NSW: Govt to discuss electricity privatisation proposal

AAP General News (Australia)
12-09-2007
NSW: Govt to discuss electricity privatisation proposal

SYDNEY, Dec 9 AAP - The NSW government will meet tomorrow to discuss the privatisation
of the electricity industry, a proposal which has drawn mixed reaction.

Cabinet will review the Owen Report, which recommended selling off the state's electricity
generating and retail sectors, before Caucus deliberates.

The report, handed down by Professor Anthony Owen in September, said NSW needed new
electricity baseload generation by 2013-14.

The new power station would have to be either gas or coal fired, supported by energy
efficient measures and renewables.

The report said the new generator should be built by the private sector, which would
not be commercially viable unless the state's other generators, and the retail arm, were
privatised.

The only other alternative to selling off the generators was to lease them on long-term
contracts, otherwise the government would have to pay $15 billion to build the plant itself,
the report said.

The NSW Business Chamber said privatisation was the only way forward, but shire councils
believe the plan would result in higher costs for country consumers.

NSW Energy Minister Ian McDonald has said consumer protection issues will be a top
priority for the government in its discussion of the proposal.

NSW Business Chamber chief executive officer Kevin MacDonald said electricity usage
was running near capacity.

He said without further investment in a base load facility sometime in the next six
years, residents would start to see interruptions to supply.

"The Owen Inquiry estimates that if NSW undertakes a privatisation program then the
bottom line of the NSW balance sheet will be $22 billion better off when interest payments
are taken into account," he said in a statement.

"This means NSW can then reinvest in critical infrastructure such as railways, roads,
ports and public transport."

Mr MacDonald said the privatisation of electricity in Victoria demonstrated state governments
could pursue a sell-off without costs running out of control for consumers.

"Already NSW has an independent pricing umpire in IPART and this will not change," he said.

"Victoria undertook electricity privatisation over a decade ago and Victorian consumers
pay similar prices to that of NSW residents."

But Shires Association of NSW president Bruce Miller said privatisation in Victoria
had been so badly managed that costs to consumers were only being moderated through the
purchase of cheaper NSW energy.

"Privatisation of essential services has never achieved the promised benefits," he
said in a statement.

"Wherever this has occurred, we have seen loss of jobs and increases in prices over time.

"Regional and rural communities are dependent on the electricity industry not just
for reliable and affordable services, but also for jobs, especially apprenticeship training."

Mr Miller also criticised the government for having a caucus meeting after parliament
had risen for the year.

AAP kd/cjh/bwl

KEYWORD: PRIVATISE

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