Generator warns over merger

West Australian
Wednesday 12/11/2008 Page: 56

The chairman of WA's newest private power station has warned that Government proposals to reunite State-owned electricity generator Verve Energy with retailer Synergy Energy could threaten investment in the industry and result in higher electricity prices for households. Trevor St Baker urged the State Government to consider the benefits, such as competition, the split up of the old Western Power had brought. "Our investment in the State has been a direct result of the disaggregation of the State's electricity market," he said.

Premier Colin Barnett has suggested the Government may re-merge Synergy Energy and Verve Energy, believing vast administrative savings could be made to help offset the need to increase domestic power prices, which have not risen for more than a decade despite rising costs. But, speaking after the opening of NewGen Power's Kwinana plant on Friday, Mr St Baker said a reunion of the companies would mean private investors would again face a government monopoly in the electricity market which could see them take their investment elsewhere. "Competitive tension is the thing that produces ideas, innovation and enterprise and cheaper prices," he said.

NewGen's gas-fired plant is the State's most efficient power station and will produce a crucial 320MW of electricity around the clock, equal to about 10 per cent of the power needs in Perth and the South-West. It was beset by teething problems during its commissioning but opened ahead of schedule and under budget just in time for the peak summer period of electricity usage. The $400 million power station ran into difficulties because of a lack of gas for testing as a result of the Varanus Island gas explosion in June, which cut 30 per cent of the State's gas supplies.

Further delays followed when the plant's turbines broke down. Industry sources said the company had done a remarkable job to get the project back on schedule and budget before its December 1 deadline. Energy Minister Peter Collier said the project would ensure reliable power supplies to industry and underpin the State's growth.

"One of the State Government's primary objectives this year is to improve power reliability across the State," he said. "The Kwinana power station is an integral part of this initiative and will bring much-needed additional capacity to meet WA's electricity requirements." Mr St Baker said the power station was among the most efficient in the country and would help West Australians reduce their carbon footprint. "This is a combined cycle power station, which means that it produces electricity from two sources - gas and steam," he said.

"The plant harnesses and uses the steam produced from the waste heat in the exhaust of the gas turbine to run a steam turbine, which means we are able to produce more power using less fuel, and significantly reduce the greenhouse gas emissions from the project." NewGen Power, a partnership of energy company ERM and international investment bank Babcock and Brown, is also building a $400 million, 330MW power station in Neerabup, north of Perth.