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Extra supply key to cut power bill

POWER consumers in WA face further delays until benefits of electricity market deregulation become evident.

WA faces the highest commercial electricity prices of any state. In 1998/99, WA commerce paid 37 per cent more for electricity than the Australian average.

WA is forecast by the Electricity Supply Association of Australia to retain the dubious honour of having the highest electricity costs of any state in 2000/01.

This is in a State boasting significant natural gas, coal, and renewable energy opportunities.

Existing steps to deregulate the electricity market do not appear to have made their mark.

One Property Council member said that there were only five customers who obtain power from suppliers other than Western Power.

Large businesses have expressed frustration at being unable to obtain alternative power supplies, even where they have access to the contestable market.

To its credit, the State Government has taken further steps to reform the electricity market.

Before Christmas, Energy Minister Colin Barnett announced two key reforms which should promote further competition and lower costs.

First, contestable levels in the South West and North West distribution networks are to be reduced.

It was estimated that the first step of deregulation would release 450 business customers to the competitive market on 1 July 2001.

A further reduction on 1 January 2003 is estimated by the Minister for Energy to release a further 2500 customers to the competitive market.

Secondly, the introduction of a new open competitive tendering process to encourage bids by private generators should reduce supply costs.

Some $1 billion is to be spent on investments in new power stations. Yet there is no guarantee that these power stations will be privately run.

The Government must do more than introduce new suppliers to Western Power, it must address a crucial issue before the benefits of competition will flow to consumers.

Customers in the contestable market should have viable alternative suppliers to Western Power at a retail level, otherwise the reforms have limited benefits.

For too long the electricity market has been dominated by a monopoly. The anticompetitive market has been a millstone around the neck of WA industry.

It is time for the Government to generate real electricity market savings.

l Joe Lenzo is the Executive Director of the Property Council of Australia

(WA Division).

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