22 May 2008
Perth Energy has struck a breakthrough deal with Verve Energy to buy power from the State generator to supply contestable customers. The deal is worth over $30 million per year to Verve Energy for the next 5 years.
Perth Energy is an independent electricity retailer catering for contestable customers of all sizes, including "small use customers" with less than 160MWh in annual consumption. It has been in operation for 8 years and contributed significantly to the reform of the electricity industry.
Verve Energy Managing Director Shirley In't Veld said that the deal was good for Verve Energy, good for Perth Energy and good for the electricity market. Completion of this mutually beneficial contract will deliver significant benefits to all parties. It also provides the opportunity for Verve Energy to continue the efficient operation of its power stations.
"Being able to sell additional energy directly to Perth Energy offers us an appropriate wholesale margin and the opportunity to continue the efficient operation of our plant".
Perth Energy CEO Ky Cao said the State's electricity market reforms had succeeded in attracting new private sector investment in power generation in the last 3 years which had generated spirited competition.
However, competition in the retail market has not matched the result in generation. Most new generation capacity is taken up by the incumbent dominant retailers, Synergy and Alinta, or singularly large loads like the Boddington gold mine. For small to medium enterprise customers, competition has been more slow to develop as independent retailers do not have their own substantial power sources, he said. This deal with Verve Energy boosts competition.
Mr Cao said Perth Energy has pioneered renewable energy supply to the fledgling contestable market in the early years of market contestability through buying landfill gas generated power and selling this energy to deregulated customers.
"In the last several years, Perth Energy has expanded its power sources and been developing a gas fired power station in Kwinana under its wholly owned subsidiary Western Energy Pty Ltd. This 120MW plant will be delivered to the market in 2010.
"The Verve Energy deal will complement Perth Energy's current power sources and the Western Energy plant.
It consolidates Perth Energy as the independent supplier of choice in the market to ensure retail competition is here to stay, while offering Verve Energy another commercial outlet for its power. As Ms In't Veld said, 'good for Verve and good for the market'." Mr Cao said.
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