13/08/2014 - 15:39

WA electricity costs are nation’s highest

13/08/2014 - 15:39

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Producing electricity for Western Australians costs at least 125 per cent more than elsewhere in Australia, according to a newly released state government discussion paper on the largest ever review of the electricity market.

WA electricity costs are nation’s highest

Producing electricity for Western Australians costs at least 125 per cent more than elsewhere in Australia, according to a newly released state government discussion paper on the largest ever review of the electricity market.

The discussion paper, which was originally due in June, was tabled in parliament this afternoon by Energy Minister Mike Nahan.

It will now be open for public submissions until mid September.

Dr Nahan said the discussion paper found the current market in WA had failed to deliver competitively priced electricity.

The 55-page document says the cost to provide electricity to users in WA is about $180 per megawatt hour, compared with the typical cost elsewhere in Australia of $60-$80/MWh.

This represents a variation of 125–200 per cent.

The government has been subsidising electricity for taxpayers to the tune of $500 million per year, and this is forecast to grow to $600 million per year.

Dr Nahan set up the review to find ways to combat rising electricity prices, as well as methods to increase competition and private investment.

It considers a number of dramatic changes to the electricity market, including moving to full retail contestability and scrapping the capacity market, two features which differentiate WA’s electricity network markedly from the east coast.

The potential to move to an energy-only market and remove the capacity market, which works to ensure enough electricity is available should it be needed, has been hotly contested by the two groups that make up the capacity market.

It has divided generators and demand-side management providers, which are currently both paid equally to either supply electricity or indirectly increase supply by reducing or eliminating their own demand for power.

The discussion paper also found that customers only used 35 per cent of the capacity they paid for.

Dr Nahan called for the review earlier this year, after repeated requests from market participants, and in line with intentions given after the last major industry shakeup, the disaggregation of Western Power in 2006.

Dr Nahan said it was important that industry and the community got involved with the review. 

“We need to have a debate about how well the electricity market has performed and what changes need to be made so that it will serve WA well in coming years,” he said.

The discussion paper and information on how to make a submission can be accessed on the Public Utilities Office website.

 

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