The Role of Prices in Western Australia's Electricity Market

Western Australians have long experienced extensive government intervention in their energy sector, primarily through the state’s ownership of utilities and setting of prices. This has resulted in cross subsidies and economic inefficiencies, which have been transmitted through power bills and taxes.  Current electricity pricing fails to convey sufficiently accurate information to users and producers, thus incentivising inefficient investment and putting additional upward pressure on prices. By applying the insights of Friedrich A. Hayek, we posit that new household-level products and technologies can be optimised by devolving decision making through shifting to market-driven electricity prices. This will empower customers and accelerate the uptake of new products and services that will improve the lives of Western Australians. Importantly, these energy services and products can be offered and deployed without direct or indirect subsidies from taxpayers or other electricity users, reducing upward pressures on prices.