❓ A parliamentary question regarding the potential re-merger of Verve Energy and Synergy, seeking information on industry support and a commitment to public consultation. The Minister's response is lengthy and includes background information, prompting a point of order.
AnsweredQoN 232Legislative Council
QuestionView source ↗
VERVE AND
SYNERGY — RE-MERGE R
232. Hon KEN TRAVERS to the Minister for Energy:
I refer to the minister's comments yesterday, 14 May
2012, that he had heard from the Economic Regulation Authority, the Chamber of
Commerce and Industry of Western Australia and the Chamber of Minerals and
Energy of Western Australia regarding the suggested merger of Verve Energy and
Synergy.
(1) Do any of these organisations support the merger of Verve
and Synergy?
(2) Is the
minister aware of any industry representative association that supports the
merger of Verve and Synergy?
(3) Will the
government commit to a public consultation process before making a decision to
merge Verve and Synergy?
SYNERGY — RE-MERGE R
232. Hon KEN TRAVERS to the Minister for Energy:
I refer to the minister's comments yesterday, 14 May
2012, that he had heard from the Economic Regulation Authority, the Chamber of
Commerce and Industry of Western Australia and the Chamber of Minerals and
Energy of Western Australia regarding the suggested merger of Verve Energy and
Synergy.
(1) Do any of these organisations support the merger of Verve
and Synergy?
(2) Is the
minister aware of any industry representative association that supports the
merger of Verve and Synergy?
(3) Will the
government commit to a public consultation process before making a decision to
merge Verve and Synergy?
AnswerView source ↗
I thank the honourable member for
some notice of the question. It is a legitimate question. It is in the public
arena, and continues to be in the public arena, and I can understand and
appreciate why there continues to be debate.
(1)–(3) Yes,
I have spoken on a number of occasions with each of the industry groups that
the member is aware of. I actually met with Lyndon Rowe on Monday, it might
have been—no, it was not this week; sorry, it was the end of last week,
possibly Friday—and we had a discussion about this very issue. I am
very aware of the fact that Lyndon feels that there is no necessity to re-merge
Verve and Synergy. Just to give members a bit of history in the process, when
we came to government, there was a problem with Verve. Verve was losing money
to the tune of hundreds and hundreds of millions of dollars. The structure of
the market was flawed; it really was. The displacement process had been too
rapid, so what in essence we were doing is that we were fending off capacity to
the private sector at the same time as we had state-owned generators that were
providing very valuable, credible and cheap generation. As a result of that, of
course, now we have a situation in which we have this excess capacity, and we
continue to pay hundreds of millions of dollars in capacity credits while at
the same time —
Point of Order
Hon
KATE DOUST : The member
asked precise questions, and I know that the standing orders provide now for
concise answers. We do not need a history lesson today. We would just
appreciate it if the minister answered the question appropriately so that other
members can ask their questions as well.
The
PRESIDENT : Standing order
105 states —
Answers to Questions
An answer shall be concise and relevant.
It is up to me to determine what is concise and relevant. The
conciseness is being stretched; on the relevancy, we have not heard about
napalm yet from the minister, but the relevance in terms of energy issues, I
think, is quite appropriate. I think the minister is getting to the point and
will conclude his answer soon.
Questions without Notice Resumed
Hon PETER COLLIER : Thank you, Mr President. I did need to
give that background of the issues that we have to face as a government to
answer the legitimate question about the potential re-merger of Verve and
Energy. One of the issues is that we have to ask: will the re-merger overcome
that displacement process? Will that re-merger ensure that we do not have
state-owned generators down at Kwinana and Cockburn sitting there idle while we
are paying hundreds of millions of dollars to private generators? That is what
we have to look at. So, as a government, they are the things that we are
considering. One of the big issues that have been articulated to me by
industry, and by Lyndon himself, is that it will be the end of private
investment in the generation market. That is nonsense. We are going to have
about 1 500 megawatts —
Hon Ken Travers : You haven't actually answered the
three questions.
Hon PETER COLLIER : No; I am going to do it right now.
Hon Ken Travers : I'm pleased.
Hon PETER COLLIER : About 1 500 megawatts of capacity will be
available by about 2018, 2020, and there will be plenty of opportunities for
the private sector, because its major issue is that there will not be
sufficient opportunities for the private sector to be involved in generation.
There will be plenty of opportunities, including around 400 to 500 megawatts of
renewable energy capacity as well.
With regard to the
CCI, the CME, the ERA and other industry groups, I am very cognisant of their
views, the Premier is very cognisant of their views and the government is very
cognisant of their views, and that is why it is not a decision that we will
make in haste. We as a government made the decision—I made the
announcement just over two years ago—that although we would not
re-merge Verve and Synergy, we would continue to watch it, and we would make changes
to the market rules and also to the vesting contract. As a result of changes to
the vesting contract, we have saved Western Australia about $1.6 billion. So we
have made some changes, but whether we have gone far enough is something that
we will consider in the weeks and months ahead, and then, as a government, we
will collectively decide, through cabinet and through discussion with our
backbenchers, whether we will make that decision to re-merge Verve and Synergy.
But at this stage that decision has not been made.
Hon Ken Travers : So a public consultation process—yes
or no?
The PRESIDENT : Order! The member cannot have
supplementary questions.
Hon Ken Travers : It's not supplementary; it was
part of my first question that he never answered, Mr President. After all of
that nonsense, he did not answer it. I mean, fair go!
Hon PETER COLLIER : Okay.
Hon Nick Goiran interjected.
The
PRESIDENT : Order! Members who have been here for a while will
realise that questions might be asked and answers given. The answer may not
satisfy the questioner, but the questioner is obliged to listen to the answer,
and the minister is obliged to give that answer in good faith. I think the
minister had concluded his answer, and I would like to move on to the next
question.
Point of Order
Hon
ED DERMER : Mr President, on
the matter on which you were just advising the house, does the minister's
answer have to be relevant to the question?
The
PRESIDENT : Yes, it does; it
is.
Hon ED DERMER : Thank you.
Questions without Notice Resumed
Several members interjected.
The PRESIDENT : Order! The answer has to be
relevant and concise. I believe the minister has extended his time in terms of
the concise bit.
some notice of the question. It is a legitimate question. It is in the public
arena, and continues to be in the public arena, and I can understand and
appreciate why there continues to be debate.
(1)–(3) Yes,
I have spoken on a number of occasions with each of the industry groups that
the member is aware of. I actually met with Lyndon Rowe on Monday, it might
have been—no, it was not this week; sorry, it was the end of last week,
possibly Friday—and we had a discussion about this very issue. I am
very aware of the fact that Lyndon feels that there is no necessity to re-merge
Verve and Synergy. Just to give members a bit of history in the process, when
we came to government, there was a problem with Verve. Verve was losing money
to the tune of hundreds and hundreds of millions of dollars. The structure of
the market was flawed; it really was. The displacement process had been too
rapid, so what in essence we were doing is that we were fending off capacity to
the private sector at the same time as we had state-owned generators that were
providing very valuable, credible and cheap generation. As a result of that, of
course, now we have a situation in which we have this excess capacity, and we
continue to pay hundreds of millions of dollars in capacity credits while at
the same time —
Point of Order
Hon
KATE DOUST : The member
asked precise questions, and I know that the standing orders provide now for
concise answers. We do not need a history lesson today. We would just
appreciate it if the minister answered the question appropriately so that other
members can ask their questions as well.
The
PRESIDENT : Standing order
105 states —
Answers to Questions
An answer shall be concise and relevant.
It is up to me to determine what is concise and relevant. The
conciseness is being stretched; on the relevancy, we have not heard about
napalm yet from the minister, but the relevance in terms of energy issues, I
think, is quite appropriate. I think the minister is getting to the point and
will conclude his answer soon.
Questions without Notice Resumed
Hon PETER COLLIER : Thank you, Mr President. I did need to
give that background of the issues that we have to face as a government to
answer the legitimate question about the potential re-merger of Verve and
Energy. One of the issues is that we have to ask: will the re-merger overcome
that displacement process? Will that re-merger ensure that we do not have
state-owned generators down at Kwinana and Cockburn sitting there idle while we
are paying hundreds of millions of dollars to private generators? That is what
we have to look at. So, as a government, they are the things that we are
considering. One of the big issues that have been articulated to me by
industry, and by Lyndon himself, is that it will be the end of private
investment in the generation market. That is nonsense. We are going to have
about 1 500 megawatts —
Hon Ken Travers : You haven't actually answered the
three questions.
Hon PETER COLLIER : No; I am going to do it right now.
Hon Ken Travers : I'm pleased.
Hon PETER COLLIER : About 1 500 megawatts of capacity will be
available by about 2018, 2020, and there will be plenty of opportunities for
the private sector, because its major issue is that there will not be
sufficient opportunities for the private sector to be involved in generation.
There will be plenty of opportunities, including around 400 to 500 megawatts of
renewable energy capacity as well.
With regard to the
CCI, the CME, the ERA and other industry groups, I am very cognisant of their
views, the Premier is very cognisant of their views and the government is very
cognisant of their views, and that is why it is not a decision that we will
make in haste. We as a government made the decision—I made the
announcement just over two years ago—that although we would not
re-merge Verve and Synergy, we would continue to watch it, and we would make changes
to the market rules and also to the vesting contract. As a result of changes to
the vesting contract, we have saved Western Australia about $1.6 billion. So we
have made some changes, but whether we have gone far enough is something that
we will consider in the weeks and months ahead, and then, as a government, we
will collectively decide, through cabinet and through discussion with our
backbenchers, whether we will make that decision to re-merge Verve and Synergy.
But at this stage that decision has not been made.
Hon Ken Travers : So a public consultation process—yes
or no?
The PRESIDENT : Order! The member cannot have
supplementary questions.
Hon Ken Travers : It's not supplementary; it was
part of my first question that he never answered, Mr President. After all of
that nonsense, he did not answer it. I mean, fair go!
Hon PETER COLLIER : Okay.
Hon Nick Goiran interjected.
The
PRESIDENT : Order! Members who have been here for a while will
realise that questions might be asked and answers given. The answer may not
satisfy the questioner, but the questioner is obliged to listen to the answer,
and the minister is obliged to give that answer in good faith. I think the
minister had concluded his answer, and I would like to move on to the next
question.
Point of Order
Hon
ED DERMER : Mr President, on
the matter on which you were just advising the house, does the minister's
answer have to be relevant to the question?
The
PRESIDENT : Yes, it does; it
is.
Hon ED DERMER : Thank you.
Questions without Notice Resumed
Several members interjected.
The PRESIDENT : Order! The answer has to be
relevant and concise. I believe the minister has extended his time in terms of
the concise bit.
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