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Assignment 2: Research Report

ECON 2010 SP2 2023

Due Date: 11pm (Adelaide Time), 25 April (Tuesday).

Weight: 25% of final mark

Team Members: You are free to complete this assignment either alone or in a team (up to 3 students in each team). By choosing to complete your assignment with other students, you have agreed that each member of the team will receive the same mark for their work. If you disagree with this mark allocation, you need to inform the course coordinator at least 48 hours before submission.  

Reference: You are required to support your arguments with information obtained from other sources such as government reports and you are reminded of the need to cite your work appropriately. Failure to do so is a form of academic misconducts. Please check University's policy with respect to academic misconduct, and note that severe penalties may be imposed for significant breaches (For recommended reference style, please check this site).

Format: The output for this assignment should be in the form of a professional report with no more than a one-page executive summary. Refer to the marking rubric for marks allocated for formatting. Your report will be evaluated for the persuasiveness of the argument, the way information is presented.

Word Limit: 1800 words (excluding data sheet and references).

Reports that are over the word limit may be returned to the team (student) who submitted them and that team (student) will be asked to shorten their report to fit the limit and re-submit the report. These reports will be accepted after they have been shortened, but they will be treated as late and marks will be deducted accordingly.

Submission: Submit via Gradebook. You need to submit at least two files: the report and the data file.

Background

The Essential Services Commission of South Australia (The Commission) (2022) is conducting an inquiry into retail energy price. You are working for a consulting company to prepare for a submission on the evidence and potential that electricity retailers in South Australia have earned super profits to the financial detriment of South Australia energy consumers. Your supervisor has asked you to conduct research and write a research report based on your findings.

Data collection stages

You (or your group) need to visit the energy comparison site (https://www.energymadeeasy.gov.au) to find out five electricity plans for a typical 2-3 person household in South Australia, and collect relevant pricing information (please refer to FAQs for step-by-step instructions on how to collect such information). The data template can provide you with a guideline as to what information is required. 

Analysis stage

Your task is to read the relevant reports on electricity retailing market, analyse the pricing data you have collected and comment on the nature of competition in the electricity retailing market in South Australia. In doing this, you should address the following questions.

1. What market structure best describe the electricity retail market in South Australia? Please include the number and size distribution of firms, HHI, the barriers to entry and exit and the degree of product differentiation in your discussion.

2. Explain whether any electricity retailer in SA possess market power and where its market power comes from. How are electricity consumers affected as a result?  

3. What are the pricing strategies of these firms? Do they adopt any of the pricing strategies discussed in Topic 3? How can those pricing strategies help the firms to increase market share and/or profit? Use the data you have collected to support your arguments.

4. How is the cheapest plan different from the standing offer? Why do energy providers offer so many plans in addition to the standing offer? If the government wants to make electricity more affordable, provide a brief overview of two possible policies that the government could implement if it wishes to reduce the price of electricity for consumers?  What, if any, any unintended consequences might come from these?