Least-Cost Planning and Electricity Industry Reform in Australia

Least-Cost Planning played a key role in the development of the energy efficiency and renewable energy industries in the USA. It has not been widely used elsewhere, largely due to differences in other nations' regulatory environments and the emergence of competitive markets as the dominant paradigm for electricity planning. Least-Cost Planning, however, may offer valuable insights for creating regulatory frameworks for competitive electricity markets. This paper examines some lessons which may be extracted from an analysis of the Least-Cost Planning experience in the USA and suggests how these lessons might prove beneficial in guiding Australia's electricity industry reform. This analysis demonstrates how market-based reforms may be flawed if they ignore the history of previous reform processes.