Electricity industry

Electricity is produced by generators, distributed through power lines by network operators and sold to consumers by retailers.

The Western Australian Government owns three corporations with active roles in the electricity supply chain.

Privately-owned electricity generators supply almost half of the electricity in the South West electricity market as well as private mining, mineral processing and other operations.

New to Western Australia (Residential customers)

The Economic Regulation Authority has a guide on how energy is supplied to your residence.

In this section

Find out more about the electricity supply chain in Western Australia

  • Generation
  • Networks
  • Retailers
  • Wholesale Electricity Market – how electricity is traded between generators and retailers
  • Renewable energy

Generation

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Generation involves the conversion of a fuel source into electricity. In Western Australia, the majority of electricity is generated using coal and gas, with smaller amounts coming from diesel and renewable sources (wind, solar and landfill gas).

Western Australia’s largest generator is Synergy, owned by the Western Australian Government.  Synergy produced around 50% of large-scale electricity generation in the South West electricity market in 2016.  

Horizon Power owns and operates generation facilities that supply towns located outside of the South West Interconnected System (SWIS). There are also a number of privately owned generation facilities throughout Western Australia.

The Australian Energy Market Operator (AEMO) provides the name and capacities of all registered facilities in the Wholesale Electricity Market, which is the electricity market that covers the South West Interconnected System - http://data.wa.aemo.com.au/#facilities.

The Economic Regulation Authority - provides information about all electricity generation licence holders in Western Australia.

Information on renewable energy resources and facilities in Western Australia is available from the Australian Renewable Energy Mapping Infrastructure (AREMI) project: https://nationalmap.gov.au/renewables/.

Networks

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The Western Australian Government owns Western Power and Horizon Power, which operate the three major electricity networks.

Western Power’s network

Western Power operates the transmission and distribution systems within the South West Interconnected System (SWIS), the biggest electricity network in Western Australia.  The boundary of the SWIS extends to Kalbarri to the north, Albany to the south and Kalgoorlie to the east.

Horizon Power’s network

Horizon Power operates the North West Interconnected System (NWIS) in the Pilbara region, the smaller Esperance network, as well as over 30 discrete networks in regional towns and remote communities.

Privately owned networks

Privately owned electricity transmission and distribution networks mainly service mining operations in the Pilbara.

Network access

The Economic Regulation Authority regulates third party (retailers and large-scale users) access to Western Australia's electricity networks covered by the Electricity Networks Access Code. Currently, the only regulated electricity network is Western Power’s South West Interconnected System.

Retailers

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Under section 7 of the Electricity Industry Act 2004, anyone who sells electricity to a customer for consumption must hold an electricity licence. 

Electricity consumers in Western Australia fall into two general categories: contestable and non-contestable customers. Contestable customers have a choice of electricity retailer, while non-contestable customers do not.

Non-contestable customers

Non-contestable customers are customers within the South West Interconnected System (SWIS) consuming less than or equal to 50 megawatt-hours of electricity a year (an average of 137 units per day).

These customers are supplied by Synergy and pay electricity prices regulated by the Western Australian Government, as determined under electricity by-laws.

Residential households and small businesses usually fall within the non-contestable category.

Contestable customers

Contestable customers are consumers within the SWIS consuming more than 50 megawatt hours of electricity a year (an average of 137 units per day). These include: 

  • small to medium sized businesses; and
  • large businesses

These customers can negotiate the rates they pay with their chosen retailer.

Customers consuming between 50 and 160 megawatt-hours per year can choose to either pay the relevant capped rates offered by Synergy or be supplied by Synergy or another retailer at negotiated tariff rates.

Outside the SWIS, Horizon Power offers regulated tariffs to eligible customers. All customers outside the SWIS are contestable and can choose their retailer.  However, customers should be aware that Horizon Power is currently the only retailer operating in many regional areas.

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Wholesale Electricity Market

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To supply electricity to homes or businesses on the South West Interconnected System (SWIS), retailers must purchase electricity from a generator directly or indirectly through an electricity market. The Wholesale Electricity Market, facilitates wholesale electricity sales within the SWIS between sellers (generators and demand side management facilities) and buyers (retailers and large users).

Wholesale Electricity Market objectives

The objectives of the Wholesale Electricity Market, as in the Electricity Industry Act 2004, are to: 

  • promote the economically efficient, safe and reliable production and supply of electricity and electricity related services in the SWIS;
  • encourage competition among generators and retailers in the SWIS, including by facilitating efficient entry of new competitors;
  • avoid discrimination in that market against particular energy options and technologies, including energy options and technologies such as those that make use of renewable resources or that reduce overall greenhouse gas emissions;
  • minimise the long-term cost of electricity supplied to customers from the SWIS; and
  • encourage the taking of measures to manage the amount of electricity used and when it is used.

The Wholesale Electricity Market is run by the Australian Energy Market Operator. For information on Wholesale Electricity Market structure, market rules and governance arrangements, visit the Australian Energy Market Operator website.

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The Economic Regulation Authority licences electricity operators in Western Australia, including generators, distributors and retailers.

Government electricity corporations

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The Western Australian Government owns and operates three statutory electricity corporations: Western Power, Synergy and Horizon Power. 

The Government established four corporations on 1 April 2006 after the split-up of Western Power Corporation (a government-owned electricity utility that controlled the production, transmission, distribution and retailing of electricity in Western Australia).

Up until 1 January 2014, the generation functions of Synergy were undertaken by a separate corporation, called Verve Energy. 

Governance

Each corporation is governed by a board. The boards are accountable to the Minister for Energy under the various parts of the Electricity Corporations Act 2005. The Minister, supported by the Coordinator of Energy, has various responsibilities under the Act including approving Strategic Development Plans, Statements of Corporate Intent and large contracts.

Copies of the corporations’ Statements of Corporate Intent and quarterly and annual reports are available from their websites.

Regulation and licensing

The Government owned electricity corporations, together with private electricity industry participants, are regulated by the Economic Regulation Authority.

The Economic Regulation Authority is an independent body reporting directly to the Parliament of Western Australia. Among other things, it is responsible for:

  • regulating third party access to Western Power’s electricity network
  • issuing, designing and assessing compliance with electricity licences (generation, transmission, distribution, retail and integrated regional licences).

For further details on the corporations’ regulatory and licensing obligations, visit the Economic Regulation Authority website.

Market participation

Western Power and Synergy are participants in the Wholesale Electricity Market. They must comply with the Wholesale Electricity Market rules.

Related information

Renewable energy

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In Western Australia, renewable energy helps the State meet the community’s long term energy needs, while supporting economic growth. The Western Australian Government continues to support investment in renewable energy to deliver a cleaner energy future for Western Australia.

Renewable energy projects support future energy security, help lower emissions from the energy sector and enables Western Australia to contribute to the Commonwealth Government’s Renewable Energy Target.

In 2016, renewable energy accounted for: 

  • over 13 per cent of all electricity consumed on Western Australia’s main electricity grid, the South West Interconnected System, including electricity consumed by households and businesses producing their own electricity from small-scale solar photovoltaic (PV) systems.
  • about 7 per cent of all electricity consumed in Western Australia. 

Renewable energy penetration in the state’s main electricity grid will continue to increase as households and businesses seek to manage electricity costs through the installation of solar PV systems and liable entities (such as electricity retailers and very large industrial customers) seek to meet their obligations under the Commonwealth Government’s Renewable Energy Target through local projects.

State renewable energy mix 2014/15

Renewable energy mix 2014-15; Wind 62%, Hydro 8%, Solar PV 25% and Biogas 5%
State renewable energy mix 2014/15
Data source: Department of Industry, Innovation and Science – Office of the Chief Economist, 2016 Australian energy statistics update (Table O) 
Page reviewed 17 July 2020