Home' Future Building Australian Infrastructure Review : Volume 3 Number 1 Contents 40 futurebuilding Volume 3 Number 1
Back on the reform horse
According to the government's own estimates,
this comes at a cost to taxpayers of $37 million per
annum, through reduced returns from the electricity
'This will ensure our power generation and
distribution remains in public hands and continues
to provide signi cant value to Tasmanians who have
invested in these assets over generations,' Giddings
Hydro Tasmania's considerable latent market
power -- and the subsequent lack of wholesale
competition -- was found by the panel to be a major
barrier to retail market entry.
'It is incontrovertible that Hydro Tasmania
possesses signi cant latent market power, and can
use this market power to pro tably in uence the
Tasmanian spot price in a far wider range of scenarios
than generators in the NEM,' the panel found.
This is a view widely shared by industry.
'In particular, the panel has pointed to the critical
importance of achieving greater competition in
the wholesale energy market,' says Mark Collette,
TRUenergy's Director, Energy Markets. 'This will
support the entry of new electricity retailers into the
The barrier to retail competition posed by Hydro
Tasmania's effective monopoly was also a central
pillar of a research paper delivered by Infrastructure
Partnerships Australia (IPA) to the Tasmanian
Government in May 2012.
IPA's advice was that the sale of Hydro Tasmania,
as well as state-owned transmission and distribution
businesses, could reduce electricity prices by as
much as 16 per cent.
As well as paving the way for effective retail
competition, the sale of Hydro Tasmania and state-
owned networks businesses would signi cantly
bolster Tasmania's scal and broader economic
position at a time of declining state revenues and
IPA has estimated that full privatisation of
Tasmanian electricity assets could unlock between
$6.57 billion and $7.9 billion in capital proceeds,
including: retail businesses worth between $271.75
million and $326.1 million; generation businesses
worth between $3.2 billion and $3.97 billion; and
network businesses worth between $3.1 billion and
Western Australia is another state in which close
to 100 per cent of the generation assets are publicly
owned, and it is also another state unlikely to pursue
bold structural reform anytime soon.
Responding to the federal government's draft
Energy White Paper (EWP), released last year, Western
Australia's Energy Minister Peter Collier reiterated that
his state is not considering selling any of its assets.
'What we have at the moment is a situation where
we have had signi cant private sector investment, in
generation particularly, over the past few years, but
that has come at a cost,' he told the ABC.
'There will be opportunities for private sector
involvement as energy capacity increases over
the next decade, but in terms of an overall blanket
privatisation, it is not on the agenda.'
In a recent speech to an industry conference,
Federal Energy Minister Martin Ferguson singled out
Western Australia for its blanket failure to undertake
energy market reform.
'The biggest barrier to greater investment
in Western Australia's energy infrastructure is
government ownership. It is crowding out private
players who do not have the certainty that government
policy won't change and adversely affect them,'
Ferguson went on to state that prices have risen
ABOVE: Jim Miller at
the IPA Symposium
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