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Government’s $2b plan lacks power

WHILE the WA Government’s $2 billion plan to upgrade electricity supply in WA meets some pressing needs, it does not go far enough to bring true competition and the price cuts that go with that.

The Government is spending $1 billion on new power stations with a requirement to generate 960 Megawatts and another $1 billion on upgrading transmission and distribution power lines – particularly in regional areas.

It is also creating a general energy regulator to strengthen ring-fencing provisions separating Western Power’s generation and transmission arms.

WA faces a power shortage by 2004 if no new generation is added.

Customers drawing 230 kilowatts per year will have the chance to choose their electricity supplier from July. In 2003, that choice will extend to customers drawing 34 kilowatts per year.

Independent generators will be allowed to bid to supply power to Western Power, effectively competing with the utility’s generating arm.

But industry sources say this does not go far enough to encourage competition because independent electricity retailers are not allowed to buy power from the new generators.

Independent retailers Perth Energy and WA Consolidated Power and the Chamber of Minerals and Energy want the Government to break up Western Power into separate generation and transmission businesses.

In fact, this is what Labor promises to do if it is elected.

Chamber of Minerals and Energy CEO Ian Satchwell says ring fencing is an “imperfect substitute for having competing private and public generators selling via an independent grid”.

WA Consolidated Power CEO John Cochrane says the output from the new generation projects will all be going to be signed to Western Power.

The way Mr Cochrane sees it, Western Power has been given a guaranteed power supply for another seven years and beyond.

Private sector suppliers have been given an opportunity to establish major generation facilities but private electricity retailers have been given nothing, he says.

“We face Western Power’s continuing dominance,” Mr Cochrane said

Chamber of Commerce and Industry chief executive Lyndon Rowe says the Government’s statement lacks focus on means to bring the price of electricity down, “the most urgent issue of all”.

Mr Rowe thinks Mr Barnett’s 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 Western Power.

However, not all are bashing the Government’s energy plan.

The Australian Gas Association endorses the plan because it means at least 600 megawatts of WA’s additional generation capacity is likely to be fuelled by natural gas.

The association’s previously forecast natural gas would comprise 50.1 per cent of the fuel used in thermal generation in WA by 2004-05, increasing to 55.9 per cent by 2014-15.

WA has already exceeded the 2004-05 target with 53 per cent of thermal power generation comprising natural gas.

We will all have to wait to see whether the announced changes deliver the benefits industry wants to see from restructuring of the energy market.

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