Western Australia’s water and electricity utilities are planning further big increases in their capital works spending, to nearly $1 billion a year, as they seek to keep up with fast-growing demand.
Western Australia’s water and electricity utilities are planning further big increases in their capital works spending, to nearly $1 billion a year, as they seek to keep up with fast-growing demand.
Western Power has released internal forecasts showing that capital spending on the state’s electricity network will jump to $950 million a year over the next five years.
This follows a rapid increase in capital spending in recent years, as Western Power has sought to redress the chronic underinvestment of the late 1990s and early part of this decade.
Its capital spending has jumped to $664 million in the current financial year and is set to grow by a further $300 million a year.
The Water Corporation’s capital spending has increased from about $400 million a year in the early part of this decade to an estimated $775 million next year.
Water Corp has budgeted to spend nearly $3 billion over the next four years, but this does not include the estimated $617 million cost of developing the South West Yaragadee, which is subject to government approval.
Western Power’s general manager asset management, Mark de Laeter, said the higher spending on the electricity network reflected increased demand as well as increased costs.
“There has been rapid escalation in our spending over the past two to three years and that is expected to continue,” Mr de Laeter said.
“We have done a lot of catch-up work to improve the reliability and capacity of our network.
“That has coincided with the resources boom, which has led to unprecedented growth in demand and increased cost of materials.”
The extra spending is likely to include four major projects designed to expand the capacity of the electricity network.
The biggest is a proposed transmission line from Pinjar, just north of Perth, to Geraldton to meet rising electricity demand in the Mid-West region.
The current transmission lines to the region are expected to reach capacity by 2010.
Western Power expects that electricity demand in the Mid-West could grow by about 300 megawatts, primarily from a series of big iron ore projects planned by companies including Gindalbie Metals Ltd and Murchison Metals Ltd.
It is also planning for new power stations that could be established in the region.
These could include Aviva Corporation Ltd’s proposal for a 400MW coal-fired power station, Eneabba Gas Ltd’s proposal for a 168MW gas-fired power station and up to 300MW of new wind-powered electricity.
Mr de Laeter said the Geraldton project was expected to cost more than $300 million, making it the biggest project undertaken by Western Power in 20 years.
A second big project, likely to cost about $100 million, is the construction of a new transmission line from the Collie coal fields to the metropolitan area.
This recognises that most demand for electricity is in the metropolitan region while 60 per cent of generation is located south of Perth.
Four main transmission lines run south of Perth but they are expected to reach capacity by 2011.
A third project involves an upgrade of the existing transmission lines to the Goldfields.
The upgrade will lift capacity of these lines from 130MW to about 170MW.
Western Power’s planned capital works program, along with the many other infrastructure projects in WA, is constrained by financial and operational pressures.
This is apparent in the Great Southern region, where two major projects have been under consideration – a new transmission line to Albany and the construction of a separate transmission line from Collie to Grange Resources Ltd’s proposed Southdown iron ore mine, 90 kilometres east of Albany.
Western Power and Grange have recently decided they will evaluate the possibility of combining the two projects.
This includes Grange adopting a staged development of the mine, requiring less power during the initial operating period from 2009 to 2012.
“Now that Grange has announced it will investigate new power solutions to deliver power via Albany, Western Power can investigate the option of expanding its planned new line for Albany to include Grange’s needs,” Western Power’s major projects coordinator, Ian Buchanan, said.
The Water Corp’s capital works program next year is focused mainly on developing or significantly upgrading water and wastewater infrastructure in Perth’s fast-growing northern and southern corridors.
The 2007-08 budget includes provision of $153 million to develop a new wastewater treatment plant at Aklimos.
It follows construction of the state’s first desalination plant at Kwinana, costing $387 million.
