Competition now making an impact [16may06]

THE retail energy market in SA is "vibrant", with 10 companies marketing and selling electricity to 750,000 consumers and another five providing competition for 350,000 gas customers, the chairman and chief executive of South Australia's Essential Services Commission says.Patrick Walsh says at the end of January, 383,000 electricity customers, or 51 per cent, and 151,000 gas users, or 41 per cent, had switched to market contracts in search of lower energy bills.
This was a sign competition in the energy industry was working, he said.
The Commission sets retail prices for "standing contracts" offered by AGL for power and Origin for gas, but competition in the market determines the rest.
The Commission also regulates SA's electricity and gas industries, ports, the Tarcoola-Darwin and intrastate railways and some water functions.
But Dr Walsh admits the imminent creation of a national energy regulatory framework makes the future role of his Commission unclear.
A new Australian Energy Market Commission has been set up to make the rules and an Australian Energy Regulator established to implement them.
SA is scheduled to hand over its responsibility for electricity and gas distribution economic regulation on January 1 next year and retail regulation on January 1, 2008.
The Ministerial Council on Energy, of which State Energy Minister Pat Conlon is a member, meets again this Friday, after which the industry expects clarification of how the transfer of powers is to proceed.
Dr Walsh said he expected the two bodies would wish to retain a strong presence in Adelaide, with experienced local staff who "understood the issues and the people at a grassroots level".
In the meantime, Dr Walsh has key projects on the go, including a five-year review of monopoly gas distributor Envestra's price regime, for which a final decision is due in August.
At the request of Mr Conlon, he has also been investigating ETSA's response to the January heatwave - the worst in 66 years - which left up to 50,000 Adelaide homes and businesses without power in 40C plus temperatures. A draft report is expected to be released publicly early next month.
Mr Conlon warned ETSA it could be liable for fines of up to $1 million if Dr Walsh finds the blackouts were a result of any breach of regulatory obligations.
As a senior Treasury bureaucrat in the late 1990s, Dr Walsh worked on a new regulatory regime for the electricity industry. In 2000, he joined the body he helped to create - the SA Independent Industry Regulator - as its licensing and performance monitoring director.
Today, he is chairman and chief executive of its successor, the Essential Services Commission, a position he obtained in October after acting in the role for six months following the departure of inaugural chair, Lew Owens.