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Power players hold off

WA’S sole private electricity retailer says onerous regulations and charges are preventing more players from entering the State’s electricity market.

From the beginning of this year, WA’s electricity market became more contestable, with the customer threshold extended downwards from those using at least an average 230 kilowatts of power to include those using an average 34 kilowatts.

Customers who consume at least 50,000 kilowatt hours (5.7 kilowatts demand) of renewable energy are also contestable.

However, Perth Energy managing director Ky Cao says a move into the lower end of the fossil fuel power market is cost prohibitive for potential newcomers, apart from those who may have multiple power stations, and Western Power is facing no competition for the newly contestable customers.

Network access charges, metering costs and energy balancing charges are too onerous for new fossil fuel, or black, power retailers, Mr Cao said.

Energy balancing regulations require new retailers to pay Western Power to change customer meters so that these can be read at half-hourly intervals.

Inequities between charges for under supply and payment for surplus were another major disincentive, Mr Cao said.

He said a contestable WA electricity market would not support green power suppliers and retailers either, until recommendations by the Renewable Energy Access Working Group were implemented.

REAWG spent two years working towards a mid-2001 set of regulations acceptable to industry, the Office of Energy, and Western Power networks.

Perth Energy took a greater share of the retail market late last year only because of a minor concession on energy balancing for those supplying power from renewable sources, Mr Cao said.

The company already sold spare Alcoa capacity to industrial customers, but late last year began supplying a number of smaller customers using power from Landfill Gas and Power.

These customers include some Water Corporation sites, Challenge Stadium, Lords Sports and Health Club, Belmont, Mandurah and Melville City Councils and the Town of Cambridge.

Landfill Gas and Power, whose six metropolitan landfill sites fuel four power stations, previously supplied Western Power.

Landfill Gas and Power director Brian O’Donnell said that, while State Government reform support had encouraged his company to find ways to supply customers directly, negotiation for network access had been “extremely difficult”.

“The conflict between Western Power competing with Landfill Gas and Power for customers, while also con-trolling the company’s access to the network, has been almost impossible for Western Power to administer and for Landfill Gas and Power to negotiate,” Mr O’Donnell said.

Current regulations were suited to large fossil fuel plants, he said, and his company was only able to supply some customers directly because it was an existing generator.

Landfill Gas and Power was hoping to have another power station up and running at Mindarie later this year.

Power from the plant could supply 1500 homes, but Mr O’Donnell told WA Business News the Government’s lack of action on a May 2002 parliamentary promise to change green access regulations was jeopardising the new plant.

“If regulations don’t change, it is unlikely any new privately owned renewable energy power stations will be built in WA,” he said.

Mr Cao said setting up a power plant was the easy bit in WA at the moment – the difficult part was getting access to the transmission grid and to contestable customers.

The REAWG recommendations would have eased some operational issues for smaller renewable energy projects regarding regulations that do not apply to Western Power’s renewable projects, such as the Albany wind farm, Mr Cao said.

However, these rules have still not been implemented, despite a promise given in State Parliament last May that they would be implemented as soon as possible.

If renewable access rules are not introduced until the Electricity Reform Task Force program is implemented, the market would have to wait until at least 2006 to see if any new rules work, before committing to investment.

The ERTF process was completed skilfully, with a neutral approach taken by all stakeholders, Mr Cao said.

However, it was important that any private reform implementation group includes private industry representation to avoid the risk of this critical phase being dominated by Western Power, he said.

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