06/03/2014 - 16:21

Electricity review launched

06/03/2014 - 16:21


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Electricity review launched
Energy Minister Mike Nahan

Energy Minister Mike Nahan’s launch today of the first review of the state electricity market since Western Power was disaggregated in 2006 has drawn a mixed response.

Mr Nahan announced that the review steering committee would be chaired by independent consultant Paul Breslin and include Department of Finance deputy director general Ray Challen and Department of State Development deputy director general Nicky Cusworth.

He also admitted that the electricity market had some serious challenges.

“It wasn’t until I became the Minister for Energy that I really appreciated that something was wrong with the sector,” Mr Nahan said.

The Chamber of Commerce and Industry WA welcomed the review and its focus to lower electricity prices, reduce the government subsidy to Synergy, and increase private sector investment.

CCI chief officer member services and advocacy, John Nicolaou, said the review would tackle some challenging issues and could provide the private sector with certainty on long-term energy policy.

Mr Nahan previously told Business News the review would investigate the possibility of residential electricity users buying from retailers other than Synergy, and review ways to remove excess capacity in the market. 

“It is also positive to see the review will look at ways to encourage competition and allow smaller businesses and consumers to choose their electricity provider by focusing on moving to cost reflective pricing and full retail contestability,” Mr Nicolaou said.

However, Labor energy spokesman Bill Johnston questioned whether the review would accomplish what it had been set up to do. 

Mr Johnston said the Barnett government, under previous energy minister Peter Collier, had previously carried out a strategic energy initiative, and its decision to hold a review now was an admission of failure.

Peter Collier promised that the strategic energy initiative would be the blue print for the energy sector in WA. Today Minister Nahan has junked the strategic energy initiative as worthless, despite it having consumed three years of effort and hundreds of thousands of dollars,” Mr Johnston said.

Mr Nahan said an important aspect of the review was tackling the subsidy to Synergy, which has grown to more than $500 million a year, a total of $2.2 billion so far.

“Let me put this in perspective. If we could do away magically without this, we could build another Fiona Stanley. Not just another floor on the children’s hospital, but a whole new hospital,” Mr Nahan said.

“I dare not say if we did not have this level of subsidy we’d still have the triple A rating and we’d be in a much better position ...to address the challenges we have.”

He said the review would be broad reaching and the terms of reference have now been released.

“The review will be thorough and broad ranging. No part of the market will be immune to it. No stone will be unturned.”


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