Energy in WA
A short history and outline of the energy industry in Western Australia
If we look back only a relatively short time in historical terms, it was in 1888 that an enterprising Mr C J Otte commenced commercial electricity generation in this State, with a 15 kw DC (direct current) generator located on premises next to the Criterion Hotel, in Hay Street, Perth.
It is interesting to note that even in those times, there was market competition between gas and electricity - and gas was well established. The City of Perth Gas Company had been formed in 1882 and was later taken over by the Perth Gas Co., which produced coal gas at a plant in Wellington Street, Perth from 1885. In 1886, acts of Parliament provided for the laying of gas mains and the granting of a franchise for the supply of gas in the Fremantle area, to the Fremantle Gas & Coke Co. Ltd.
Indeed, gas street lighting continued in central Perth until the 1920's, while various other localities in the Perth region such as Fremantle, Subiaco and Claremont established local electricity supply services in the early 1900's. The East Perth Power Station began generating electricity in 1916, with a 40 Hertz (cycles per second) 250/440 volts AC (alternating current) plant.
There must have been a lot of innovation by electrical tradespersons and contractors during the 1930's and 40's because despite the isolation of the state and the problems of distance, by the mid 1940's there were some 140 electricity supply undertakings of various sizes, some offering AC, some DC, electricity supplies. But the gas industry was also very active - the coal-fired East Perth Gas Works were initially opened in 1924, leading to substantial expansion in the use of gas over the following years.
It was in 1945 that the State Electricity Commission was formed and eventually it was to take over the local electricity undertakings, firstly in Perth, then Fremantle and in the south-west of the State. In 1948 it also took over gas supply in the Perth suburbs.
This was a major change which led to 50 Hertz AC power stations being built at South Fremantle and Bunbury in the 1950's, the conversion of East Perth Power Station to 50 Hertz operation and the establishment of the interconnected 132 kv transmission system.
It was the beginning of a new era for the State. People wanted electricity and throughout the southwest of the state, including rural areas, new and existing buildings were wired for 250/440 volt alternating current electricity. This also raised some fundamental safety issues and concerns.
The earliest evidence of licensing electricians is by the Fremantle Municipality, in 1905 and the Public Works Department started to issue general electrical licences in 1925. In 1939 the existing regulations were changed to introduce a system of ``A" grade electrical licensing - it was the beginning of the current system. Then in 1945 - no doubt as a result of demand for electrical services - an Electrical Contractor's Licensing Board was also established, to accompany the existing Electrical Workers' Board.
Concern about safety outcomes during those late 1940's ultimately led to the first SEC inspectors being appointed, for the benefit of the community.
In the late 1960's, the State's industrial development gathered pace based on the then mining boom, leading to a rapid expansion of the economy. It provided significant opportunities for engineers, electrical trades and contractors, leading to an influx of such people. Then came a series of important natural gas discoveries, commencing with the Dongara field, the gas from which was piped to Perth by 1971. North Rankin No.1 discovery by the North West Shelf participants followed, as did others, leading to gas again becoming a major player on the energy resources scene of the State.
The State Energy Commission (SECWA) was formed in 1975 and like its predecessor, was an electricity supplier, gas supplier and also industry regulator. In 1985, the standard voltage on the SECWA network was modified to 240/415 volts AC, aligning with the rest of Australia.
As the years progressed and industry expanded, SECWA's multiplicity of functions became increasingly difficult to manage. There was a perception of lack of competitive pricing for gas and electricity, because SECWA controlled the whole energy supply industry. Industry also expressed concern that the regulator was captive to the State's principal energy supplier.
But SECWA also had its very positive side, such as the ability in 1980 to contract for significant long-term gas purchases and to undertake establishment of the Dampier-to-Bunbury natural gas pipeline, a strategic asset from a State development point of view. This pipeline and the domestic purchase of natural gas were critical support for the decision by the North West Shelf participants to proceed with initial north-west shelf gas production and processing developments. The gas industry in the State has not looked back since - new discoveries, production projects and major pipeline projects as well as related gas-fired power stations are now regular industry news items.
Then 20 years after its creation, on 1 January 1995, SECWA ceased and was transformed into two separate, corporatised entities - Western Power Corporation and AlintaGas Corporation.
Concurrently the Office of Energy was born, resulting from the marriage of the gas and electrical regulatory arms of SECWA with the Energy Policy & Planning Bureau. The Bureau had for some years provided independent policy advice on a wide range of energy-related matters, to the Minister for Energy.
This restructuring was the beginning of the market deregulation process, designed to provide increasing competition between gas and electricity, and to bring new electricity and gas suppliers, such as landfill gas plants, cogeneration plants and energy traders into the market.
The Office of Energy's creation satisfied the need for independent professional advice to the Minister for Energy, to whom it reports. It also provided for the independent administration of the various regulatory functions with which it was charged.
On 1 July 2002, the technical and safety regulation arm of the Office of Energy transferred to the Department of Consumer and Employment Protection (DOCEP) to become EnergySafety WA.
On 1 January 2009, DOCEP was restructured to become the Department of Commerce. EnergySafety remained a division, without any change of role or function. Commerce has five other key operational divisions: Consumer Protection; Labour Relations; WorkSafe WA; Science, Innovation and Business; and the Building Commission.
The State's energy industry reforms reached a major milestone in April 2006 when the Government's Western Power Corporation, which until then had been a vertically integrated electricity utility, was disaggregated into entirely separate corporate business entities, to open the electricity market to wider competition:
- Western Power Networks (trading as Western Power, and thus continuing the name of its former parent), responsible for the ownership and operation of the SW electricity grid (known as the SWIS – south west interconnected system) which connects generators of all types to consumers' installations.
- Horizon Power, responsible for the ownership and operation of what were previously Western Power's remote electricity supply systems (including some local generation facilities), and the retailing of electricity to customers, in most towns of the far north of the State, the Pilbara and Esperance.
- Synergy, responsible for the retailing of electricity to what were previously Western Power's customers in the SWIS.
- Verve Energy, responsible for ownership and operation of what were previously Western Power's power stations connected to the SWIS.
Since then an Independent Market Operator (IMO) has also been established to administer and operate a wholesale electricity market (WEM) for the SWIS, which is essential if genuine competition is to exist and grow in that system.
The IMO’s responsibilities can be summarised as:
- administration of the market rules;
- operation of the WEM (which includes the financial transactions between all parties involved in generating, transporting and retailing electricity); and
- facilitating the provision of sufficient generation capacity and demand side management to meet expected load.
Under the new framework the Economic Regulation Authority, supported by EnergySafety as technical adviser, ensures that the electricity and gas network operators (such as Western Power and Alinta Networks) provide access to all corporations who wish to have electricity or gas transported, at reasonable rates, and that electricity supply reliability is maintained at an acceptable level.
The Energy Ombudsman also deals with reliability issues, particularly complaints not resolved between the parties, but at the individual consumer level.
In 2006 EnergySafety became, following the passage of legislation through the Parliament, fully industry funded through a system of levies on electricity and gas distributors and the revenues from licensing fees for electrical and gas workers, and electrical contractors.
EnergySafety reports to the Minister for Commerce (to whom WorkSafe also report), whereas the State-owned energy enterprises such as Western Power Networks and Horizon Power report to the Minister for Energy.