The State Government today announced important changes to Western Australia's electricity market, which is expected to reduce the cost of supplying electricity by up to $130 million every year.
Energy Minister Mike Nahan said the changes, which would take effect from 2017-18 in the South West Interconnected System (SWIS), formed part of the Government's Electricity Market Review, aimed at keeping electricity prices as low as possible for West Australians. The reforms include:
- transitional arrangements to reduce capacity payments to power stations and demand-side management (DSM) providers due to current levels of excess capacity
- the introduction of an 'auction' by 2021, at the latest, to achieve efficient levels of electricity capacity in the market
- updated requirements for DSM providers so that services are more readily able to be called upon, and therefore more effective to the market
- improved incentives to maintain power stations to ensure they are ready to supply electricity immediately, as required.
"Electricity supply costs have spiralled out of control in recent years and the way our electricity market was structured back in 2006 is largely to blame," Dr Nahan said.
"Currently, there is more than 1,000 megawatts (MW) of surplus electricity (excess capacity) within the SWIS, which is enough to power up to 750,000 homes on a hot summer's day.
"The reforms that will be implemented, together with significant reductions in costs of the electricity businesses over the coming years, will go to fixing the problem.
"These reforms are broadly supported by the electricity industry, however I am disappointed about the scaremongering campaign launched by a new lobby group, Western Australians for Lower Power Prices. The reforms aim to keep electricity prices as low as possible.
"In the interests of removing excess capacity, Synergy will also reduce its plant generation capacity by 380MW by October 1, 2018."
Since 2006, DSM providers have been paid about $430 million and have only been used for 106 hours, on eight occasions, which included testing
In 2016-17, the SWIS will have 23% too much capacity, meaning consumers are paying for 1,061MW that they do not need
Minister's office - 6552 5700