Power players want a piece of the action

Energy Minister Mike Nahan’s announcement earlier this week of the government’s planned introduction of greater competition to the electricity sector has already spurred the growth prospects of one market entrant.

Sydney-based public-listed energy management consultancy firm Energy Action has set up shop in Subiaco with the aim of securing cheaper electricity contracts for Western Australian customers through a reverse auction process with local retailers.

Chief executive Scott Wooldridge told Business News Energy Action managed around 15 per cent of Australia’s total commercial and industrial energy spend and decided to enter WA because of electricity market reforms under way.

Energy Action offers tender processes for large energy users and reverse auctions for small to medium commercial users, which involve energy retailers underbidding each other to gain contracts.

In its first WA deal, Mr Wooldridge said Energy Action saved Iona Presentation College more than 20 per cent on its previous electricity rates, equal to an $80,000 saving over two years. The average savings are between 7 per cent and 10 per cent.

Using Energy Action’s online reverse auction platform, WA retailers Synergy, Alinta, ERM Power, Perth Energy and Landfill Gas & Power made a total of 22 bids in 15 minutes.

Synergy, which previously had the electricity contract for the school, won the auction.

Dr Nahan’s proposed reforms of the state’s electricity market, flagged last week, do not go as far as a working paper recommended, with the government ruling out splitting Synergy, major privatisations or adopting the market arrangements of the National Electricity Market.

The treasurer has also put off making a decision about Western Australia’s two-tier energy and capacity market, instead setting up a steering committee to oversee a further review and lead wider public consultation.

However, the treasurer has received support from within the sector for the decision to phase out WA’s $500 million-plus annual electricity subsidy within four years, paving the way for deregulation and full retail contestability.

“We need to have enough retailers for there to be competitive tension,” Mr Wooldridge said.