The WA Electricity Retail Market

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The WA electricity industry operates differently to the NEM number of respects.  Customers that operate within the South West Interconnected System (SWIS) – the biggest electricity network in Western Australia – are split into two categories. 

  • ‘Non-contestable’ customers are customers who use less than 50 megawatt hours (MWh) of electricity annually. This covers the majority of residential and small business consumers.  These customers cannot choose their retailer but are supplied by govt-owned corporation Synergy and pay prices regulated by the WA Government.   
  • ‘Contestable’ customers are customers who use between 50 – 160 megawatt hours (MWh) of electricity annually.  This predominantly covers medium to large business consumers, and they can choose their retailer.

To give an idea of coverage in the WA market, a rough breakdown of customer type for electricity retailers is below, based on information extracted from the 2020/21 ERA Annual Data Report

WA Electricity Retail Licences – Customer breakdown 2020/21
Customer Type2020/21% of total customers
Residential customers1,060,11390.8%
Business customers (small medium and large)106,3449.1%
Other (Prepayment Meter)1,3590.1%
Total customers1,167,816 

As you can see, Residential customers cover almost 91% of the retail market; they have no choice in retailer and are off limits to any new retailers who enter the market.

In the Business customers category above, the report specified only 11,727 of the customers in the SWIS were contestable with the right to choose a retailer.  Of these, 55.8% chose Synergy, 29.9% chose Alinta, and 9% chose Perth Energy, together covering 94.7% of this market.

What does this mean?

New entrants into the licensed electricity market would essentially be fighting for a slice of the medium to large business market, which only covered ~11,727 customers at last count (or 1% of the total electricity customers). 

According to the report, as at 30 June 2020 there were 13 licensed retailers to supply electricity in this space.  Ostensibly they were all seeking to gain these customers, with only three of them successfully dominating the market.

Perhaps this limiting factor for market share has contributed to lack of new applicants for retail authorisation / licensing. In the 2020-21 period there were no new electricity licences granted in WA[1], compared to 15 approved + 9 under review by the AER during the same period[2]

** taken from the2020/21 ERA Annual Data Report. 

There are of course exemptions to obtaining an electricity retail licence (for example, supply via embedded networks) and some retailers choose to go down this path.  These exemptions will be covered in a separate article.

Application Process

Despite these challenges, should a retailer wish to enter into the WA market sell electricity, they must apply for a licence with the Economic Regulation Authority (‘ERA’). 

The WA application process has many similar requirements to other jurisdictions, in that comprehensive evidence regarding financial capability, corporate information, technical ability etc must be provided.

However, there are some unique aspects to the WA process, particularly around costs.  Indicative figures are provided where available, but further specifics should be sought prior to application.  Additional potential costs include:

  • (Prior to application) applicant must enter into an agreement with Western Power to use the ETAC infrastructure to connect to the network – costs dependant on retail scenario.
  • Financial and technical assessment of application – ~$5,000 dependent on complexity. Unlike some other jurisdictions, the ERA engages a financial / technical consultant to assist with reviewing the application, and there are additional costs associated with producing licence maps and gazettal of notices.  These costs are borne by the applicant.  The ERA can provide an estimate on request, but it is not binding. 
  • Annual licence fee (ongoing) – $3,416 at time of this article.
  • Standing charge (ongoing) – amount based on number of customers.  Further information about standing charges can be found in Reg 7 Economic Regulation Authority (Licensing Funding) Regulations 2014 (WA)
  • Performance audits (ongoing) – ~$10,000 – $15,000.  The first will occur 2 years after licence approval.

[1] ERA Annual Report 2020-21 (p 20): https://www.erawa.com.au/cproot/22155/2/Economic-Regulation-Authority—Annual-Report-202021—Final-WEB.PDF

[2] AER Annual Report (p 34): https://www.aer.gov.au/system/files/ACCC-and-AER-Annual-Report-2020-21.pdf

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