OPINION: There are good competition reasons why monopoly distribution networks should not be owned by companies that also generate electricity.
for Origin Energy was one such surprise. It would also have surprised AGL’s shareholders, especially those who were sour that their board rejected Mike Cannon-Brookes’ now seemingly derisory offer to take control of AGL.
The obvious policy solution to ongoing high international gas prices adversely affecting local gas prices, is to apply an export tax on all the value of gas that exceeds a price that is high enough to cover the actual costs of producing and exporting gas, including a commercial rate of return. First, you have to ask: What future investment? Second, if the tax threshold is set so producers still get a healthy return on their investment, how does it stifle investment? The same arrangements could be applied to the export coal market too.
Brookfield owns and operates the Victorian high-voltage electricity transmission network, one of Victoria’s poles and wires distribution networks, and a gas distribution network. More specifically, policymakers were, and still ought to be, worried about a strategy called price squeezing. This is the practice of a vertically integrated firm raising the price of services it provides to its rivals and then using the uplift gained by selling these vital services to undercut its rivals in the downstream retail market.
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