❓ Opposition questions the Minister for Energy about a new electricity charge impacting WA businesses, while the Minister defends it as a necessary measure to address past mismanagement and cost recovery in the North West Interconnected System.
AnsweredQoN 738Legislative Assembly
QuestionView source ↗
PILBARA ELECTRICITY REFORMS — HORIZON POWER
738. Mr W.R. MARMION to the Minister for Energy:
I refer to the minister's
announcement in the house yesterday about opening up the north west
interconnected system to competition. Why did the minister hide that he is
introducing a new electricity tax that will slug Western Australian businesses
between $120 000 and $8 million a year?
738. Mr W.R. MARMION to the Minister for Energy:
I refer to the minister's
announcement in the house yesterday about opening up the north west
interconnected system to competition. Why did the minister hide that he is
introducing a new electricity tax that will slug Western Australian businesses
between $120 000 and $8 million a year?
AnswerView source ↗
The premise of the question is not
true. Yesterday, when I made the announcement through a brief ministerial
statement, I think I highlighted that there would be —
Several members interjected.
The SPEAKER : Members!
Mr W.J. JOHNSTON : — a
10� per kilowatt hour tariff adjustment contribution. By the way, member, it is
not a tax. As I highlighted to the
Parliament yesterday, it is imposed to recover the costs that were left to this
government by a disgraceful decision to ignore all professional advice
by the former government and to contract a power station for 27 years that has
pushed up the cost of operations for Horizon in the north west interconnected
system by 100 per cent. That is what has occurred.
Several members interjected.
The SPEAKER : Members!
Mr W.J. JOHNSTON : I want to
congratulate the staff of Energy Policy WA, the staff of Horizon Power and the
Treasury officials who have been working on this complicated question for
nearly two years. I pay credit to the Treasurer, in his role as former Minister
for Energy, who took these matters to cabinet last year to get the outline of
the proposal approved by cabinet, and I am pleased to be implementing the
decision of cabinet. This is not an easy issue. The former government made a mess
of this. It built a switchyard for $130 million, which forced it to build a power
station at a specific location. Remember, it spent that $130 million out of the
operation budget of Horizon Power, not out
of the capital budget, so that it could hide the decision from the Parliament
and the people of this state, and—worse still—paid every cent of
that cost out of the tariff equalisation contribution that is paid by Synergy
customers. It was a disgrace. The former government then entered a 27-year
take-or-pay contract with an energy provider that is about the capacity to
provide energy, not about the energy itself. We have to burn our own gas—gas
that the people of Western Australia have to pay for—to create the
energy. We are not paying for electricity; we are paying for the station to be ready when we call on it, but, of
course, there is no demand and we do not call on it.
Yes, this is a difficult prospect
for us to come to terms with. Member for Nedlands, I wish I did not have to do
this. In my negotiations and discussions with the companies that are affected
by this, I have made it clear to them that this is the only way forward. That
is why they have agreed to the proposal. I want to make it clear: the tariff
adjustment contribution will not increase prices for electricity customers
above current levels, as they will be able to choose to remain on their
existing tariffs or move to a market contract where a lower market price,
including the TAC, is available. Also, the TAC will not recover costs from
existing customers, north west interconnecting system retailers other than
Horizon Power, or customers using a dedicated connection.
true. Yesterday, when I made the announcement through a brief ministerial
statement, I think I highlighted that there would be —
Several members interjected.
The SPEAKER : Members!
Mr W.J. JOHNSTON : — a
10� per kilowatt hour tariff adjustment contribution. By the way, member, it is
not a tax. As I highlighted to the
Parliament yesterday, it is imposed to recover the costs that were left to this
government by a disgraceful decision to ignore all professional advice
by the former government and to contract a power station for 27 years that has
pushed up the cost of operations for Horizon in the north west interconnected
system by 100 per cent. That is what has occurred.
Several members interjected.
The SPEAKER : Members!
Mr W.J. JOHNSTON : I want to
congratulate the staff of Energy Policy WA, the staff of Horizon Power and the
Treasury officials who have been working on this complicated question for
nearly two years. I pay credit to the Treasurer, in his role as former Minister
for Energy, who took these matters to cabinet last year to get the outline of
the proposal approved by cabinet, and I am pleased to be implementing the
decision of cabinet. This is not an easy issue. The former government made a mess
of this. It built a switchyard for $130 million, which forced it to build a power
station at a specific location. Remember, it spent that $130 million out of the
operation budget of Horizon Power, not out
of the capital budget, so that it could hide the decision from the Parliament
and the people of this state, and—worse still—paid every cent of
that cost out of the tariff equalisation contribution that is paid by Synergy
customers. It was a disgrace. The former government then entered a 27-year
take-or-pay contract with an energy provider that is about the capacity to
provide energy, not about the energy itself. We have to burn our own gas—gas
that the people of Western Australia have to pay for—to create the
energy. We are not paying for electricity; we are paying for the station to be ready when we call on it, but, of
course, there is no demand and we do not call on it.
Yes, this is a difficult prospect
for us to come to terms with. Member for Nedlands, I wish I did not have to do
this. In my negotiations and discussions with the companies that are affected
by this, I have made it clear to them that this is the only way forward. That
is why they have agreed to the proposal. I want to make it clear: the tariff
adjustment contribution will not increase prices for electricity customers
above current levels, as they will be able to choose to remain on their
existing tariffs or move to a market contract where a lower market price,
including the TAC, is available. Also, the TAC will not recover costs from
existing customers, north west interconnecting system retailers other than
Horizon Power, or customers using a dedicated connection.
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