"The energy market review, chaired by former Howard Government Minister Warwick Parer, has recommended removal of tariff caps for electricity to coincide with the adoption of full retail contestability in electricity markets," Mr Ripper said.

"But, I told Federal Industry Minister Ian Macfarlane at the Ministerial Council on Energy meeting in Brisbane last week, that the recommendations were unacceptable to the Western Australian government."

During the week, Mr Ripper also announced plans to set up a state-owned regional power corporation saying that under current arrangements, regional WA had to compete with the other priorities of Western Power.

"A government-owned regional power corporation, dedicated to meeting the electricity needs of regional areas, will not be distracted by other non-regional commercial imperatives," Mr Ripper said.

Mr Ripper said the corporation would have two distinct business units, in which one would cover the North-West interconnected system (NWIS) while the other would cover areas of the state not served by an existing power grid.

In other WA power news, energy players are queuing up for the right to build a gas-fired 240 megawatt peaking generation plant for Western Power.

It has been reported that Hong Kong Electric International has joined forces with the Griffin Group to bid for the project. Hong Kong Electric is owned by Hong Kong billionaire Li Ka Shing while the Griffin Group is owned by Monaco-based magnate Ric Stowe.

Also bidding for the project are Mitsui & Co, Origin Energy-ANZ Infrastructure Services and Transfield Services-ABN Amro.

The short-listed companies have until May next year to finalise their bids and Western Power is expected to sign an agreement in July 2003.