Western Power signs new alliance agreement

Western Power today announced a new alliance agreement with Downer EDI Engineering and Tenix Alliance which will provide Western Power, with resources for the future transmission and distribution infrastructure of its south-west interconnected system.

Downer has formed an alliance with Western Power and Tenix Alliance to design, engineer, supervise, build and commission all transmission and distribution infrastructure allocated to the alliance.

Western Power transmits electricity to the south-west interconnected system of WA, a catchment including metropolitan Perth.

Population growth and the booming mining industry has spurred demand for electricity in the state.

Prior to the alliance, Western Power, a wholesale and retail power distributor, contracted out the construction of power stations and distribution methods, like overhead power lines.

Now, that responsibility will be overseen by Downer EDI Engineering and Tenix Alliance, with Western Power maintaining responsibility for maintenance and fault repairs.

Downer EDI chief executive Geoff Knox said the alliance would help rectify the rift between a growing labor skills shortage in Western Australia and a growing power demand.

"The alliance is an example of how the needs of communities will be increasingly met into the future through more efficient business models," Mr Knox said.

"(The alliance) will enable faster and more cost effective development of infrastructure."

The alliance begins today and will run for five years, with an additional five year option.

Within the alliance, Downer EDI Engineering, the engineering wing of Downer EDI, and Tenix Alliance have formed a joint venture to consolidate their respective expertise in transmission and distribution.

The full annoucement from Western Power is pasted below:

Western Power today announced a new alliance agreement with Downer EDI Engineering and Tenix Alliance.

The alliance will provide Western Power with guaranteed resources and will assist it in meeting the demands associated with Western Australia's booming levels of growth.

The alliance will have a potential value of more than $250 million in the first full year of operation.

The main goal of the alliance is to minimise the impact of the rising cost of materials and the skilled labour shortage being experienced by business in WA.

The alliance agreement covers capital works for both the transmission and distribution networks. The agreement, which is effective from today, will run for a period of five years, with an option to extend for a further five.

Western Power's Managing Director Doug Aberle said this arrangement was a new approach for Western Power that signalled a commitment to working collaboratively with industry in long-term contracts that will deliver the works program.

"In WA alliances have already been adopted by organisations such as the Water Corporation and are used by eastern states utilities as an efficient method of delivering major infrastructure programs.

"Alliance models are particularly effective at increasing efficiencies in an economic climate where demand outstrips supply for labour and materials, which is WA's current environment.

"Western Power's traditional approach of using a tender process to secure best prices is a model best suited to a situation where supply outstrips demand.

"We believe it will be more effective to develop longer term collaborative arrangements where both parties involved in an alliance gain efficiencies and have greater certainty of supply and greater certainty of work respectively.

"This will be a pain-share gain-share arrangement with transparency of accounting.

Mr Aberle said the alliance should provide significant commercial benefits for Western Power.

Staff from all three companies will be involved in the delivery of work which includes design, engineering, supervision management, construction and commissioning of transmission and distribution infrastructure that is allocated to the alliance.

Western Power will announce details of another similar alliance arrangement during April.