PWC releases report into privatisation of WA energy sector

Price Waterhouse Coopers has taken the politics out of energy infrastructure privatisation and produced The Case For Change – Privatisation of Western Australia’s energy networks.

The report estimates the West Australian government could reap between $12 and $16 billion if it was privatised – either through sale or long-term lease as done in New South Wales this month.

Western Australian Treasurer Mike Nahan announced the proposed privatisation in his 2016 budget speech, but said it would not be undertaken until after the 2017 state election.

One of the key findings by PWC in The Case For Change report was the current regulatory environment made government ownership of energy infrastructure unsuitable.

“The Productivity Commission assessed a number of factors in this analysis including price, operation, expenditure per kilometre, customers per employee and safety measures including fire starts,” the report said.

“The rationale for government ownership of network businesses no longer holds. State-owned business is ill-suited to the current incentive regulatory regime.”

The report found a full monopoly shift to the private sector was also not ideal for consumers.

“Electricity networks are heavily regulated by an independent entity… with the regulator seeking to set tariffs which provide a return for an ‘efficient cost’ business,” it said.

“Similarly there are performance hurdles that are set for ensuring reliability of service and safety requirements.”

“What is often forgotten in the debates about ‘poles and wires’ ownership is that almost every state and territory, including Western Australia, has privatised gas distribution and transmission assets.

“There is no evidence to suggest consumers are worse off with gas assets in private hands.”