Report backs Horizon network sale
Selling the poles and wires owned by Horizon Power in the Pilbara is crucial to reforming the resource-rich region’s electricity sector, a long-awaited report says.
Almost two years after it was convened, a high-level committee headed by Synergy chairman Lyndon Rowe has released a report recommending a wholesale shake-up of the Pilbara’s “inefficient” power system.
The report’s central recommendation is the potential $600 million privatisation of the grid, which runs from Karratha to Port Hedland, and establishment of an “independent” operator.
Most of the grid is owned by Government-controlled Horizon.
The report said the arrangement “created an incentive for restricting access to its (Horizon’s) distribution network in order to limit the potential for retail competition”.
A private operator, it said, would have a stronger commercial incentive to sell the benefits of the grid and better access to capital.
The report also called for a regime that initially ensured Horizon and private competitor Alinta Energy could use each other’s networks.
While the network was “notionally” open to competition, the report said in reality there were two major barriers to private providers taking on Horizon. One was Horizon’s unwillingness to allow competitors to use its network.
The other was the State’s uniform tariff policy, which meant tariffs were generally below the cost of supply.
A third recommendation was the establishment of an independent system operator, with the committee saying Horizon carried out the role at “sub-optimal” levels.
Energy Minister Mike Nahan said while the Government was looking into the sale of Horizon’s network assets, no decisions had been made.
Shadow energy minister Bill Johnston said Labor opposed selling Horizon’s network.