INDUSTRY BACKGROUND
Since 1991, governments in Australia have been undertaking restructuring and reform of the electricity industry. State owned utilities have been disaggregated into separate generation, transmission, distribution and retail supply entities, corporatised and, in some jurisdictions, sold to the private sector. In 1994, the introduction of competitive wholesale and retail electricity markets resulted in trading across state borders. The central element of the reforms was the establishment in December 1998 of the National Electricity Market (NEM), which now links the Australian Capital Territory, New South Wales, Victoria, South Australia, Queensland and Tasmania. (Please see <http://www.nemmco.com.au>, the website of the National Electricity Market Management Company, for more details.) Western Australia has also experienced the effects of privatisation but is not part of the NEM, for reasons of geography. Partly as a result of these developments, the concept of state bounded entities continues to lose relevance.
Another continuing trend has been the diversification of energy businesses with the aim of providing their customers with a wider range of energy services. This has seen electricity businesses enter the gas market and, conversely, gas businesses enter the electricity market as opportunities expand within these markets. Because each business unit reporting in ABS surveys is classified to one industry, based on its predominant activity, such diversification can affect the statistics in this chapter and those in Chapter 3 Gas Supply Industry.
Deregulation has allowed new entities to come into the market and compete for customers. It has also resulted in a number of long established entities being dismantled or sold off. The effect of disaggregation on industry structure has been to change single entities wholly classified to the electricity supply industry into a number of smaller entities, some of which may be classified to industries other than electricity supply. Those entities classified to other industries do not contribute to the statistics for the electricity supply industry. Examples of activities formerly carried out by businesses classified to the electricity supply industry, but which are now largely carried out by specialist businesses classified to other industries, are network construction, repair and maintenance of electricity transmission towers, and power pole inspection.
Effect on these data
These changes to business structures have a direct impact on the data presented in this publication, but not all impacts are in the same direction. Where several smaller specialist business units wholly classified to the electricity supply industry have been created from one vertically integrated business, transactions between these businesses are recorded in the statistics (such as sales from the generating business to the distributing business). Previously, such transactions were internal to a single business and generally were not recorded in the statistics. This situation tends to increase sales and purchases values for the industry, but should have little direct effect on statistics for industry value added, operating profits or capital expenditure. On the other hand, the estimates of several data items (wages and salaries and capital expenditure in particular) for the electricity supply industry will be reduced if activities such as those mentioned in the previous paragraph are now carried out by businesses classified to other industries.
Generally, private sector businesses which are engaged in the electricity supply industry and conduct their own construction and maintenance operations tend to do so through separate business units (typically classified to ANZSIC Division E, Construction), which employ most of the staff engaged in those activities. Government owned businesses in this industry, by contrast, are more likely to employ these staff in a business unit which is classified to the electricity supply industry.
Ownership changes and restructuring in the electricity supply industry continued during 2005-06. In a partial reversal of the disaggregation that has characterised the industry since 1991, some privatised electricity businesses have been sold by their original purchasers to operators that are already involved in a different segment of the electricity supply industry in Australia.
The Australian Bureau of Agricultural and Resource Economics (ABARE) reports that electricity consumption in Australia increased by 1.2% (from 251,076 GWh in 2004-05 to 254,144 GWh in 2005-06). Consumption increased slightly in South Australia, Victoria and New South Wales but fell elsewhere, the Northern Territory having the biggest fall in percentage terms (6.4%). The Consumer Price Index relating to electricity (weighted average of eight capital cities) indicates that prices for household consumers were 2.7% higher in 2005-06 than in 2004-05.
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