WA Government to be praised for pursuing cost-reflective prices

9 March 2010

The Energy Supply Association of Australia supports the announcement by the Western Australian Government that it will continue the program of making electricity and gas prices cost-reflective.

"The Western Australian Government is to be praised for making the politically tough decision to stay on track and reverse a decade of ‘fool’s paradise’ energy tariffs," said esaa Chief Executive Officer Brad Page.

"Moving towards cost-reflective tariffs is an important step towards competitive energy markets, which demonstrably provide the best outcomes for consumers.

"This move is a step in the right direction towards that goal, as is providing specific hardship measures to protect vulnerable consumers as separate targeted initiatives," said Mr Page.

The WA Government’s Strategic Energy Initiative has four strategic goals – secure energy, reliable energy, competitive energy and cleaner energy – and will recommend initiatives for the short, medium and longer terms to guide government, policy makers and stakeholders in achieving WA’s strategic energy goals.

esaa’s Western Australian Energy Market Study – published in November 2009 as the energy supply industry’s contribution to the Strategic Energy Initiative – found that energy markets work best when they are competitive.

Mr Page said Western Australia’s long-term competitive energy market objectives should not be compromised by short-term politicking.

"Growing demand for energy will only be met by providing all of the right signals for investors in new energy capacity. The irony is that by paying less for electricity than what it costs, Western Australians will eventually find themselves with an inadequate electricity supply. Prices set below the cost to supply is definitely a fool’s paradise," he said.

"As esaa’s WA Energy Market Study found, energy markets work best when they are competitive: there should be no unnecessary barriers to entry or exit, prices should reflect supply and demand conditions and market information should be transparent and accessible.

"Where prices are determined by a regulator or government, they should make sure that efficient costs can be recovered by energy supply businesses and they should promote innovation," said Mr Page.

"In all jurisdictions except Victoria, the removal of retail price regulation remains an outstanding area of reform; esaa commends the WA Government for taking a far-sighted approach to energy pricing that will improve the state’s prospects for competitive energy and benefit consumers in the long run."

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Media contact: Melissa Baldwin 03 9670 0188 or 0418 697 626

The Energy Supply Association of Australia seeks to positively influence government policy decisions to ensure that Australia enjoys the benefits of a safe, secure, reliable, sustainable and competitively priced electricity and natural gas supply.

esaa’s 40-plus member businesses have more than $120 billion in assets and infrastructure investment plans worth over $49 billion over the next five years. The Association is fuel and technology neutral and member businesses have investments across a wide range of fossil fuel and renewable generation technologies.