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End electricity monopoly: regulator
Picture: Sharon Smith/ The West Australian

WA's energy market regulator says he sees no reason the Barnett Government should not remove rules that give Synergy a monopoly on selling electricity to households and small businesses.

Economic Regulation Authority chairman Lyndon Rowe's declaration came as private power company Perth Energy called for a fresh round of energy market reform and again said it believed it could profitably sell power to small customers at the existing government- regulated price.

The calls followed the entrance of Wesfarmers, through its Kleenheat Gas business, into the retail gas market. Kleenheat will offer customers a 10 per cent discount on usage charges if customers sign up for a two-year contract, agree to receive bills by email and pay by direct debit each month.

Kleenheat claims its Monthly Smart Saver plan could save a family of four more than $100 a year.

Under existing laws, only State-owned Synergy can sell electricity to the 915,000 households and 85,000 small and medium business customers who consume less than 50,000kwH of electricity each year.

The 19,000 businesses that consume more can choose their electricity retailer or negotiate a price directly with suppliers.

The rules are different in the gas industry but, until the weekend, no business other than Alinta Gas had chosen to compete. Citing the ERA's Synergy price inquiry that found tariffs were 17-25 per cent below the utility's efficient cost of production, Energy Minister Mike Nahan said the Government had no plan to abolish the rules while the taxpayer continued to subsidise that gap.

"The focus needs to be initially on identifying efficiencies in the market and ensuring the market is structured correctly in order to successfully support competition," Dr Nahan said.

But Mr Rowe said the best judge of whether prices reflected costs was to "throw open" the market to new entrants.

"Just because the ERA does a really good report, I'm more than willing to admit that the market is a better predictor of that than the regulator is," he said. "Throw it (the market) open. If nobody enters, fine. But throw it open and let businesses try."

Perth Energy managing director Ky Cao said he remained confident Perth Energy could profitably sell power to small customers.

"My view is that we can," he said. "If you had a free market, people would find ways to supply (households and small customers) at lower cost," he said.

"The wholesale market is functioning really well. Now it is time to look at the market and see where we can improve and I think Mike Nahan has an opportunity to make it more competitive."

The West Australian

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