Electricity industry reform in Western Australia

Abstract

The Government of Western Australia has recently embarked on a major restructuring of the electricity industry and the development of a wholesale electricity market. It plans to split Western Power, the dominant government owned integrated electricity utility, into four entities by July 2004 and to implement a competitive wholesale electricity market in the South West of WA by July 2006. The four successor entities representing the current networks, generation, retail and regional power business units of Western Power will remain government owned and will initially be the dominant players in the electricity marketplace. Because of the isolation and the relatively small size of the South West System, to design a competitive market that will provide real benefits from greater competition in trading electricity without compromising security is not an easy task. The solution that has been proposed is unique to Western Australia and will provide for five separate trading mechanisms. Initially it will substantially replicate the current limited electricity trading in which the dominant supplier. Western Power provides access to its networks for third parties to undertake bilateral trading. However the design will provide sufficient flexibility to accommodate greater levels of competition as the market matures.