FRESH uncertainty has emerged over the future of a vital upgrade of power transmission capacity in the Mid West following the release of the state budget last week.
FRESH uncertainty has emerged over the future of a vital upgrade of power transmission capacity in the Mid West following the release of the state budget last month.
The budget did not include a firm funding commitment for Western Power to construct a 330-kilovolt transmission line from Perth to Eneabba.
Instead, the government made a $318 million provisional allocation, subject to “final regulatory approvals and government review of the business case” for what it now calls the southern section of its North Country Reinforcement program.
The government has provisioned $47.1 million for next financial year, $244 million in 2011-12, and $27.8 million the following year.
Once the stage one upgrade is under way, Western Power plans a $280 million second stage to extend the line to Geraldton and the Oakajee deepwater port and industrial estate.
Stage one was first deferred last year after the expected cost came in at double the original estimate.
No funding for stage two has yet been allocated, though the state government did nominate the project for the next round of Infrastructure Australia funding.
The upgrade will replace the existing 132kv line to Eneabba and is vital to ensure effective power delivery to the Mid West’s emerging mining industry. It will also enable prospective renewable energy producers in the region to supply metropolitan and industrial users to the south.
At a WA Business News forum on the Mid West last week, City of Geraldton-Greenough chief executive Tony Brun said the 330kv line was the key to unlocking the region’s full potential.
“Without it, nothing happens,” he said. “Oakajee as an industry precinct is not a reality, the mines aren’t a reality, but most importantly from our point of view, the development of our region as an energy region is not a reality.”
Opposition energy spokesperson Kate Doust accused the government of doing nothing to ease concerns about future energy needs in the Mid West, especially given the lack of detail on the timing of work, and the absence of any funding for stage two.
“This important project, supported and initially funded by Labor, was ripped from last year’s budget. The funding now returns, but with no certainty for the northern stage of the line or any guarantee on the conditions for the southern stage,” she said.
“The government’s had two years to sort this out ... and if the minister thinks this is a non-issue he should go and speak to the people of Geraldton and a range of other companies in the Mid West.”
But Energy Minister Peter Collier said funds were guaranteed once negotiations between Western Power and power line users were concluded.
“If those ducks fall into line, there won’t be any issue and the first stage will progress,” he said.
“What also needs to be remembered is the fact that the justification for construction of the first stage is principally the block loads of the large mining companies.
“Western Power has been prudent in ensuring that commercial negotiations with these customers are finalised. That’s what’s happening, and as I am led to believe, those commercial negotiations are imminent.”
Mr Collier said it was prudent standard practice for the allocation to remain provisional until Western Power had submitted a firm business case, especially given the blowout from the original cost estimates.
The provisioning has been seized upon by Eneabba Gas, which hopes to supply local industry directly from its planned 168-megawatt Centauri 1 gas-fired power station near Dongara.
Eneabba said the decision effectively deferred work on the power line by at least a year, and that it remained the only party able to meet the needs of local miners within 14 months of signing a power offtake agreement.
Eneabba Gas has to date not struck any offtake deals for Centauri 1 with the most advanced Mid West mining proponent, Gindalbie Metals’ offshoot Karara Mining, instead signing up with Verve Energy. Karara has already begun early works on its own 330kv spur from the Karara mine site to Eneabba.
Gindalbie managing director Garrett Dixon this week welcomed the government’s commitment as vital for its long term expansion plans, and the region in general.
“This removes any question marks over our ability to access adequate power supplies for the (Karara) project well into the future,” he said.
