Business & Law | Curtin University, Perth, Western …more energy efficient. Chamber of Commerce and...
1
ᗄ 46 Thursday, October 13, 2016 WESTBUSINESS 47 Thursday, October 13, 2016 WESTBUSINESS CRICOS Provider Code 00301J CU-CBS-0124/MF CU-CBS000256B Curtin University is a trademark of Curtin University of Technology. Curtin is an accredited member of AACSB International – the Association to Advance Collegiate Schools of Business. At Curtin Business School we are dedicated to making tomorrow better for WA. Through our research partnerships, industry engagement, and local business internship alliances, we’re able to examine the real-world issues affecting our state and help WA plan for the future. Visit business.curtin.edu.au/outlook Make tomorrow better. At Curtin Business School, we’re committed to WA. BE THE INNOVATOR T he laws governing who pays what for their elec- tricity need to be changed urgently before any market reform can be achieved, accord- ing to the people who control WA’s energy market. At a meeting of some of the State’s most influential electric- ity and gas regulators and sell- ers, organised as part of the Curtin University/WestBusiness Outlook Series, the need to change the tariff system was stressed by all participants. Curtin University senior lec- turer Tom Houghton flagged energy affordability as a key issue affecting low-income ear- ners. He said households on the lowest income quintile spent 12.5 per cent of their gross income on energy and were “suffering in the face of price rises”. Dr Houghton said the energy sector was going through pro- found change. “There are very specific changes in regards to electricity market reform — we have a unique opportunity to address some of those (affordability) issues,” he said. Energy Minister Mike Nahan said the State Government aimed to move to a more compet- itive energy market, but it would require changing the current subsidy structure. “We are committed to full retail contestability but that requires getting the heavy subsi- dy out of the system,” he said. He said the Government paid Synergy about $300 million in subsidies this year, about 30 per cent of the price of electricity. “You can have subsidies and a bit of competition, but when we peaked at $450 million, we were going towards $1 billion,” he said. Dr Nahan said subsidisation distorted incentives for people to use energy more efficiently. Shadow energy minister Bill Johnston said he supported a more competitive market, but the Government needed to ensure people who needed subsi- dies were not disadvantaged. “This is not a one-way debate. There is a much more sophisti- cated discussion about what you do to make sure people don’t miss out,” he said. Synergy chairman Lyndon Rowe said tariffs were the key issue affecting the reform of WA’s energy market. “There are really perverse incentives in the current struc- ture,” he said. Mr Rowe said 5 per cent, or 50,000, of Synergy’s customers paid less than the cost of connection to the network for electricity. “There are another 80,000 on top of that from which we get negative returns, and there are about 150,000 customers who are paying more than they should,” he said. He put this price disparity down to 80 per cent of the elec- tricity tariff being linked to fixed costs and only 20 per cent to usage. If private players were allowed into the market under the current regime they would cherry pick those customers who used a lot of power, leaving the State to subsidise the rest. “Full retail contestability can work, but if you go into it with the current tariff structure, you get those 150,000 customers who are profitable gone and you will see a transfer of wealth from the public sector,” he said. Jackson McDonald partner for energy and regulation Mat- thew Bowen said energy prices must accurately reflect costs. “If you want people to use resources appropriately more or less, you need to price them appropriately which means they are more or less cost-reflective,” he said. “That is going to pro- duce radical changes in the pric- ing of all these utilities.” He said the issue of support- ing disadvantaged customers was separate to the tariff debate. Alinta Energy general manag- er customer operations David McNeil said cross-subsidies from taxpayers should be removed in tandem with tariff reform. “If the right price sig- nals are there through competi- tion, you can channel the money you are not spending on cross- subsidies to the people who need it most,” he said. Renewables a new force The future of energy production and the increasing use of renew- able technologies was also wide- ly discussed. Western Power executive manager customer and corporate services Simon Walsh said the South West Inter- connected System was poised for change. “The idea of a monopoly is dis- appearing, there are substitute products for what we do and we expect the SWIS will turn into Swiss cheese — there will be bits of it carved out,” he said. Each time a new housing block was established, people would consider whether to put batteries, solar or any other type of energy system in, Mr Walsh said. “All of those things would take energy away from grid and they are changing what the nature of our business is funda- mentally,” he said. WA Council of Social Service social policy director Chris Twomey said it was crucial not to leave behind the socially dis- advantaged in the transition to sustainable energy. “There is a huge transforma- tion coming. “We need to think about how there is a whole pile of people in our community that if we get settings wrong, if they don’t have rights or financial capacity to participate in it, they could be left behind,” he said. Kleenheat commercial man- ager natural gas and electricity Rebecca Banks said energy pro- viders could tailor products for customers to access renewable energy such as solar. “There are some people who will never be able to afford solar panels, but there are a couple of percentiles who with the right package could afford them and it would benefit them in the long term, but they don’t have the right information,” she said. Ms Banks also suggested a price comparison website for energy customers to learn how much power different household appliances drew and how to be more energy efficient. Chamber of Commerce and Industry WA chief executive Deidre Willmott said the com- munity had a responsibility to look after the disadvantaged and vulnerable. “The best way to drive down prices is to encourage the adop- tion of new technology as it comes in and through agile par- ticipants in the market,” she said. She said the State needed to privatise its government-held electricity assets for the shift to occur effectively. Leave no one behind in energy revolution Guests at the Curtin University/WestBusiness Outlook Series roundtable on energy poverty. Picture: Simon Santi Tariff tinkering is critical but electricity reform risks power poverty, energy leaders tell Claire Tyrrell The key is the level playing field. Rebecca Banks You have to get the cost structure right. Lyndon Rowe There is no question energy is a hot button issue. Bill Johnston We have to have a sustainable energy supply and figure out how to deal with its costs. Matthew Bowen The best way to drive down prices is to encourage the adoption of new technology. as it comes in. Deidre Willmott We are going through a transitional change fundamentally altering the structure. Mike Nahan The most vulnerable have the least control to access over energy savings and renewable energy. Tom Houghton The idea of a monopoly is rapidly disappearing. Simon Walsh We need to remove the cross-subsidy and reform the tariffs. David McNeil You can’t underestimate how hard it is to get a level playing field. Chris Twomey OUTLOOK SERIES
Transcript of Business & Law | Curtin University, Perth, Western …more energy efficient. Chamber of Commerce and...
8
46 Thursday, October 13, 2016WESTBUSINESS 47Thursday, October 13, 2016 WESTBUSINESS
CRICOS Provider Code 00301J CU-CBS-0124/MF CU-CBS000256B Curtin University is a trademark of Curtin University of Technology. Curtin is an accredited member of AACSB International – the Association to Advance Collegiate Schools of Business.
At Curtin Business School we are dedicated to making tomorrow better for WA. Through our research partnerships, industry engagement, and local business
internship alliances, we’re able to examine the real-world issues affecting our state and help WA plan for the future.
Visit business.curtin.edu.au/outlook
Make tomorrow better.
At Curtin Business School,
we’re committed to WA. BE THE INNOVATOR
The laws governing whopays what for their elec-tricity need to bechanged urgentlybefore any market
reform can be achieved, accord-ing to the people who controlWA’s energy market.
At a meeting of some of theState’s most influential electric-ity and gas regulators and sell-ers, organised as part of theCurtin University/WestBusiness
Outlook Series, the need tochange the tariff system wasstressed by all participants.
Curtin University senior lec-turer Tom Houghton flaggedenergy affordability as a keyissue affecting low-income ear-ners. He said households on thelowest income quintile spent 12.5per cent of their gross income onenergy and were “suffering inthe face of price rises”.
Dr Houghton said the energysector was going through pro-found change.
“There are very specificchanges in regards to electricitymarket reform — we have aunique opportunity to addresssome of those (affordability)issues,” he said.
Energy Minister Mike Nahansaid the State Governmentaimed to move to a more compet-itive energy market, but it wouldrequire changing the currentsubsidy structure.
“We are committed to fullretail contestability but thatrequires getting the heavy subsi-dy out of the system,” he said.
He said the Government paidSynergy about $300 million insubsidies this year, about 30 percent of the price of electricity.
“You can have subsidies and abit of competition, but when wepeaked at $450 million, we weregoing towards $1 billion,” hesaid.
Dr Nahan said subsidisationdistorted incentives for people touse energy more efficiently.
Shadow energy minister BillJohnston said he supported amore competitive market, butthe Government needed toensure people who needed subsi-dies were not disadvantaged.
“This is not a one-way debate.There is a much more sophisti-cated discussion about what youdo to make sure people don’tmiss out,” he said.
Synergy chairman LyndonRowe said tariffs were the keyissue affecting the reform ofWA’s energy market.
“There are really perverseincentives in the current struc-ture,” he said.
Mr Rowe said 5 per cent, or50,000, of Synergy’s customerspaid less than the cost of connection to the network forelectricity.
“There are another 80,000 ontop of that from which we getnegative returns, and there areabout 150,000 customers who are
paying more than they should,”he said.
He put this price disparitydown to 80 per cent of the elec-tricity tariff being linked tofixed costs and only 20 per centto usage. If private players wereallowed into the market underthe current regime they wouldcherry pick those customerswho used a lot of power, leavingthe State to subsidise the rest.
“Full retail contestability can
work, but if you go into it withthe current tariff structure, youget those 150,000 customers whoare profitable gone and you willsee a transfer of wealth from thepublic sector,” he said.
Jackson McDonald partnerfor energy and regulation Mat-thew Bowen said energy pricesmust accurately reflect costs.
“If you want people to useresources appropriately more orless, you need to price them
appropriately which means theyare more or less cost-reflective,”he said. “That is going to pro-duce radical changes in the pric-ing of all these utilities.”
He said the issue of support-ing disadvantaged customerswas separate to the tariff debate.
Alinta Energy general manag-er customer operations DavidMcNeil said cross-subsidiesfrom taxpayers should beremoved in tandem with tariff
reform. “If the right price sig-nals are there through competi-tion, you can channel the moneyyou are not spending on cross-subsidies to the people who needit most,” he said.
Renewables a new forceThe future of energy productionand the increasing use of renew-able technologies was also wide-ly discussed. Western Powerexecutive manager customer
and corporate services SimonWalsh said the South West Inter-connected System was poised forchange.
“The idea of a monopoly is dis-appearing, there are substituteproducts for what we do and weexpect the SWIS will turn intoSwiss cheese — there will be bitsof it carved out,” he said.
Each time a new housingblock was established, peoplewould consider whether to put
batteries, solar or any other typeof energy system in, Mr Walshsaid.
“All of those things wouldtake energy away from grid andthey are changing what thenature of our business is funda-mentally,” he said.
WA Council of Social Servicesocial policy director Chris Twomey said it was crucial notto leave behind the socially dis-advantaged in the transition tosustainable energy.
“There is a huge transforma-tion coming.
“We need to think about howthere is a whole pile of people inour community that if we getsettings wrong, if they don’thave rights or financial capacityto participate in it, they could beleft behind,” he said.
Kleenheat commercial man-ager natural gas and electricityRebecca Banks said energy pro-viders could tailor products forcustomers to access renewableenergy such as solar.
“There are some people whowill never be able to afford solarpanels, but there are a coupleof percentiles who with the right package could afford them and it would benefit themin the long term, but they don’thave the right information,” she said.
Ms Banks also suggested aprice comparison website forenergy customers to learn howmuch power different householdappliances drew and how to bemore energy efficient.
Chamber of Commerce andIndustry WA chief executiveDeidre Willmott said the com-munity had a responsibility tolook after the disadvantaged andvulnerable.
“The best way to drive downprices is to encourage the adop-tion of new technology as itcomes in and through agile par-ticipants in the market,” shesaid.
She said the State needed toprivatise its government-heldelectricity assets for the shift tooccur effectively.
Leave no one behind in energy revolution Guests at the CurtinUniversity/WestBusiness Outlook Seriesroundtable on energy poverty. Picture: Simon Santi
Tariff tinkering is critical butelectricity reform riskspower poverty, energyleaders tell Claire Tyrrell
The key is thelevel playing field.Rebecca Banks
You have to getthe cost structureright.Lyndon Rowe
There is noquestion energy isa hot button issue.Bill Johnston
We have to havea sustainableenergy supplyand figure outhow to deal withits costs.Matthew Bowen
The best way todrive down pricesis to encouragethe adoption ofnew technology.as it comes in.Deidre Willmott
We are goingthrough atransitional changefundamentallyaltering thestructure.Mike Nahan
The mostvulnerable havethe least control toaccess overenergy savingsand renewableenergy.Tom Houghton
The idea of amonopoly israpidlydisappearing.Simon Walsh
We need toremove thecross-subsidy andreform the tariffs.David McNeil
You can’tunderestimatehow hard it is toget a level playingfield.Chris Twomey
OUTLOOKSERIES
