Western Power separation included in state electricity market reforms

26 November 2002 – The government of Western Australia has endorsed a broad package of electricity reforms, including the break up of utility Western Power.

Energy Minister Eric Ripper said cabinet had given the green light to the separation of Western Power into four separate entities – generation, networks, retail and regional power – over the next 18 months.

The reforms will also involve the establishment of a wholesale electricity market by July 2005 and will make 12 000 Western Power customers eligible to choose their energy supplier from January 1, 2005. “Now that cabinet has given the tick to reform, more detailed work will be undertaken to prepare for implementation,” Mr Ripper said. “This includes design work on the wholesale market and further development of the plans for disaggregation of Western Power.”

Ripper said Western Australia’s electricity prices were too high and competition was needed to stimulate economic development and job growth. The reforms were proposed by the Electricity Reform Task Force (ERTF), formed last year by the newly elected Labor Government. According to the ERTF, reform benefits include an average 8.5 per cent cut in electricity prices, an increase in gross state product of up to $300m a year by 2010, and the creation of 2900 new jobs.

Ripper ruled out privatising Western Power or any of its successor entities, saying the government’s main concerns were reliability, safety and security of supply. “Unlike the Liberal Opposition, we do not believe privatisation advances these aims.”

Western Power chairman Malcolm Macpherson said last month the utility agreed with a number of task force recommendations but was opposed to the disaggregation of generation and retail functions. “Based on the experiences of interstate and overseas utilities, we believe the move would increase costs and reduce payments to government,” Macpherson said at the time.

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