If the observations of unregulated and recently deregulated essential services were to hold
for electricity reform, we could expect to see market segmentation of household
customers. This is a corporate strategy aimed at the acquisition of attractive customers
and the avoidance of unattractive customers. It is a function of market relations and
commodification. Some markets already segment and assign unattractive customers to
'residual' markets, 'sub-prime' markets or 'markets of last resort'. Residual markets tend to
involve market abuse by suppliers because these customers lack market power. It is
possible therefore to suggest that segmented markets are characterised by simultaneous
competition and monopoly. The implications for the supply of essential services, such as
electricity, are profound. This research sought to identify whether there is evidence of
emerging segmentation of the domestic electricity market in Victoria.
In practice, few essential services areas are completely deregulated. The history of
segmentation in the US insurance and lending industries provides valuable insights into
markets, market failure and social protections. Taking this history and the more recent
experiences of reforms in the US, the UK and Australia, it has been possible to identify
three models of social protection: 'universal service', a 'civil rights' model, and a 'market'
model. The Victorian reforms reflect some elements of each of these. The social
protections included in the reform package both encourage and present barriers to market
segmentation. At the time of the research, some elements of the safety net arrangements
and customer inertia (born out of negative attitudes to competition) have acted to inhibit
segmentation. Customer inertia in its own right poses questions for the efficacy of
competition policy.
The key understanding that is gained from this research is that both civil rights and socioeconomic
entitlements (social rights) are required to prevent markets in essential services
acting upon and exacerbating inequality. This suggests that universal service, as a model
of social protection, is most likely to ameliorate the impacts of inequality.
| Identifer | oai:union.ndltd.org:ADTP/216605 |
| Date | January 2005 |
| Creators | Sharam, Andrea, n/a |
| Publisher | Swinburne University of Technology. |
| Source Sets | Australiasian Digital Theses Program |
| Language | English |
| Detected Language | English |
| Rights | http://www.swin.edu.au/), Copyright Andrea Sharam |
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