Whacko! What a great reward for everyone who conscientiously exchanged their air conditioning for discomfort in the summer just past.
It would seem pretty likely that the same result will occur in the event of the carbon tax, as people seek to reduce the burden on their household budget, naively thinking they will benefit, whilst the above scenario will be repeated in the electricity providers, giving us all higher bills regardless of our attempts to reduce use!
The National Electricity Market (NEM) was never intended to minimise cost or maximise economic efficiency, a point that was clearly noted in industry publications as far back as 1993. Indeed if you read carefully, a loss of economic efficiency is in fact stated, albeit in disguised terms in the context of CO2 emissions, as one of the key aspects and "benefits" of the market. Remeber this was 18 years ago...
Bottom line today is that the industry is not focused on cost minimisation. Generators are focused on trading whilst distributors are focused on extracting maximum revenue via regulators. Where once there were senior engineers running the show, now there are Spot Traders and their ilk calling the shots (often to the detriment of sound technical operation by the way, something that adds even more costs). In short, the industry has been taken over by bankers and speculators (surprise, surprise...).
Prior to deregulation, Australia had the 3rd cheapest electricity in the OECD beaten only by Canada and New Zealand, both of which have the advantage of heavy reliance on cheap hydro-electricity. In terms of generation from fossil fuels, we were doing
very well in terms of low cost and high technical efficiency.
Whilst it's only a modest source of energy in Australia, we did pretty well with hydro-electricity too. Both of the two major Australian systems, the Snowy and the Tasmanian systems, are world class in terms of engineering. Plenty of world first engineering in both, and that continued right up to the end of dam construction in the early 1990's .
Meanwhile, the SECV (Vic) was long associated with much progress in the use of brown coal. As with the Snowy and Tasmanian hydro schemes, Victoria's brown coal operations were also world class at the time.
Then along came the great deregulation. Out went the proper engineering, in came recycled power plants from overseas,
drastic cuts to maintenance, lack of investment in generation, and the endless propping up of ancient plants that were good in their day but are an embarassment now.
Then a decade after that began the great cost surge as the proverbial chickens came home to roost in the distribution system and a fortune was spent. Now we've done so many silly things with generation, transmission, distribution and retail tariffs that there's basically no chance of turning the clock back...
Carbon tax? Well let's just say that an ETS amounts to yet another artificial market (like the National Electricity Market) for the traders / bankers to spend their days playing with at the expense of producers, consumers and the real economy. If these people were really concerned about CO2 then they'd get rid of the "competitive" NEM which of itself has significantly increased CO2 emissions and lowered power plant technical efficinecy (ie more fuel burned to produce a given output due to inefficient, inconsistent operation).