson and Sophie Vorrath, Renew Economy, 20 Nov 2019

Coal seen as biggest threat to Victoria power supply

Sophie Vorrath, Renew Economy, 19 Nov 2019

Victoria pushes for urgent overhaul of energy rules as blackouts loom

Benjamin Preiss, Nick Toscano and Peter Hannam, The Age,

18 Nov 2019

Clarification from Bruce Mountain, VEPC Director: 'Contrary to The Age article, Alcoa closure is not a factor for Victoria's brown coal until much later in coming decade, if at all.'

Victoria pushes for urgent overhaul of energy rules as blackouts loom

Nick Toscano and Benjamin Preiss, The Sydney Morning Herald,

13 Nov 2019

Energy industry weighs up 'crowding out' risks of Snowy's storage plan

Peter Hannam, The Sydney Morning Herald

17 Oct 2019

Clouds gather over Portland as Alcoa flags closures

Peter Ker and Angela Macdonald-Smith, Financial Review

17 Oct 2019

Snowy Hydro may push up power prices, analysts say

Peter Hannam, The Sydney Morning Herald

16 Oct 2019

'The wrong project in the wrong place’: Malcolm Turnbull’s Snowy 2.0 vision comes at a huge cost

Quentin Dempster, The New Daily, 4 October 2019

The ACT is set to run on 100 per cent net renewable energy. What does that mean?

Nick Bonyhady, The Sydney Morning Herald, 1 October 2019

'Big stick' energy laws unlikely to ever be used

Mark Ludlow, Financial Review, 18 September 2019

Are renewables really cheaper than coal and nuclear?

RMIT ABC Fact Check Unit, Crikey, 12 September 2019

Save your energy: electricity consumers fail to get results

Mirage News, 3 September 2019

Switching power provider in complex market generates no big savings

InDaily, 3 September 2019

Paying high electricity bills? Making the switch to another provider may not make any difference

Liz Hobday and Lisa Divissi, ABC 7.30, 2 September 2019

Consumers switching electricity retailers not saving much money: study

Angela Macdonald-Smith, Australian Financial Review, 2 September 2019

Recent commentary

Energy oligopoly using market power to profit under cover of rooftop solar

 

A/Prof Bruce Mountain and Dr Steven Percy, Renew Economy, 12 February 2020

Snowy 2.0 will not produce nearly as much electricity as claimed. We must hit the pause button.

 

A/Prof Bruce Mountain, VEPC Director, The Conversation, 15 October 2019

Australia’s energy woes will not be solved by reinforcing a monopoly

 

A/Prof Bruce Mountain, VEPC Director, The Conversation, 23 August 2019

Ownership, regulation, and financial disparity: The case of electricity distribution in Australia

 

A/Prof Bruce Mountain, ScienceDirect,  October 2019

Regulator’s ruling on default market offers might not lower prices

 

A/Prof Bruce Mountain, Renew Economy30 April 2019

Energy price gouging exposed by new regulations

 

A/Prof Bruce Mountain, Renew Economy14 January 2019

VEPC is part of the Victoria Institute of Strategic Economic Studies within Victoria University, Melbourne