03/09/2009 - 00:00

Industry demands input on energy reform

03/09/2009 - 00:00

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LOCAL industry is demanding a say on the state government's next move on energy policy, after it finally scrapped unwelcome plans to merge electricity generator Verve with retailer Synergy.

LOCAL industry is demanding a say on the state government's next move on energy policy, after it finally scrapped unwelcome plans to merge electricity generator Verve with retailer Synergy.

Plans to re-amalgamate were formally scrapped based on the findings of a comprehensive review by electricity expert, Peter Oates.

However, Energy Minister Peter Collier said significant changes to energy market rules and Verve's vesting contract were still needed to improve Verve's ongoing viability.

He also announced plans for a strategic energy initiative to ensure a coordinated direction for the state's future energy security and reliability.

WA industry bodies welcomed the Verve-Synergy decision and the commitment to further reform of the local energy market, but say industry must be consulted before any major new policy decisions are made.

Chamber of Commerce and Industry WA chief executive James Pearson said industry remained in the dark about the next stage in the reform process. In particular, Mr Collier needed to clarify his intentions with respect to the state energy initiative and possible changes to energy market rules.

"We'd like to know what all of that means - those are important things, but at the moment there's no flesh to those bones," Mr Pearson told WA Business News.

"Has the government actually come to a position on these issues ... or not? We don't know."

It was also vital for the full Oates report to be released publicly before any new energy policy was decided, he said.

"What's important for my members is that it's made public before any more decisions are made by the government, and that industry has a chance to respond," Mr Pearson said.

"A lot of effort went into that report, a lot of good people were involved in it, however Mr Oates did not consult widely ... so the consultation has to come before decisions are made."

Speaking last week at the Energy in Western Australia conference, Chamber of Minerals and Energy chief executive Reg Howard-Smith said it was critical that the energy initiative provided the certainty needed to encourage new investment by energy suppliers and customers.

"If the right market signals are not received by the private sector regarding certainty for future investment, energy supply could become a major impediment to development across the state," he said.

Mr Collier told WA Business News that industry would have ample opportunity to provide input before any policy decisions were made.

"It will be a coordinated approach, it will be a very collaborative and cooperative strategy. All sectors of industry will be asked to contribute," he said.

The terms of reference for the initiative would be finalised and made public within the next couple of weeks, he said.

Mr Collier also pledged to release the Oates report before any decisions were made about Verve or energy market rules, but declined to discuss possible changes.

"I don't want to pre-empt anything, (but) everyone knows there are problems with the market rules and with the vesting contract," he said.

The Oates report is thought to have considered a range of options, including an earlier transition to full contestability in the retail energy market, freeing Verve and Synergy to compete in both generation and retail, easing restrictions on Verve's existing generation capacity, and a faster transition to full cost-reflective pricing.

Mr Collier also said he would soon receive the final report from the Gas Supply and Emergency Management Committee, established in January to review the security of future domestic gas supplies in response to last year's Varanus Island explosion.

"I've received the draft recommendations and the final report will be due to me in the next few weeks," he said.

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