A recent spate of populist attacks on Western Power has obscured attention from the substantive issues facing the electricity utility. Mark Beyer analyses the situation.
WESTERN Power managing director Stephen van der Mye is approaching the half way-point of his contract with the government utility.
Thus far his tenure has been characterised by repeated public relations disasters, which have eroded confidence in him and his organisation.
By any objective measure Dr van der Mye has been harshly dealt with, considering that his interstate commuting, his use of a luxury car service and his $455,000 salary (plus possible bonus) would not raise an eyebrow if he was chief executive of a private sector business of similar size and complexity.
Dr van der Mye’s real flaw is an abject failure to communicate properly with all stakeholders, including the media.
That was abundantly clear last week, when he failed to properly apologise to the victims of the Tenterden fire.
Communication is a critical part of a chief executive’s job, and especially for Dr van der Mye, who was hired as an agent of change.
He will need to hope that the second half of his tenure is more successful, with some real achievements on the energy reform front.
Chamber of Commerce and Industry chief executive Lyndon Rowe believes energy reform remains “the most important piece of reform this government needs to implement”.
The Government failed last year to win majority support in the legislative council for its reform plans.
Barring a major shift by the Greens or defections by some coalition MPs, it is unlikely to get its way in March when the legislation is due to be voted on.
In the meantime, the Government and Western Power need to make decisions on the critical issue of future generation capacity.
The process of planning for a new 330MW base load power station started way back in November 2002.
Thirteen groups lodged expressions of interest, and Western Power then selected “a number of bidders” to progress to the next stage.
But it did not take the next step.
Its task has been complicated by the entry of new generators, such as Alinta, currently building its first co-generation plant with Alcoa, and Griffin Energy, which is planning its own coal fired power station at Collie.
“The various combinations of new plant proposals could defer the need for the [planned 330MW] Power Procurement Stage 2 plant and will have implications for the terms of any power purchase agreement,” Dr van der Mye said last October.
Energy Minister Eric Ripper took over in December, appointing a working group with under treasurer John Langoulant, coordinator of energy Anne Nolan and his own chief of staff Mike Megaw, as well as Western Power representatives, to oversee the process.
Mr Ripper said the working group was in response to the “new market environment we are moving into”.
The treasurer added that he would issue a ‘ministerial direction’ if there was any incompatibility between the Government’s policy objective of securing an assured electricity supply and Western Power’s need to act in a commercial manner.
At around the same time as Mr Ripper’s announcement, Dr van der Mye finalised a restructure of Western Power that put new people in charge of the power procurement process.
General manager emerging business Peter Oates retired, while general manager generation Mark Chatfield was moved into a strategic planning role, and general manager corporate finance Nenad Ninkov’s role was changed so he could focus on the reform program and power procurement.
Dr van der Mye also implemented a new organisational structure that aligned with the four businesses proposed by the government under its disaggregation plan – generation, retail, networks and regional.
He will be seeking to change the politics and culture of Western Power, which remains home to active and influential opponents of reform.
If he succeeds on that front, he will start to win more friends in government than he has achieved to date.
He (Dr van der Mye) will need to hope that the second half of his tenure is more successful, with some real achievements on the energy reform front.
