❓ Mr. Johnston questions the Minister for Energy regarding Alinta's access to Horizon Power's Pilbara network, potential revenue loss for Horizon, and the impact on electricity prices and taxpayer subsidies. The Minister outlines ongoing negotiations and a review of access rules, suggesting competition could lead to lower prices.
AnsweredQoN 419Legislative Assembly
QuestionView source ↗
ALINTA–HORIZON POWER — PILBARA
NETWORK
419. Mr W.J. JOHNSTON to the Minister for
Energy:
Before I ask my question, on behalf
of the member for Kwinana, I acknowledge members of the Kwinana Cricket Club in
the gallery today. I refer to the Horizon Pilbara network.
(1) Will there be a ministerial
directive to allow for Alinta to be given access to Horizon's Pilbara
network?
(2) If yes to
(1), has the minister modelled the revenue loss to Horizon through customers
moving to Alinta?
(3) If Horizon
loses some of its current revenue, will this push up electricity prices for
other users or require an increased subsidy from taxpayers?
NETWORK
419. Mr W.J. JOHNSTON to the Minister for
Energy:
Before I ask my question, on behalf
of the member for Kwinana, I acknowledge members of the Kwinana Cricket Club in
the gallery today. I refer to the Horizon Pilbara network.
(1) Will there be a ministerial
directive to allow for Alinta to be given access to Horizon's Pilbara
network?
(2) If yes to
(1), has the minister modelled the revenue loss to Horizon through customers
moving to Alinta?
(3) If Horizon
loses some of its current revenue, will this push up electricity prices for
other users or require an increased subsidy from taxpayers?
AnswerView source ↗
I thank the member for the
questions. They are legitimate questions.
Mr
P. Papalia : All our questions are legitimate. What are you talking about?
Dr
M.D. NAHAN : No, not all of them.
(1) The issue
here is that Horizon Power has a distribution and transmission facility in the
Pilbara, and Alinta also operates in the Pilbara with a power station. The act
that governs access to the network allows Alinta to request access and
utilisation of Horizon Power's facility. Alinta approached Horizon for
access, and initially made a claim through the process to acquire access.
Horizon Power also requested access to Alinta's facilities. The advice
that I received was that, undoubtedly, depending on the cost, I would be the
adjudicator under the act, and I would undoubtedly have to agree to Alinta
having access to Horizon's facilities. I did two things. First, I told
Alinta and Horizon Power to negotiate joint access to their facilities.
Secondly, I initiated a committee, chaired by Lyndon Rowe, to look at having
light-handed access rules for the Pilbara system—to address not only
this specific request, but also any future request. There are many players up
there. That is underway, and it is still being negotiated. I have not received
advice as to whether I will have to sign an order.
(2) Will Horizon
Power lose customers? That will probably not be the case in the subsidised
area. Most of the customers up there are heavily subsidised. I am sure Alinta
will not try to take away the residential and small business users, but it will
no doubt try to compete for the contestable side, and it might win some
customers. However, that is a benefit to the customers. Competition is good,
particularly in the areas of the larger operations.
(3) Will it cost
Horizon? We do not know. A risk was identified in the budget. We have not
measured it yet, but competition is good in that area. We are going to allow
Horizon to have access to other users' grids, and we are going to allow
Alinta to have access to Horizon's grid to get into a competitive
market up in that area. To answer the member's question, I do not know
whether I will have to give an order. Will Horizon Power lose some money?
Maybe. Will it lead to higher prices?
Mr F.M. Logan : Yes, of course it will.
Dr
M.D. NAHAN : No. How would competition and lower prices for customers lead
to higher prices? This illustrates the member for Cockburn —
Mr
M.P. Murray interjected.
The
SPEAKER : I want the answers through the Chair, member for Collie–Preston.
Dr
M.D. NAHAN : The member for Cockburn is the former Minister for Energy, and
he is saying that competition —
Mr
M.P. Murray interjected.
The
SPEAKER : Member for Collie–Preston, I call you to order for the
first time, and you are on 3.5 calls. Are you listening? You are on 3.5 calls
to order; you are going to have a rest.
Dr
M.D. NAHAN : If Alinta, utilising Horizon's network, offers
customers lower prices and they accept, I am not sure how that will increase
prices. It will not. Will it lead to higher prices? No, it will lead to lower
prices. Will it cost Horizon some losses? Perhaps, but we will wait and see.
Perhaps Horizon will be more competitive, and Alinta will get market share.
questions. They are legitimate questions.
Mr
P. Papalia : All our questions are legitimate. What are you talking about?
Dr
M.D. NAHAN : No, not all of them.
(1) The issue
here is that Horizon Power has a distribution and transmission facility in the
Pilbara, and Alinta also operates in the Pilbara with a power station. The act
that governs access to the network allows Alinta to request access and
utilisation of Horizon Power's facility. Alinta approached Horizon for
access, and initially made a claim through the process to acquire access.
Horizon Power also requested access to Alinta's facilities. The advice
that I received was that, undoubtedly, depending on the cost, I would be the
adjudicator under the act, and I would undoubtedly have to agree to Alinta
having access to Horizon's facilities. I did two things. First, I told
Alinta and Horizon Power to negotiate joint access to their facilities.
Secondly, I initiated a committee, chaired by Lyndon Rowe, to look at having
light-handed access rules for the Pilbara system—to address not only
this specific request, but also any future request. There are many players up
there. That is underway, and it is still being negotiated. I have not received
advice as to whether I will have to sign an order.
(2) Will Horizon
Power lose customers? That will probably not be the case in the subsidised
area. Most of the customers up there are heavily subsidised. I am sure Alinta
will not try to take away the residential and small business users, but it will
no doubt try to compete for the contestable side, and it might win some
customers. However, that is a benefit to the customers. Competition is good,
particularly in the areas of the larger operations.
(3) Will it cost
Horizon? We do not know. A risk was identified in the budget. We have not
measured it yet, but competition is good in that area. We are going to allow
Horizon to have access to other users' grids, and we are going to allow
Alinta to have access to Horizon's grid to get into a competitive
market up in that area. To answer the member's question, I do not know
whether I will have to give an order. Will Horizon Power lose some money?
Maybe. Will it lead to higher prices?
Mr F.M. Logan : Yes, of course it will.
Dr
M.D. NAHAN : No. How would competition and lower prices for customers lead
to higher prices? This illustrates the member for Cockburn —
Mr
M.P. Murray interjected.
The
SPEAKER : I want the answers through the Chair, member for Collie–Preston.
Dr
M.D. NAHAN : The member for Cockburn is the former Minister for Energy, and
he is saying that competition —
Mr
M.P. Murray interjected.
The
SPEAKER : Member for Collie–Preston, I call you to order for the
first time, and you are on 3.5 calls. Are you listening? You are on 3.5 calls
to order; you are going to have a rest.
Dr
M.D. NAHAN : If Alinta, utilising Horizon's network, offers
customers lower prices and they accept, I am not sure how that will increase
prices. It will not. Will it lead to higher prices? No, it will lead to lower
prices. Will it cost Horizon some losses? Perhaps, but we will wait and see.
Perhaps Horizon will be more competitive, and Alinta will get market share.
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