Hon Mike Nahan BEc MS PhD MLA — Electricity Market Review Paper released

Energy Minister Mike Nahan today released a discussion paper on ways to reform the electricity market in the south west of Western Australia.

The Electricity Market Review Discussion Paper examines why the cost of supplying electricity in WA is so high compared to the rest of Australia.

Several options to deal with this – and reduce the $500million per year taxpayer-funded subsidy – are canvassed, including whether WA should join the National Electricity Market, or reform the existing market.

The Electricity Market Review has three objectives: reducing costs of supplying electricity without compromising safe and reliable supply; reducing Government exposure to energy market risks and having future power generators built by the private sector without Government investment or other financial support; and attracting to the electricity market private-sector participants that are of a scale and capitalisation sufficient to facilitate long-term stability and investment.

Some of the key findings in the discussion paper relate to the Reserve Capacity Mechanism being a major contributor to high generation costs, noting that just 35 per cent of the capacity that customers pay for is being used.

Dr Nahan said it was important that industry and the community had the opportunity to discuss factors that were contributing to higher electricity prices, as well as the State Government’s role in the industry.

“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 Minister said there would be further upward pressure on electricity costs in the future and it was vital that the WA electricity industry was the most efficient and cost effective it could be.

The steering committee undertaking the review will use feedback on the discussion paper to explore the reform options available to Government.