09/09/2013
Taxpayers and companies pay for the high cost of electricity and gas, according to the WA Minister for Energy, Finance, Citizenship and Multicultural Interests, Mike Nahan.
Speaking to a CEDA audience in Perth, Mr Nahan said the WA energy market is flawed and expensive.
"I think the system we have here is high cost, it's a high cost system in terms of administration, in terms of construction, in terms of promoting excess capacity," he said.
Mr Nahan said in the 1980s and 1990s, Australia focused on the comparative advantage of access to low priced energy and resources.
But in focusing on these advantages, governments lost sight of keeping the price of energy down for consumers.
"I think in WA…we've implemented a whole range of taxes, charges, restrictions, regulations, inhibitors that have increased the cost of energy quite dramatically and particularly in the energy intensive industries," he said.
On the cost of coal and gas, Mr Nahan said by international standards both commodities remain relatively cheap.
In terms of gas availability, Mr Nahan took a different view to the Independent Market Operator Gas Statement of Opportunities report released in July.
"As to gas availability, the IMO…came up with the view that we have sufficient gas going forward," he said.
"I'm not sure I agree with that, in fact I don't…I think the market is much tighter both in capacity and therefore price into the future."
After the re-merger of WA's two energy companies, Synergy and Verve Energy, the next step will be to pull the focus back to the market and developing competition, Mr Nahan said.
This will involve extensive conversations with the sector to ensure the market becomes better for consumers.
Mr Nahan's ideas were echoed by industry leaders, including ATCO Gas Australia, President, Brian Hahn.
"Really it's important that there is a dialogue that the government is at the table, that industry is at the table, big consumers and little consumers are at the table," Mr Hahn said.
Mr Hahn also noted it is important that all parties are engaged in a discussion about how the future of the energy market in WA will impact them and the consequences of future decisions.
On the current state of the market, Economic Regulation Authority, Chairman, Lyndon Rowe said there is a lack of private sector confidence in the energy market.
"Clearly the real challenge for government at the moment is to restore confidence in the market," Mr Rowe said.
Additional speakers at this event included:
- ACIL Allen Consulting, Director, Mark Chatfield
- WA Independent Power Association, Chairman, Richard Harris