26/09/2013 - 12:24

Western Power on road to recovery

26/09/2013 - 12:24

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Western Power has achieved a five per cent reduction in operating costs as it aims to deliver greater efficiencies and a higher standard of service to customers.

Western Power on road to recovery
Western Power chief executive Paul Italiano.

Western Power has achieved a five per cent reduction in operating costs as it aims to deliver greater efficiencies and a higher standard of service to customers.

The utility shed $25.5 million from its $489 million operating costs, the majority of which is spent on corrective maintenance.

Western Power recorded a normalised net profit after tax of $93 million, around $39 million of which was derived from residential customers at an average of $42 per customer.

That profit is returned as a dividend to the state government to reinvest into other services.

The utility invested more than $1 billion in capital programs, including the $443 million Mid West Energy Network and set a record for the number of wood pole replacements, up 96 per cent from the previous year to more than 48,000, and reinforcements, which were up 12 per cent.

It also recorded a reduction in the number of outages caused by equipment failure on the previous year.

Western Power deputy chairman John Cahill said the utility had turned its performance around after a disappointing year in 2011-12.

A parliamentary standing committee last year identified several areas where the utility's performance had fallen short of community expectations, including network reporting and asset management.

"The board recognised that it needed to improve what it was doing in order to meet the expectations of the stakeholders and indeed, the Western Australian community," Mr Cahill said.

Mr Cahill said the board of directors was confident that the company was heading in the right direction under the guidance of chief executive Paul Italiano, who was appointed to the role in August last year.

The utility has implemented a number of costcutting measures, including a freeze on executive salaries for the second consecutive year.

Mr Italiano said the utility had come a long way in a year but still had a long way to go to reach the standards it was aiming for.

"To the fullest extent possible, we're going to try and catch up on decades of underinvestment in the network," Mr Italiano told reporters.

"We're trying to reach a point where we're investing in the network in a way that drives down costs, improves safety and maintains reliability."

The Economic Regulation Authority ruled last year that Western Power's service revenue ceiling to 2017 would be fixed at $6.7 billion, despite the utility proposing a ceiling of $9.1 billion.

Mr Italiano said the utility would be forced to rely increasingly on debt to fund its services, which rose 13 per cent to $6.19 billion in 2012-13.

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