WA Independent Power Association chairman Richard Harris said the “vast majority” of submissions to the government’s Electricity Market Review had been aligned – with a clear message the industry and energy users favour structural changes to the government-owned entities combined with modifications to existing market mechanisms.
“It is clear that private energy providers and users in WA want greater competition in the market, and their considered views on what the market requires to achieve this are aligned,” he said.
“The best way to achieve greater competition and downward pressure on electricity prices is to spilt up Synergy which currently dominates the market, and make other careful changes to the capacity market.
“Given our isolation and inability to import electricity from other grids the IPA supports retention of a capacity mechanism in Western Australia consistent with most submissions to the Energy Market Review.
“Having said that, the IPA believes that the WA market should begin aligning with the National Electricity Market and its institutions.”
The IPA called on the views expressed in the submissions to the Energy Market Review to be heeded as they represent the opinion of those who have invested in and compete in the WA electricity sector and who have a deep understanding of the issues faced.
“Reforms should build on the market established in 2006 to enhance competition, put downward pressure on prices and reduce government involvement in the sector,” Harris said.
In a nutshell, the IPA’s “road map” to achieve greater competition and more private sector investment in the WA electricity sector involves:
- Synergy’s generation fleet should be rationalised and uneconomic plant retired or sold;
- Split Synergy into two or more competing “gentailers”
- Tariffs should continue the path to cost reflectivity;
- The retail electricity market should be opened up to Full Retail Contestability (FRC);
- The Tariff Equalisation Charge should be paid out of consolidated revenue;
- Improve the capacity mechanism to make it more responsive to market needs;
- Establish a separate decision-making body for market rules, with industry representation; and
- System management should be absorbed into the market operator to streamline the functional operation of the electricity system.