Distribution, Gas, LNG, Markets, Projects, Technology

WA Economic Regulation Authority calls to end reservation policy

The recommendation is included in the ERA’s draft microeconomic reform report, which is open for public comment until 9 May, with 31 recommendations aimed at reducing overall costs in the state’s economy and removing barriers to competition.

The draft says gas reservation:

  • Increases reliance on subsidised gas prices;
  • Discourages efficiency and technological innovation;
  • Perpetuates the existence of industries that may not have a comparative advantage in WA at the expense of investment in other industries; and,
  • Discourages investment in gas projects, reducing the availability of gas for future domestic or international use.

ERA Chairman Lyndon Rowe said “With reforms like the ones recommended in this report, there are many winners and, while their individual gains are small, their number means a significant economy-wide benefit.

“In contrast, there are often only relatively few losers and their losses may be individually significant, but they are the ones who have benefitted from a degree of protection by existing restrictions on competition.”?

Meanwhile, the Australian Petroleum Production and Exploration Association (APPEA) has welcomed the ERA’s call to remove the reservation policy.

APPEA Chief Operating Officer Western Region Stedman Ellis said “The ERA report has once again confirmed APPEA’s view that WA’s gas reservation policy cannot be justified on the grounds of market failure.

“It is protectionism pure and simple.”?

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