Colin Barnett

Colin Barnett

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    Government to spend $2 billion to expand WA's electricity infrastructure

    8/12/2000 2:40 PM
     
    8/12/00

    Energy Minister Colin Barnett today unveiled a $2 billion package of major energy measures to see Western Australia through this decade.

    He said the package included new power generation, deregulation of the electricity sector, expansion of the power line system and broad structural change to industry itself.

    Mr Barnett said under this package $1 billion would be spent in investing in new power stations.

    A further $1 billion would be spent upgrading transmission and distribution power lines - particularly into regional areas.

    The power generation package would be in three stages - Kwinana B, mid merit and base load.

    The strategy called for the additional power to be provided in three stages to allow opportunities for both gas and coal.

    “Latest forecasts that power demand will grow three per cent to four per cent annually until the end of the decade, make it imperative that an additional power plant was operating,” Mr Barnett said.

    “New power generations capacity of about a further 1,000 megawatts will be needed over this decade.

    “In a further deregulation of the State’s electricity market, private generators will bid to supply that power to Western Power in a new open competitive tendering process.

    “This will ensure WA has the most competitively priced, most efficient and most up to date technology available.

    “There is no doubt that reliable and quality supplies of electricity are essential as the WA economy continues to grow.

    “The private sector will have the opportunity to provide those electricity supplies.

    “Preparing the process for that to happen has been an enormous challenge.

    “The result, which has drawn on international experience, is rigorous but fair."

    Mr Barnett said Western Power would also replace two ageing 120MW gas/oil fired generating units at Kwinana Power Station with new, high efficiency gas plant by the end of 2003.

    This meant coal burning at Kwinana would be phased out by 2003 and replaced with gas - a significant plus for Perth’s air quality.

    “The two stages of public procurement allowing the private sector to build new plants would be merit - or daytime power - and base load,” Mr Barnett said.

    “Bids for the first stage of the public power procurement process will be called by middle of next year and contracts awarded by mid-2002 so that the additional plant will begin delivering electricity for the 2004-05 summer.

    “Major international and national companies keen to enter the WA electricity market are likely to compete.

    “The public power procurement process requires all new additional power plant to be put to the market and will be overseen by an independent chairman and independent auditors who will report to the Minister for Energy.

    “Western Power will negotiate suitable power purchase agreements with the successful bidder.

    “The outcome we seek should yield lower electricity prices for Western Australians although it should be noted that there has been just one increase (3.75 per cent in 1997) in residential tariffs and no increases for the business sector since 1991-1992.”

    Mr Barnett said the plan would provide:
    • timely additional generation plant;
    • new privately owned plant;
    • competition between Western Power and private generators;
    • continuation of the appropriate balance between fuels;
    • an appropriate range of base load, mid merit and peaking generation plant; and -
    • environmental benefits.

    Mr Barnett also outlined initiatives which would continue the reform process of WA’s electricity sector to foster effective competition and lower electricity prices.

    He said phased third party access to Wester Power’s distribution networks began in July 1997 with access available for transporting electricity to single customers with an annual average load of at least 10 megawatts at a single premise.

    At the beginning of January 1998 access levels were reduced to an annual average load of at least five megawatts.

    This was further reduced to a megawatt at the beginning of this year when about 120 of Western Power’s biggest electricity customers - representing 30 per cent of Western Power sales - were in the contestable market.

    “To encourage a more competitive market through independent power producers and private retail participation, the Government is now accelerating the rate of access to Western Power distribution systems,” Mr Barnett said.

    “From July next year, customers with an annual consumption of 0.23 megawatts at a single site will be able to negotiate with the supplier of their choice.

    “The access levels on Western Power’s South West Interconnected System and North West Interconnected System distribution networks will be reduced at the beginning of January 2003 to 0.034 megawatts.

    “This would mean about 450 big customers - small industrial plants, hospitals, large hotels and shopping centres - open to competition with the first stage. This represents about 40 per cent of Western Power’s sales.

    “The second stage involves about 2,500 medium customers - smaller-sized businesses, schools, smaller hotels and supermarkets - open to competition representing about 50 per cent of Western Power’s sales.”

    Mr Barnett said Western Power would spend more than $1 billion in the next five years on its transmission and distribution networks including major upgrades and reinforcement of the transmission and distribution networks.

    He said nearly $480 million would be spent over five years on transmission to improve the capacity, reliability and quality of electricity delivered to country areas north and south of Perth.

    The Government would establish an independent Energy Access Regulator for both gas and electricity and would enhance ring-fencing arrangements.

    A customer education program would be implemented and an investigation of an electricity code for Western Australia, market arrangements and regulatory arrangements which would apply to new electricity market participants undertaken.

    Media contact:
    Diana Callander 9222 9699