Australian Petroleum Production and Exploration Association (APPEA) executive director Barry Jones said the policy undermined open, competitive commercial tendering and failed to take in account the likelihood that carbon constraints would be introduced in the next decade.
But the plan may well be smart politics. This policy will shore up Coalition support in the marginal coalfields seat of Collie-Wellington and put pressure on the Gallop Government in one of its weak spots – power electricity supply only four months before an election is due.
Last February’s blackouts have made power supply on of the state’s most politically sensitive issues. Opposition leader Colin Barnett claims ‘similar widespread blackouts’ are likely during peak periods over the next two summers.
“The Labor government’s mismanagement has created third world conditions in the provision of electricity supplies in this state,” Barnett said.
“There has been a total failure to run an efficient and competitive power procurement process to increase permanent generation capacity. As a state, we are endowed with an abundance of coal and natural gas, which should mean we have a competitive and reliable supply of electricity.”
The Coalition said extra capacity must be built to meet the anticipated growth in the market – the state’s South West Interconnected Grid would require up to 1000MW of additional and replacement generation capacity by 2010. Building these stations in the near future would also allow Western power to retire its old and inefficient Muja A-B and Kwinana B plants ahead of schedule.
Barnett said the policy would also ensure that planning for new capacity maintained a ‘competitive balance’ between coal and gas to achieve the ‘right mix’ of base, mid-merit and peaking plant and reliable and efficient generation.
But APPEA countered that coal already accounted for the bulk of Western Australia’s power supply and future decisions on power generation should be based on transparent commercial criteria, not a political decision to appease the coal lobby.
“Western Australia and all other governments in Australia have agreed to have competitive energy markets in Australia,” Jones said.
“In a competitive energy market, decisions on fuel supply for electricity generation should be based on an open, competitive commercial tender process. In such a process there is no room for government.”
In fact, the WA Opposition’s policy will scrap Western Power’s existing power procurement process. Three groups – two coal and one gas – have been shortlisted to build the new 330MW baseload station. The preferred tenderer is to be announced next September. This has lead to threats of legal action.
APPEA also argued that as new power generation facilities would have an economic life of 20 to 30 years, the probable introduction of some form of carbon constraints in the next 10 years should be taken into account.
“APPEA would expect Western Power or another potential electricity supplier to make commercial judgments about the input of potential carbon constraints on the economics of the varying fuel options,” Jones said.
