The Economic Regulation Authority’s draft decision on Western Power’s plans for the next five years has some welcome proposals. The increased capital expenditure proposed in the review should be able to be adsorbed without the need to increase charges to customers.
“Western Power is a well resourced organisation generating operating cashflow profits of around $1 billion per annum which comfortably covers their capital works spending,” said Dr David Honey, Leader of the WA Liberal Party and Shadow Energy Minister.
“Any increase in revenue from higher prices would just flow into their profit resulting in higher flow to the Budget through higher nominal income tax and dividend payments.
“In essence, any increase in Western Power’s charges would simply be a revenue grab for the state budget.”
Dr Honey previously highlighted the fact that Western Power’s financial position has improved by some $450 million through an approximate $150 million capital works underspend from their budget plans and the retention of some $300 million in dividends as the Labor government sought to diminish the true extent of its budget surplus.
“That $450 million improvement provides a substantial boost to its already significant annual plans of around $800 million on capital works.”
Dr Honey noted the Economic Regulation Authority’s concern over Western Power’s ability to deliver even bigger capital works programs than what it has achieved recently.
“I have raised concerns about a lack of priority given by Western Power to its fundamental task of ensuring we all enjoy reliable power. Western power should not be competing with or chasing after the private sector with regard to renewable energy.”
The private sector has abundant funding available for such projects and the government should focus Western Power on its core function.
“The Independent review into the Christmas outages set forth a pretty good path for dealing with these core problems,” Dr Honey said.
“There has been no notable response from the government to that review so I am pleased to see the ERA highlight the matter of poor reliability in rural areas. Hopefully the government will tackle the problem in a serious manner.”
Over five years, from 2016-17 to 2020-21, Western Power recorded around $1 billion per annum in cashflow operating profit. From the five year, $5 billion cash operating profit, Western Power spent $3.35 billion on capital investment while returning $1.5 billion to government.
“With the cost of living pressures on households and businesses, the last thing we need is another significant government impost. Western Power has the financial capacity to meet its needs for the foreseeable future without price rises above budget forecast,” Dr Honey said.