Increased competition in Western Australia’s market will improve the long-term sustainability of the state’s electricity sector, according to CCI Chief Economist Rick Newnham.
Newnham said CCI has called on the State Government to introduce more competition in WA’s electricity market.
“The slow pace of electricity reform has left WA with an electricity market that has contributed to high state debt and limited competition. It will continue to cost consumers long term,” Newnham said.
“In 2016-17 alone, electricity subsidies have cost the Government about $325 million – money that could have been spent on critical infrastructure and services, or reducing the State’s net debt.
“CCI has welcomed the Government’s actions to date to introduce cost-reflective tariffs by reducing the government subsidy for electricity, but we encourage the Government to clarify its position on enhancing competition in our electricity market.
“Greater competition in the electricity market would put downward pressure on costs, and enable the private sector to plan for the next wave of investment in the sector,” Newnham said.
“It would be an error for the Government to look at the eastern states’ National Electricity Market and say that meaningful reform doesn’t benefit customers. The WA market and the east coast market are completely separate and are unique in the challenges they face.
“Linking the two markets doesn’t acknowledge the multiple causes and complex nature of price increases, supply constraints and reliability issues that have been occurring over east, including over-investment in electricity networks, volatile gas prices, concentrated market power, and an ageing thermal generation fleet.
“Critics also haven’t recognised the success of increased competition in WA’s gas market, which has resulted in discounts of up to 35 per cent for residential gas customers.
“Changing the threshold to increase competition would be a welcome first step toward implementing full retail contestability.
“CCI encourages the State Government to progress this policy as part of a broader strategy to modernise our electricity sector.”
► As WA’s peak business advocate, CCI works to elevate the concerns of WA industry to key nationwide decision-makers. Find out more about our advocacy efforts here.