Download - Business & Law | Curtin University, Perth, Western …more energy efficient. Chamber of Commerce and Industry WA chief executive Deidre Willmott said the com-munity had a responsibility

Transcript
Page 1: Business & Law | Curtin University, Perth, Western …more energy efficient. Chamber of Commerce and Industry WA chief executive Deidre Willmott said the com-munity had a responsibility

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