Leadership’s all about power

WEST Aussies love winners.

Look at the response when WA’s North-West Shelf last month beat Gulf States and Indonesian based LNG suppliers to meet China’s needs with a $25 billion long-term contract.

Understandably that story splashed across newspapers and led electronic media news bulletins.

But who recalls April 13 – just four months earlier – when a tiny back page story revealed French alumina giant Pechiney had abandoned plans to locate a $5 billion smelter in WA?

Pechiney’s reason – WA’s high electricity costs.

Energy Minister Eric Ripper made concerted efforts to negotiate Pechiney into WA, but couldn’t do so.

For WA that’s one we lost, so only few recall it.

The person releasing that news was Department of Mineral and Petroleum Resources chief Rod Evans, whereas it should have been Western Power chief David Eiszele, who commands a $575,000 salary or $11,000 per week, earning in a month more than most Western Australians take home annually.

Another who could have attended the Eiszele ‘press conference that never was’ is Colin Barnett, current Liberal leader and the party’s Energy Minister between 1993 and 2001.

Why them?

Way back in 1992 the Lawrence Labor Government launched an energy review headed by Sir Roderick Carnegie, former CRA Ltd chief, whose 1993 report to Mr Barnett recommended competition be introduced into WA’s energy system wherever possible.

Writing in his no-holds-barred book, Warring Tribes: The Story of Power Development in Australia, former Western Power deputy chief Dr Bob Booth said: “In recent annual reports Western Power published separate financial results for the different sections of their business activity.

“The average cost of power for the generation system has been in the range of $64-76/MWh.

“By comparison, the average revenue received by the NSW generators in the same year was only around $30/MWh – fully $34-46/MWh less than Western Power.”

Little wonder bauxite-rich WA couldn’t tempt Pechiney.

Little wonder also that WA’s business community is falling in behind Mr Ripper who, soon after winning office, convened an Electricity Reform Task Force to examine how, not whether, WA can move to gaining cheaper electricity via a competitive market.

Business has had a gut full of talk about cutting power costs while nothing happens.

Business – through the Chamber of Commerce and Industry (CCI) and Chamber of Minerals and Energy – doesn’t believe a monopoly utility, Western Power, can deliver cheaper power.

That game, as far as they’re concerned, is over.

CCI wants the vitality of competition, not the dead hand of a monopoly utility.

And Mr Ripper is receptive to adopting open competition, whereas both chambers see Mr Barnett as way back in the past.

What business wants is Western Power’s generating, transmission/ distribution and retail arms separated, with the generating and retailing markets, but not transmission/ distribution, opened up to competition.

For a long time the Barnett-Eiszele approach has been to keep Western Power intact and allow possible future private generating companies to contract to supply only it, meaning the companies would supply consumers indirectly via Western Power, not directly, as would be the case under free and open competition.

This crucial difference between the Ripper-CCI-Chamber of Minerals and Energy approach and that of the Barnett-Eiszele camp is at the hub of the present debate, with many Liberal MPs backing Mr Ripper, not their nominal leader.

Little wonder a recent CCI newsletter reported Mr Ripper saying: “For too long WA has had relatively high power prices and the least competitive electricity market in Australia.”

The same newsletter continued: “Mr Ripper displayed a commendable grasp of the issues and an earnest determination to take the electricity sector forward.

“Slow progress in reform under the previous government has led to a lack of investment in WA by independent power producers.”

Interestingly, Mr Barnett was once chamber chief.

Compare those words to what CCI chief Lyndon Rowe said about Mr Barnett in his last days as Energy Minister.

“Members are concerned at the lack of focus in the Government’s statements and actions on means to bring the price of electricity down,“ he said.

“This is the most urgent issue of all – WA has fallen too far behind the tariffs available in other States where there has been more concerted deregulation than has been allowed in the WA electricity sector.

“The program announced by Mr Barnett will not produce the competitive market structure that industry requires and has argued long and hard for.

“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.”

Although Mr Barnett has recently mellowed somewhat, now backing removal of transmission/ distribution from Western Power, many see it as too little too late.

His stance is causing deep ructions in Liberal parliamentary ranks and if he doesn’t amend soon he’ll need to prepare to say goodbye to the Liberal leadership.

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