WESTERN Power has told coal miners to reduce prices or face a heavily reduced demand for coal.
The utility is WA’s biggest user of coal, burning about five million tonnes a year for power generation at Muja, Collie and Kwinana power stations.
The combination of existing coal burning power plants reaching retirement age and the impact of competitive gas-fired generators could result in a significant change in the make up of the WA power generation market.
Western Power general manager of generation Mark Chatfield said while the future of coal was secure in the short term, there were significant competitive threats emerging.
Mr Chatfield said the high cost of generated electricity in WA had sparked continual calls for change in the industry.
He said if coal costs were not modified, it would be displaced as Western Power’s gas-fired competitors captured the market.
The electricity industry has not harnessed the competitive gas industry.
However, during the next decade competition and the retirement of ageing, low-efficient power plants could force gas into the power system at the expense of coal.
