The behind-the-scenes tussle for the $2.5 billion Western Power electricity procurement contract won by Wambo Power Ventures Pty Ltd involved three of the state’s most astute lobbyists and backroom operators.
The behind-the-scenes tussle for the $2.5 billion Western Power electricity procurement contract won by Wambo Power Ventures Pty Ltd involved three of the state’s most astute lobbyists and backroom operators.
This is hardly surprising, since the stakes were so high for what is likely to be the last such long-term Western Power electricity procurement contract.
Wambo, a joint venture of Babcock & Brown and ERM Power, employed Richard Harris, a Perth-based energy expert and lobbyist with Hawker Britton, and former Labor MP for Kalgoorlie, Megan Anwyl.
Ms Anwyl, with her high-level Labor contacts, and Mr Harris made a formidable duo, which Wambo deliberately hunted out to push their case into the Gallop Government’s corridors of power.
Wambo made another smart decision by engaging West Perth-based Perth Energy Pty Ltd to provide crucial market intelligence and information about the state’s South West Interconnected System, still fully owned by Western Power.
Ms Anwyl lost her seat to one-time Goldfields car parts retailer, Matt Birney, who became Liberal leader after retaining the traditional Labor seat at his first recontest last February.
Hawker Britton has excellent contacts with all state Labor governments.
Principals David Britton and Bruce Hawker were staffers for recently-retired NSW Labor premier Bob Carr.
Stephen Mayne, founder of Australia’s first on-line news service, Crikey, said: “They charge like wounded bulls but are said to be extremely effective.
“Hawker Britton are one of the great unwritten stories in NSW and business-political journalists need to wake up to themselves and start looking into their activities.”
Mr Harris, as well as having been a federal parliamentary staffer – he worked for onetime Hawke and Keating government minister Senator Peter Cook – has had eight years’ experience in the State Government’s Office of Energy, where he was director of energy market and regulatory policy.
He is, therefore, thoroughly conversant with the rivalry between coal and gas that has dominated Western Australia’s energy sector since the 1970s when the North-West Shelf came on stream.
He would have known, for instance, that his main competitor, Griffin Energy, had spent years developing high-level links within the Labor Party, and even closer ones with unionists.
The decision to favour Wambo’s $400 million bid was in part due to Mr Harris’s low-key approach in delicately selling the idea that WA needed the cheapest and cleanest option, namely, gas.
Western Power is about to enter a deregulated electricity market, with its long-time privileged monopoly status about to be scrapped as the Government has signalled it will disaggregate it into generating, retail and a transmission entities.
The days of charging clients cost-plus for electricity are, therefore, set to end.
This is something Western Power’s board fully appreciates, meaning the utility must become competitive otherwise clients, especially large ones, will desert it for new entrants such as Alinta and Perth Energy, which will be able to offer cheaper electricity.
The new rules for WA’s energy sector are set to trigger greater competition, with much of this new ingredient likely to be from Alinta, which has teamed-up with Alcoa to become a major gas-fired electricity producer.
Mr Harris is fully aware of the disadvantages of the old-style monopoly market and the potential benefits that will flow from a competitive market.
Gallop Government ministers and Labor MPs would have had the disadvantages of the former and the benefits of the latter markets clearly and concisely explained to them by Mr Harris and Ms Anwyl.
In the other corner for long-time Collie-based coal miner, Griffin Energy, was one of the Burke Labor government’s shrewdest and best informed ministers, Julian Grill, who, like Ms Anwyl, hailed from the Goldfields, having been MLA for the seat of Eyre until 2001.
Griffin was confronted with the ‘not-as-clean’ image and was therefore at a disadvantage against Wambo, which also highlighted that gas-fired units can be brought on-stream faster than a coal-fired ones.
Griffin’s strategy was to counter by re-branding coal into a ‘New Coal’ image, something it did jointly with Wesfarmers Premier Coal, to convince government that coal’s emissions were on a par with gas if one aggregated all emissions produced by gas – from its mining, transmission and firing. Griffin also thrust itself forward as an environmentally progressive enterprise by announcing last month that it would build a 48-turbine wind farm at Badgingarra.
The outlay on Badgingarra’s Emu Downs Wind Farm will be in the order of $180 million and it will be capable of supply 50,000 homes with ‘green power’.
Griffin’s other environmental initiative was to team-up with the State Government to store highly saline early winter run-off from the East Collie River into its disused coal voids.
Despite both moves, Mr Grill’s efforts to topple Wambo, Mr Harris and Ms Anwyl, failed.
Energy sector observers have offered a range of other explanations for his failure to get Griffin’s proposal accepted.
One highlighted theory is that Mr Grill was at a disadvantage with the Gallop cabinet because of his close links with Brian Burke.
The two former MPs regularly team-up to lobby for projects and Premier Gallop has banned his ministers from having any official contact with their lobbying efforts.
Also noteworthy is Mr Grill’s key role during 1990-91 in ensuring that Western Power (then SECWA) acquired a coal-fired station despite the Lawrence Labor Government’s 1989 Power Options Review Committee recommending gas ahead of coal.
That inquiry was headed by Dr Frank Harman, a former Murdoch University economist.
Dr Harman has had a book published by the influential Melbourne-based Institute for Public Affairs outlining how the Lawrence government rejected his inquiry’s recommendation in favour of coal.
“The deadline for the acceptance of the conditions in the modified private option was set for May 1, 1991,” Dr Harman writes. “On February 5, 1991, Jeff Carr, after being forced out of Cabinet, was replaced by Geoff Gallop as Minister for Fuel and Energy.
“To assist the promotion of the coal option, two Labor MPs, Julian Grill and Norm Marlborough, were requested by the Government to act in a facilitating role to explain the Government’s position to the Collie coal companies and unions.
“A particular concern was that the job losses and income losses arising from reduced tonnages and prices would occur almost immediately; whereas the new jobs would not be available until the start of construction and the development of the new coal deposit to supply the power station.
“A further concern was that ... there appeared to be no incentive for the other to reduce coal prices and tonnages.”
By May 1991 Western Power “recommended that Cabinet approve a private coal-fired power station”.
