Cost,price, and revenue differentials in electricity supply: Queensland and Australia

Queenslanders consume relatively less but pay more for electricity than most Australians, a penalty surprising in a State with the nation's largest sources of energy. An explanation lies in the industry's relative youth and dynamic performance, strong post-war capitalisation, inherent monopoly organisation and the issue of product differentiation expressed in peak/off-peak pricing. Such matters pose particular problems in the Queensland market which is numerically small and areally dispersed. Examination of production and distribution economics reveals that Queensland fuel is presently not cheap and that some of the penalty derives from the strong capitalisation which the system is undergoing. Further pressures lie in the lack of scale economies and in financial policies of supply authorities such as spatial price equalisation. Many factors bear on future prices and predictions are difficult. Nevertheless Queensland's energy advantages should ensure that unless major change transforms the economic environment the price of electricity relative to that in other States falls during the next two decades.