Independent regulation of government-owned monopolies: An oxymoron? The case of electricity distribution in Australia

The network component of household electricity bills served by government-owned network service providers in Australia more than doubled between 2007 and 2013. Their regulated assets and profits more than tripled over this period. These outcomes have been delivered under a similar system of price cap regulation that has delivered quite different outcomes in Great Britain, and in Victoria (Australia) to the privately owned network service providers in that state. We conclude that changes in operating conditions, demand, customer numbers or reliability do not explain this. Rather we find that government ownership has undermined the authority and independence of economic regulation. The Australian experience in the regulation of government-owned electricity distributors casts doubt on the assumption that regulation can be entirely independent of government ownership, or would operate in the same way as for an entity in private ownership.