2 days ago
Rising power prices push businesses to the brink as coal shutdown plan questioned
Western Australia's biggest electricity system could be sliding towards a crisis as customers not shielded by taxpayer subsidies are hit by eye-watering price rises.
Businesses have reported electricity price hikes of up to 50 per cent or more, prompting warnings some are scaling back their operations or could even be sent to the wall in the face power of bills costing thousands of dollars more a month.
It's led to questions over whether the WA government can meet its ambitious plans of shutting its two remaining coal-fired generators within five years.
Neil Handasyde, an Albany strawberry grower who has branched into food processing and hospitality, said the situation was a concern.
Mr Handasyde said his businesses had never needed more power but the cost of that energy was starting to hurt.
He has gone to extreme lengths to cushion the blow, including installing a vast array of solar panels and batteries at a cost of $350,000.
But still his power bills have "gone through the roof in the last 18 months."
"It's been a massive jump. Thousands … thousands more a month," he said.
Mr Handasyde is not alone.
Under WA's energy rules, small-scale energy users such as householders and some small businesses are shielded from the full cost of providing power by state government subsidies.
But that still leaves most businesses in the state fully exposed to the whims of the state's biggest electricity market, which spans the relatively populous south-western corner of the continent.
These customers — those using more than 50 megawatt hours of electricity a year — are what are known as "contestable" customers who can shop around between energy providers.
Energy consultant Etienne Quayle is a veteran of the energy system and his brokerage firm represents more than 1,500 clients across the country.
Mr Quayle said contestable customers usually benefit from the power of being able to choose where they buy their electricity.
But the sheer scale of the price rises in the market now mean few — if any — customers would be feeling the benefit.
"From our biggest client to our smallest, we do not see decreases anymore, or savings," he said.
"We've changed our discussions with a client from, 'this is how much we can save you', to 'this is how much we've mitigated the increase'.
At the heart of the upheaval is the rising cost of generating and transporting electricity.
Much of that comes thanks to higher coal and gas prices, but experts have also pointed to a sharp rise in the costs of poles-and-wires amid interest rate hikes and capital spending.
On top of this, Mr Quayle notes significant pressures from services and new infrastructure such as batteries needed to back up the power system.
As part of a shake-up of the market that came into effect in late 2023, these costs exploded and although they have since eased, they remain significant.
He said these services and new assets are the insurance premium WA pays as a stand-alone grid that cannot turn to anyone else for help.
Adding to the pressure are WA Government plans to get out of coal by the end of the decade.
Coal still accounts for almost 30 per cent of the power produced in the state's biggest grid, with the state-owned Collie and Muja among the last three remaining coal plants in the west.
Through a spokesman, new WA Energy Minister Amber-Jade Sanderson acknowledged medium and large users of electricity were "directly" affected by the changes in the electricity market and urged contestable customers to shop around for the best deal possible.
"The Cook Government is delivering on a sensible, managed transition to a greater use of renewables and is committed to getting out of coal by 2030, faster than any other state," the spokesman said.
Shadow Energy Minister Steve Thomas is not so charitable or optimistic.
Dr Thomas accuses the government of mishandling the energy system, pointing to the rising costs across the board.
He said the government's biggest failure was its inability to build enough new capacity to replace retiring coal plants.
"If you look at their transition plan, there's not enough generation in the system," Dr Thomas says.
"Whether you want it in renewables or gas, it's still insufficient."
Worse still, Dr Thomas said the situation was pushing some businesses to the wall.
Mr Handasyde sees little relief in sight.
"There's certainly no cheaper power coming our way any time soon, if ever," he said.
