- Feb 14, 2005
- Reaction score
Private can do it under the right circumstances.Energy is a lot different to most other goods, it requires a lot of infrastructure to get it to the purchaser, whereas most other non essential goods the purchaser goes to get them.
So in reality electricity, water and sewage, which are essentials, should be left in Government hands. If you aren't going to do that, you will need a big stick to make them upgrade and renew aging infrastructure, that doesn't add to revenue.
Adjusted for inflation AGL charged less for gas as a monopoly, as they were for most of the company's existence, than the same company now charges the same customers in a competitive market.
That competition leads to lower prices is widely accepted but in practice true only if the loss of economies of scale are less than the benefits of added competitive tension which, in the energy sector, generally isn't the case.
Same happened with LPG in Tasmania. The price under a competitive market is around 50% higher in real terms than when the now defunct Gas Corporation of Tas, which was privately owned as an offshoot of Boral and in no way part of government, had a monopoly.
Economic theories, like most things, are valid under some circumstances but not all. Where the "competition drives lower prices" one fails is with things which have high scale of economy aspects and as we both know gas and electricity are the ultimate examples of that hence the issue causing so much angst.
The surest way to stuff anything up is to be wedded to an ideology and to keep going with it when it's clearly not working.