❓ Mr. Nalder asks about Western Power's reference tariff for residential customers. The Minister avoids a direct answer, instead criticising the Economic Regulation Authority's (ERA) decision-making process and announcing plans to reform the regulatory framework.
AnsweredQoN 474Legislative Assembly
QuestionView source ↗
WESTERN POWER —
REFERENCE TARIFF
474. Mr D.C. NALDER to the Minister for Energy:
I refer to the recently released
Economic Regulation Authority price list for Western Power's tariff
charges. Can the minister confirm that the reference tariff that Western Power
charges for residential customers to be connected to the electricity grid is 87�
a day?
REFERENCE TARIFF
474. Mr D.C. NALDER to the Minister for Energy:
I refer to the recently released
Economic Regulation Authority price list for Western Power's tariff
charges. Can the minister confirm that the reference tariff that Western Power
charges for residential customers to be connected to the electricity grid is 87�
a day?
AnswerView source ↗
One
of the interesting things about the Economic Regulation Authority is the move
it made in access arrangement 4 to shift $250 million of costs that are
recovered by Western Power from transition customers, or large users of the
grid, to distribution customers, or small users of the grid. That has shifted
$250 million of costs from large users of electricity to Synergy and Synergy's
customers. This is one of the issues that I raised with the member in last year's
estimates committee hearing. It is one of the challenges in the electricity
system. It does not have any impact on Western Power's income, because
all that is being done is costs are being shifted from one set of customers to
another. It does not increase the amount of revenue that Western Power
receives, but it transfers costs from large users to small users. One of the
challenges with the ERA was the way it made its final decision. Ordinarily, a regulator
would be expected to make a draft decision, which would then get commented on,
and a final decision, which would then get implemented. The ERA chose to make a
second final decision. That is a very poor outcome for regulatory practice. In
fact, I have asked the ERA what was the legal basis that it used to have a second
final decision, because I am unaware of a provision in the legislation that
allows the ERA to do that. I have not yet heard from the ERA—of course,
it is independent of government—about why it chose to do this unusual
practice. It is certainly a suboptimal outcome for any regulator. I have
reflected on the ERA in this chamber previously. One of the challenges is that
because of that delayed structure of the decision, Western Power had to publish
its tariffs prior to the second final decision, and that meant that it had to
update those tariffs at short notice. That is another regulatory challenge in
the sector that arises out of the AA4 decision.
The
AA5 decision would require a submission from Western Power during the caretaker
period for the next election, so I have made the decision to delay the
AA5 process so that whichever party wins the next election will be able to deal
with the AA5 decision after the election, because we would not want such a critical
process to be dealt with during the caretaker period. That would be
unacceptable, and I am sure that everybody here would agree on that.
As part of the energy transformation
strategy, we are also looking at restructuring the way that these decisions are
issued so that there is an opportunity for a workshop following the draft
findings and all the people involved in the sector can come together and make
verbal submissions on the draft AA5 decision and then have an opportunity to be
heard on the final outcome of the AA5 when it is finally made.
There
is no question that the ERA processes are inadequate to properly protect the
interests of all Western Australians. The energy system in Western Australia
is in a massive state of transition, just like it is everywhere else in the
world. Fortunately, in Western Australia, because we have not privatised the
system and we have not handed our regulation over to the national bodies, we
are able to make much more rapid decisions to deal with the regulatory outcomes
of our system. We can be much more dynamic and respond to the needs of Western Australians.
I am very pleased to say that, in the future, the regulatory framework that
manages Western Power will be completely changed so that it is more transparent
and agile to respond to the needs of all Western Australians.
of the interesting things about the Economic Regulation Authority is the move
it made in access arrangement 4 to shift $250 million of costs that are
recovered by Western Power from transition customers, or large users of the
grid, to distribution customers, or small users of the grid. That has shifted
$250 million of costs from large users of electricity to Synergy and Synergy's
customers. This is one of the issues that I raised with the member in last year's
estimates committee hearing. It is one of the challenges in the electricity
system. It does not have any impact on Western Power's income, because
all that is being done is costs are being shifted from one set of customers to
another. It does not increase the amount of revenue that Western Power
receives, but it transfers costs from large users to small users. One of the
challenges with the ERA was the way it made its final decision. Ordinarily, a regulator
would be expected to make a draft decision, which would then get commented on,
and a final decision, which would then get implemented. The ERA chose to make a
second final decision. That is a very poor outcome for regulatory practice. In
fact, I have asked the ERA what was the legal basis that it used to have a second
final decision, because I am unaware of a provision in the legislation that
allows the ERA to do that. I have not yet heard from the ERA—of course,
it is independent of government—about why it chose to do this unusual
practice. It is certainly a suboptimal outcome for any regulator. I have
reflected on the ERA in this chamber previously. One of the challenges is that
because of that delayed structure of the decision, Western Power had to publish
its tariffs prior to the second final decision, and that meant that it had to
update those tariffs at short notice. That is another regulatory challenge in
the sector that arises out of the AA4 decision.
The
AA5 decision would require a submission from Western Power during the caretaker
period for the next election, so I have made the decision to delay the
AA5 process so that whichever party wins the next election will be able to deal
with the AA5 decision after the election, because we would not want such a critical
process to be dealt with during the caretaker period. That would be
unacceptable, and I am sure that everybody here would agree on that.
As part of the energy transformation
strategy, we are also looking at restructuring the way that these decisions are
issued so that there is an opportunity for a workshop following the draft
findings and all the people involved in the sector can come together and make
verbal submissions on the draft AA5 decision and then have an opportunity to be
heard on the final outcome of the AA5 when it is finally made.
There
is no question that the ERA processes are inadequate to properly protect the
interests of all Western Australians. The energy system in Western Australia
is in a massive state of transition, just like it is everywhere else in the
world. Fortunately, in Western Australia, because we have not privatised the
system and we have not handed our regulation over to the national bodies, we
are able to make much more rapid decisions to deal with the regulatory outcomes
of our system. We can be much more dynamic and respond to the needs of Western Australians.
I am very pleased to say that, in the future, the regulatory framework that
manages Western Power will be completely changed so that it is more transparent
and agile to respond to the needs of all Western Australians.
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