A well attended first session saw an update from Dr Frank Harman from the Electricity Reform Task Force who told the audience of the progress the Task Force has made since it released November's "Preliminary Views" discussion paper. He outlined what may be in store in the April "Current Views" paper which Harman said would be based on submissions made in response to the "Preliminary" paper and reports back from working groups assisting the Task Force.
Harman made it clear it was a demanding role, balancing the needs for public sector provision of services such as power, with the financial needs and restrictions of the State and the opportunities being chased by private sector who in turn want adequate financial returns. He also made it clear that there were clear benefits to be gained from a competitor to Western Power, as opposed to the current situation where independent power producers (IPP's) sell their power to Western Power in what is known as power purchase agreements (PPA's). "This distorts the way energy demands are viewed," he said.
Turning around the behemoth of Western Power and its historical operating structure was a major cog in the wheel of reform.
He said real competition could be introduced in WA by the vertical disaggregation of Western Power; the introduction of an independent gas regulator, the introduction of an access code; and the introduction of appropriate market structures to allow generators, retailers and consumers, using their open access rights to supply and buy at efficient prices.
The last point was crucial, he said. "There has to be transparency in the pricing. People have to know what the prevailing prices are. They have to know what Western Power is charging so new entrants in the game can look at opportunities to supply. We haven't got to that yet but it is essential for the market."
The inevitable competition between AlintaGas and Western Power also was problematic. The separation between gas transmission and gas distribution was required of AlintaGas by the National Gas Access Code, yet the same was not required of Western Power.
Ring fencing was not an option either, Harman said, as the legal responsibilities of the Board meant they needed to oversee all levels of operation. "You may ring fence at an operational level," Harman said, "but it would not work at board level. Directors are required to have all information relevant to the operation of the total business and to make decisions consistent with the overall objectives for the total business. In that context ring fencing has no meaning."
