Page 2800 - Week 10 - Tuesday, 13 September 1994
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Canberra is in a unique position to benefit from the structural reform that is now taking place. We are centrally located on the proposed national electricity grid and have nothing to protect but the interests of our consumers. We should be able to buy power from the cheapest source without fetters - whether it is from Victoria, New South Wales or the Snowy - provided the Commonwealth, New South Wales and Victorian governments reform with conviction. However, for the people of the ACT to achieve the benefits that should flow from the national electricity reform, it is important that the introduction of the national electricity grid and its associated market trading reforms not be delayed.
The ACT Government has a particular problem with the timing of the national reform. We get a substantial amount of our power from the Snowy scheme, which is about to be corporatised. If the national reforms were introduced concurrently with or before corporatisation of the Snowy, ACTEW could pursue the purchase of power for the ACT in a truly competitive market from the Snowy, New South Wales or the yet untested Victorian markets. However, corporatisation of the Snowy scheme is proceeding apace, with final agreement on future Snowy arrangements having been almost reached by the Commonwealth, New South Wales and Victoria. Meanwhile, the national reform process is not proceeding uniformly and, until New South Wales changes its operations to split its generating portfolio into competitive parts and further separates its distribution function to open them up to national competition, the ACT is unlikely to receive significant benefit from those changes.
The New South Wales Minister, Mr Pickering, confirmed at the recent meeting of Commonwealth and State minerals and energy Ministers, which I attended, what has been widely assumed by government and the electricity industry for some time: The proposed level of reform of the electricity system in New South Wales will not be achieved by 1 July 1995, the date proposed for corporatisation of the Snowy scheme. Mr Acting Speaker, without the guaranteed benefit of the Snowy arrangements as they currently stand, the price the ACT pays for electricity will increase. Already, on my ready reckoning, some $20m of Pacific Power's $600m dividend to the New South Wales Government comes from ACT consumers. ACTEW will be forced to continue to purchase power at prices which include these monopoly rents rather than gain the benefits from a nationally competitive electricity trading market. The net result is likely to be that we will be faced with a considerable period of time during which we will have to bear the additional costs of electricity because of capital changes to the Snowy scheme without the benefits of national reforms. This could lead to ACTEW having to pay at the top end $38m a year more for its electricity than under the present Snowy arrangements. I might add, however, Mr Acting Speaker, that, given the reforms that are occurring within the grid itself, it is anticipated that that is the worst case scenario and that the likely impact would be significantly less - somewhere in the order of $20m.
For many years the ACT Government has been aware of the possibility that cancellation of the longstanding Snowy arrangements may adversely affect the ACT and has been demanding a more appropriate role in negotiations on the reform of the Snowy scheme, to ensure that the ACT gets a fair deal with its electricity supply. It has raised the issue both formally and informally on many occasions with the Commonwealth Government.
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