Electricity is an essential strategic service, fundamental to Western Australia's healthy and growing economy and the quality of life of its residents.

The provision of electricity must be safe, reliable and environmentally responsible.

An electricity supply at the lowest price commensurate with satisfactory quality and reliability is essential for Western Australian industry to compete in global markets. Secure, low cost electricity supply is vital to encourage investment and growth in the economy.

Fuel constitutes a major proportion of the cost of supplying electricity to consumers. Coal and gas are the dominant fuels for electricity generation in Western Australia and are expected to remain so for the foreseeable future.

Renewable energy sources are also increasingly important, reflecting their environmental benefits. Other fuels are important, for example the use of liquid fuels in ensuring security of electricity supply in the interconnected systems and in supply to remote areas.

Fuel production, particularly of coal and gas, is an important part of the Western Australian economy. It provides financial returns and significant employment, especially in regional areas.

Infrastructure in the fuel supply industry is long term in nature and requires significant investment.

Fair and open competition between coal, gas, renewable and other fuels is necessary to maintain downward pressure on electricity costs, and to safeguard the continued viability of these important Western Australian industries and the job security of those employed in them.

Objectives

The Government aims to maintain a fair and open competitive market for power generation fuels in Western Australia, as it will:

• facilitate the sustainable supply of reliable, competitively priced electricity;
• underpin the competitiveness of Western Australian industry in global markets and the attractiveness of Western Australia as an investment destination;
• encourage investment in fuel supply options that can effectively compete in an environment of regulatory certainty, adequate information and realistic time frames; and
• provide the foundation for innovative, sustainable and competitive fuel industries that contribute efficiently to the economic, social and environmental health and growth of the State, especially in regional areas.

Principles

The choice of fuels should, primarily, be driven by commercial considerations in a competitive environment.

For competition to be effective, fuels for power generation must be able to compete on a consistent and equitable basis.

Electricity production should strive for best practice in environmental responsibility.

Encouraging a diversity of fuel types and fuel sources for electricity generation will enhance security of electricity supply.

An effective competitive environment will make Western Australia's fuel industries robust and adaptable in the face of the rapid changes in environmental and economic circumstances of the world today.

The expansion of competitive fuel supply industries to meet growing electricity demand will provide access and opportunity for local employment, particularly in regional areas.

The current reform of the State's electricity industry is a key strategy in the Government's approach to this issue.

To ensure that all fuel types compete on a consistent basis the new electricity market arrangements will:

• facilitate open and unbiased competition in electricity supply and hence in the upstream fuel industries;
• provide the basis for entry of new players into the market in a way that allows for fair competition between new and established generators and fuel suppliers;
• safeguard fair and reasonable conditions of network access for power producers through independent regulation of network access;
• provide for the timely publication of reliable demand and supply forecasts and procurement intentions; and
• facilitate increased use of renewable energy through removal of impediments to network access and targeted support schemes.

Government will work to ensure that regulatory regimes:

• are equitably applied;
• encourage efficient and timely investment in infrastructure;
• encourage efficient and timely development of fuel sources;
• provide long term certainty for investors in fuel supply industries; and
• do not result in any fuel type enjoying a competitive advantage or suffering disadvantage solely due to the regulatory environment.