Business slams deregulation plan

LIKE California, WA faces an electricity shortage, although this State's crisis is not nearly as severe.

Energy industry sources say at the current rate of expansion, WA's energy supplies will fall short by 2004 unless new capacity is added to the system.

Instead, new generation capacity of about 1,000 megawatts will be needed by the end of the decade.

The WA Government announced it would be spending $2 billion on WA's electricity system - $1 billion on generation and $1 billion on transmission.

The Kwinana power station will be the first to be upgraded to arrest WA's power shortfall. Western Power's two ageing 120 megawatt gas-oil fired generators will be replaced with a gas plant by 2003.

The Government is also calling for the private sector to bid for generation contracts. The first tenders will be announced in the middle of the year and the contracts awarded by 2002.

Perth Energy managing director Ky Cao said WA already had several independent power producers.

One of them - Kalgoorlie-based TransAlta - has surplus power available but cannot feed it back to Perth because the transmission line between the South West Interconnected System and Kalgoorlie cannot cope.

"I don't believe any money has been planned to go to upgrade the Kalgoorlie transmission line," Mr Cao said.

Energy Minister Colin Barnett said allowing private generators into the grid would allow WA to have the most "competitively priced, most efficient and most up-to-date technology available".

Then there is the question of cost.

Western Power managing director David Eiszele said WA's electricity price, once the highest in the land had fallen about 15 per cent on average when compared to the rest of Australia.

But according to the Electrical Suppliers Association of Australia, WA has the second highest electricity costs in Australia.

Western Power has long argued the cost of fuel is responsible for WA's high electricity prices.

Sources said eastern states generators were more efficient - despite WA's easy access to natural gas.

WA's electricity price is a concern to WA business. The State's power costs are a major disincentive to companies setting up manufacturing operations here.

Chamber of Commerce and Industry chief executive Lyndon Rowe believes the Government's moves to involve the private sector in electricity generation do not go far enough.

"WA has fallen too far behind the tariffs available in other states where there has been more concerted deregulation than has been allowed in the WA electricity sector.

"The program announced by Mr Barnett will not produce the competitive market structure the industry has argued long and hard for.

"His rhetoric implies an increasing involvement of the private sector in the generation and retail supply of electricity, but the detail of the program points to ongoing impediments and continuing dominance by the state utility."

Mr Rowe said a stronger commitment to the ring-fencing of Western Power's distribution arm was no substitute for proper structural separation.

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