MEDIA RELEASE MONDAY 23 APRIL 2012
OPEN UP ELECTRICITY MARKET TO LOWER COSTS – ENERGY MAJORS
A new association of major independent power companies operating in Western Australia has called for a greater awareness of the benefits of increasing competition in the State electricity market.
The WA Independent Power Association (WA IPA), which was officially launched today, believes that the key to addressing rising energy costs is to have increasing competition and an open market.
The WA IPA currently represents six members: Alinta Energy, APA Group, Collgar Wind Farm, ERM Power Ltd, Griffin Power Pty Ltd and NewGen Power Pty Ltd, each of whom supplies wholesale electricity to the WA energy market.
Speaking at the WA IPA launch today, chairperson, Richard Harris said independent power companies have invested more than $2 billion into the WA energy market since 2006, providing 40 per cent of the overall power generated in WA’s main grid.
“Through innovation and utilising new technology these companies have developed efficient, cost effective generation. This, coupled with the increase in competition in the market has lowered the wholesale price of energy to commercial customers in Western Australia.”
A report released to coincide with the launch of the WA IPA and prepared by major international economic consulting firm Frontier Economics has found that re‐merging Verve Energy and Synergy could create significant barriers to further private investment.
Frontier Economics found that the main cause of the under‐utilisation of Verve Energy’s generation capacity was its ageing power stations, not the breakup of Western Power.
Mr Harris said that the WA IPA is keen to address recent speculation about the possible re‐ aggregation of Verve Energy and Synergy.
“There is a mis‐perception that merging the two back together would bring down electricity costs. According to the Frontier economic report this would not be the case. The savings, if any, would amount to less than 0.4 per cent of a typical residential electricity bill, or around $5 per customer per year. The fact is that Verve’s plant is ageing and inefficient and costs more to run that the newer infrastructure of independent power providers.”
The report examines the claims that the disaggregation of Verve Energy and Synergy has led to under‐utilisation of Verve Energy’s generation and contributed to increased electricity tariffs.
Frontier Economics found that a four‐fold increase in gas prices and significant increases in network charges were key factors in increased electricity tariffs.
“The findings of the report support our association’s message that it is imperative that an open and competitive market place is maintained and encouraged by the State Government for the benefit of all West Australians,” Richard Harris said.
“Our aim is to have the most efficient solution that will benefit investors and consumers. We believe that increased competition in power generation and retailing will place downward pressure on costs and prices. It will also lead to innovative market‐based solutions to address rising fuel costs. “
About the WA IPA The WA Independent Power Association Inc is an association of independent power companies, each of whom supplies wholesale electricity to the WA energy market. Members are: Alinta Energy, APA Group, Collgar Wind Farm, ERM Power Ltd, Griffin Power Pty Ltd and NewGen Power Pty Ltd.
The purpose of the WA IPA is to provide a united voice and represent the interests of independent power generators and retailers operating in Western Australia. The WA IPA is advocating for the continuation and further development of an open and competitive electricity market in Western Australia.
Website: www.waipa.com.au
About Frontier Economics
Frontier Economics (Australia) has an established reputation for providing respected advice in the Australian energy sector. Its energy practice combines in‐depth knowledge of energy markets around the world with the ability to apply advanced economic techniques to these markets. Frontier consultants have led energy market reform programs and managed energy‐related transactions across all Australian states since the inception of the National Electricity Market (NEM), as well as throughout the Asia‐Pacific region, Europe and North America.
This includes advising governments on how to privatise, restructure and regulate energy companies as well as helping private sector clients with their regulatory and commercial strategies. Frontier’s suite of electricity market models provides real world advice on market outcomes. Frontier’s energy clients receive independent advice based on robust analysis and modelling, underpinned by extensive experience.
Media contacts:
Linda Reddi Warrick Hazeldine Senior Consultant Managing Director Purple Communications Purple Communications Ph: 08 6314 6300 Ph: 08 6314 6300 Mob: 0401 566 998 Mob: 0417 944 616
(A full copy of the Frontier Economics report can be found at www.waipa.com.au)