14/10/2010 - 00:00

Prices more reflective of reality

14/10/2010 - 00:00

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EMBRACING renewable energy is not just a matter of plugging solar stations into the existing energy grid, but involves strategic management and requires investment in infrastructure.

Prices more reflective of reality

EMBRACING renewable energy is not just a matter of plugging solar stations into the existing energy grid, but involves strategic management and requires investment in infrastructure.

That was the message from Western Power chief executive Doug Aberle at a recent Young Energy Professionals (YEP) event, The Future of Energy in WA, who said raising the price of electricity was a major requirement.

Mr Aberle spoke fervently about rate rises and said cost-reflective pricing was integral to the state’s future in energy efficiency.

He said one of the headline issues that would characterise energy in the future was having a mature, open and self-supporting market where energy was traded in a market-driven way.

In other words, he endorses cost competitive pricing.

“In 1945 a stamp, a telephone call and a unit of electricity each cost a penny. Now a stamp costs 55 cents, a telephone call costs about 50 cents and a unit of electricity has only recently moved from 13 or 14 cents so there has been a substantial separation,” Mr Aberle said.

“We haven’t seen significant price rises in a long time and it has created a false impression about the value.

“Until cost-reflective pricing is in place, meaning actual value and value across time, we won’t be driving the right kind of behaviours.”

His comments follow Premier Colin Barnett’s support for higher energy prices, despite community disquiet.

“In this government’s first year it increased electricity prices by 10 per cent plus 15 per cent, which was a big increase,” Mr Barnett said in parliament earlier this year.“This year energy prices have increased by 7.5 per cent plus 10 per cent. That does not get us to full cost recovery; however it is taking the issue on and dealing with it up front. It may be unpopular but it is honest.”

Speaking at the YEP event, Energy Minister Peter Collier also endorsed electricity rate rises.

“After 10 years we had not had an electricity increase and the message was unambiguous and false, that energy is almost free,” he said.

“We had to change that message and that has come at a huge political cost to both me and my colleagues in government, but it was a message that needed to be made and it was the right decision.”

Mr Aberle also spoke passionately about the integration of renewable energy into WA’s grid.

“As we think about the energy industry and the network in particular, I think we need to grasp that we are moving into a new way of operating, an organic space,” Mr Aberle said.

“That means we are now reaching out beyond just building poles, wires and transformers, and we are involving the customer in the equation.

“We stand at a really interesting time where we need to be making the right investments in that network to maintain it, being careful about how we extend it, but we have to be taking care of the state of that network as well as allowing those new technologies to connect in a way that lets the supply stream be maintained.

“It is important we recognise the materiality of the new way of thinking and the equal reality of what has been there for a long time and will still need to be maintained.

“Where we are standing is how do we make these things work together?”

He said major changes were required if WA was going to meet the 20 per cent target for renewable energy by 2020.

“To meet the target of 20 by 2020 we need to be working as quickly as we can to modify how we think about the network and modify the hardware,” Mr Aberle told the meeting, adding that the future of energy in WA was dependent on careful forward planning.

“Long-term planning for the generation of network infrastructure is critical because we are starting to think about what is globally most economic.”

 

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