Aaron Morey
Chief Economist
The WA Liberal Opposition has today adopted the Chamber of Commerce and Industry WA’s recommended electricity contestability policy, letting more WA businesses choose their own energy retailer. This is a welcome decision that would mean lower electricity prices for WA businesses.
As outlined in CCIWA’s Pre-Budget Submission, lowering the contestability threshold from 50 to 20 megawatt hours would enable more businesses to choose their supplier, driving down prices through greater competition. Tens of thousands of WA businesses would benefit from the change.
Electricity is a major component of business operating costs and three quarters (75 per cent) of WA businesses surveyed pre-COVID agreed that more competition in the market for electricity would drive down prices and help their business grow and invest, particularly for businesses in manufacturing and those with high refrigeration costs.
Importantly the Opposition has further committed to completely remove the monopoly in the market for electricity in Western Australia, gradually making the provision of electricity contestable for all WA energy users, including households.
Deregulation of the electricity market in New South Wales, New Zealand and the UK resulted in at least a 5 per cent fall in energy costs for the average consumer over three years.
At the same time, it is disappointing that electricity asset recycling has been ruled out. It is our expectation that all governments, State and national, constantly look to asset recycling options so that we can seize opportunities to grow our economy and improve our standards of living. The sale of Western Power’s network in particular would deliver significant benefits for electricity consumers through lower prices.
As WA businesses seek to recover after the COVID-19 shut down, continuing to remove cost burdens and other barriers to growth will bolster our economic recovery.
