Power grid gets closer [11feb06]

THE viability of establishing a national electricity grid to allow the trading of power between the states will be known by the end of the year.

Prime Minister John Howard and the state premiers ordered the creation of a high-level energy group yesterday to start work on examining the grid proposal.
A national wholesale energy pricing market now exists in Australia, but it has been mooted that each of the separate states abolish their grids.

The Council of Australian Governments meeting in Canberra yesterday found the country's energy market needed to become more efficient and secure.

It has proposed rolling out "smart meters" from next year when pricing could be judged on the time of use.









The meeting agreed to also investigate the current structural issues and introduce clearer pricing signals for energy consumers.

"While Australian enjoy lower electricity and gas prices than much of the developed world," the COAG meeting report said, "and secure energy markets help underpin Australia's industrial base, further reform would yield significant efficiency and energy security benefits."

Treasurer Peter Costello has been a proponent of the national grid as a measure to increase competition between the states. He has previously named it as one of the greatest economic hurdles facing the country.

Mr Costello has argued the move would create cheaper power. But last night Mr Costello refused to comment on the grid's feasibility.

The Energy Reform Implementation Group, created yesterday, is due to report back to COAG on whether a national grid is possible by the end of the year. A separate ministerial council on energy reform is also investigating the viability of a national gas regulatory framework.

The move is part of the government's new economic reform agenda which will rejuvenate the National Competition Policy. It has been pushed by the Bracks government.

The meeting also named six red-tape "hot spots".

A report ordered by the Treasurer from productivity chairman Gary Banks is now under consideration by the Government.

The COAG agreed that each state will review its regulatory requirements on businesses each year.

It named rail safety regulation, occupational health and safety, national trade measurement, chemicals and plastics, development assessment arrangements and building regulation as six key areas.

"COAG agreed that effective regulation is essential to ensure markets operate efficiently," the report said.