Collier changes tack on Mid West power

03/08/2009 - 12:04

The state government has conditionally agreed to build part of a major power line in the Mid West after it omitted the upgrade in this year's budget due to a substantial cost blow-out.

Collier changes tack on Mid West power

The state government has conditionally agreed to build part of a major power line in the Mid West after it omitted the upgrade in this year's budget due to a substantial cost blow-out.

The turnaround follows a report from the government-commissioned review team, which identified around $200 million in potential savings by splitting the construction of the power line, extending from Pinjar to Moonyoonooka, into two stages.

Estimates had initially pegged the upgrade of the power line to 330 kilovolts at $300 million, but that had blown out to $689 million which prompted the government to defer the project.

Today, Energy Minister Peter Collier told WA Business News the entire project was anticipated to cost between $450 million and $470 million, depending on Western Power's confirmation of the team's report, part of the government's conditional approval.

Other conditions include a new business case for stage one, where the review team has proposed the 330kV line extend from Pinjar to Eneabba to encourage progress of Gindalbie Metals' Karara iron ore mine, six prospective wind farms and a major new power station.

Mr Collier said the first part is anticipated to cost between $200 million and $250 million.

However he did not specify which power station project the team was referring to, adding that the proposed Geraldton power station, which was part of the original plans was "not a consideration at this stage".

The government's decision is welcome news for Aviva Corporation which took a hit in its shares prices after the government deferred the project earlier this year.

Aviva and global power company AES Corporation are jointly developing the $1.3 billion Coolimba power project, a 450 megawatt base load coal-fired power station near Eneabba with an additional 360MW of gas-fired generation.

"Today's announcement gives the assurance needed to progress planning and funding activities to have Coolimba supplying much needed power to the WA energy grid by 2014," Aviva chief executive Lindsay Reed said.

Gindalbie Metals, which is close to securing final environmental approval for Karara, welcomed the decision but added that it can rely on the current 132kV power line for its 10 million tonne per annum start up operation.

"This latest decision to ensure the region has sufficient power infrastructure, is testament to the government's belief that the Mid West is set to become the next resources growth centre in WA," Gindalbie managing director Garret Dixon said.

Mr Collier said the power line project, anticipated to be completed in 2012, will be funded by treasury and the government will seek Commonwealth funding.

"Stage-two of the project, which will involve extending the line to Moonyoonooka terminal, outside Geraldton, would be built at a later date subject to further justification," he said.

Energy Opposition Spokesperson Kate Doust has called on the government to make firm its commitment to the project.

"While the announcement of some commitment to the transmission line is welcome, it is fixed with stringent conditions that may not see the entire project completed before energy shortages in the regions become critical," she said.

"The funding is subject to the progress of proposed projects, availability of Commonwealth funding and growth in demand for energy.

"Geraldton residents need a real commitment to the transmission line not just a media announcement."

Ms Doust called for the review to be made public because of conflicting information about when the region's power would be under threat.

"In a report to the Economic Regulation Authority in 2007, Western Power expressed significant concerns about the deterioration in the reliability of the supply as soon as summer of 2010-2011," she said.

"An SKM report commissioned by Western Power in 2007 also stated that without the transmission line, there may be a need to shed loads in the region as early as 2010-2011.

"The Barnett Government‟s review allegedly found that there would not be problems with the power supply until after 2015 which contradicts all this earlier information. This review must be made public. "

 

 

Both announcements are below:

 

The State Government has conditionally agreed to build stage one of a major power line in the Mid-West after about $200million in potential savings was identified by a review team.

The Government requested a formal review of the power line, also referred to as the North Country Reinforcement Project, which extends from Pinjar to Moonyoonooka (near Geraldton), after the initial cost estimates more than doubled - from $300million to $689million.

Energy Minister Peter Collier said the review team, represented by the Office of Energy and the departments of State Development and Treasury and Finance, was asked to ensure that initial cost estimates were defendable and to explore possible deferral and staging options.

Mr Collier said the review team analysed electricity demand forecasts and found that without the power line, the risk of outages in Geraldton would only start becoming significant after 2015.

"The review team also recognised that there are a number of major Mid-West projects that are well under way and will require access to substantial electricity supply," he said.

"As a result, the review team proposed that the 330kV line initially extends from Pinjar to Eneabba to encourage progress of Gindalbie's Karara mine, six prospective wind farms and a major new power station."

The Minister said the Liberal-National Government gave the go-ahead for the project on a number of conditions, such as confirmation by Western Power of the review team's findings that Geraldton would receive adequate power supply until 2015.

Other conditions required a new business case for stage one as well as appropriate regulatory approvals.

"This conditional approval will ensure that Government funding for this significant but costly project will proceed only if it can be justified by the growth in energy demand and the adequate progress of proposed projects that rely on access to the network, or the availability of supplementary funding from the Commonwealth," Mr Collier said.

"Through this approach, the State Government can clearly demonstrate to industry the basis under which the transmission lines will be funded and built.

"It also provides major project owners with the assurance needed to progress their planning and funding activities.

"Stage-two of the project, which will involve extending the line to Moonyoonooka terminal, outside Geraldton, would be built at a later date subject to further justification."

Once necessary approvals have been given, stage one of the project is expected to take 26 months to complete.

 

KATE DOUST

The Barnett Government has once again left Geraldton in the dark by making a flimsy announcement about the 330kv line from Pinjar to Eneabba, Shadow Minister for Energy Kate Doust said today.

Ms Doust said the Barnett Government had given "conditional approval" and set tough conditions on the development of the transmission line after undertaking a review.

"The Barnett Government has come under significant pressure from Labor and the Geraldton community to deliver this project," she said.

"There is however, no funding in the Budget and no timeline for completion.

"With a Budget already in tatters because of policy back flips and unfunded projects, this announcement will put further strain on Treasurer Troy Buswell's ability to manage the State's finances."

Ms Doust said the Barnett Government's announcement had stipulated restrictions on the project which could threaten it going ahead at all.

"While the announcement of some commitment to the transmission line is welcome, it is fixed with stringent conditions that may not see the entire project completed before energy shortages in the regions become critical," she said.

"The funding is subject to the progress of proposed projects, availability of Commonwealth funding and growth in demand for energy.

"Geraldton residents need a real commitment to the transmission line not just a media announcement. Ms Doust said without an expected completion date, Geraldton's power supply was still at risk because of conflicting information about when the region's power would be under threat.

"In a report to the Economic Regulation Authority in 2007, Western Power expressed significant concerns about the deterioration in the reliability of the supply as soon as summer of 2010-2011," she said.

"An SKM report commissioned by Western Power in 2007 also stated that without the transmission line, there may be a need to shed loads in the region as early as 2010-2011.

"The Barnett Government's review allegedly found that there would not be problems with the power supply until after 2015 which contradicts all this earlier information. This review must be made public.

"With Geraldton's significant projected growth in population and industry, the Barnett Government must reveal how it plans to fund the 330kv line and how long it will take."

Labor had committed $75.6million in 2008-2009 to commence initial works on the 330kv line.

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