Power reform in the works for SMEs

Reforms to the WA energy market to enable more small businesses to choose their own electricity retailer, and reduce power prices, are under consideration.

Industry sources have told Business News the state government is investigating lowering the contestability threshold for the electricity market from its current level of 50 megawatt hours.

That’s about the annual power use of an independent supermarket.

About 17,000 businesses in Western Australia were contestable as at June 2019, according to data from the Economic Regulation Authority.

For businesses in Perth and surrounding regions below the threshold, Synergy has a monopoly.

About 87,000 businesses were non-contestable, according to ERA data.

Energy Minister Bill Johnston confirmed the move was under consideration.

“Lowering the 50MWh contestability threshold for businesses is being actively considered, but has been slightly delayed because of COVID-19,” Mr Johnston said.

“This includes how contestability would be provided to businesses in embedded networks.”

One number that has been cited as a possible new threshold is 20MWh.

By comparison, the gas market has had full retail competition for more than a decade.

Alinta Energy competes in gas with Kleenheat, Origin Energy, AGL and Simply Energy, with discounts of up to 40 per cent on offer.

Competition in electricity has had a more a tumultuous journey since it was adovcated by former minister Eric Ripper in the 2000s.

In 2017, Ben Wyatt had announced the McGgowan government would pursue the policy; but that was paused in 2018.

As minister, Mr Johnston is heading a broad reform program in power markets, with a government taskforce reviewing rules and recommending ways to modernise regulations.

In recent weeks, the government also announced $66 million of funding for renewable energy projects.