Network Pricing for the Prosumer Future: Demand-Based Tariffs or Locational Marginal Pricing?

Abstract Under retail competition, retailers intermediate between the wholesale prices and the retail contracts offered to end-customers. Ideally, retailers would offer end-customers a range of retail contracts that balance the need to make efficient usage and investment decisions with the customer’s desire for insurance against pricing risks. This can be achieved where the wholesale prices are set efficiently, and where the retailers have access to the tools they need to hedge those network prices. These ideas are applied in the context of the debate over network pricing in Australia.