Adelaide Tuesday May 23, 2017

Coober Pedy power deal will keep prices "competitive": ARENA

Local

The Australian Renewable Energy Agency insists competition among suppliers is enough to keep Coober Pedy’s energy prices down, despite warnings a $192 million contract to supply electricity to the town will cost $85 million more than it should.

Bension Siebert @Bension1

Tuesday May 23, 2017

Tuesday May 23, 2017 Comments

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In February, InDaily revealed an independent consultant’s warnings that the power supply deal – partly funded by ARENA and signed off by Coober Pedy Council last year – was executed with “minimal probity”, and that a failure to go to tender could cost residents and businesses millions.

Several councillors now say they regret signing it.

According to advice from a consultant engineer, the deal for a hybrid renewable system for the off-grid outback town opens the taxpayer to financial risk because the State Government subsidises the town’s power prices.

Local Government Minister Geoff Brock has threatened to sack the council – which has been at odds with the Government over the deal – citing “long-standing financial issues”.

But ARENA Chief Financial Officer Ian Kay told a Senate Estimates committee this morning that competition among suppliers to the corporation behind the project – Energy Developments Ltd (EDL) – would keep power prices down.

Kay said because of competition among suppliers to the company, “we were confident that the price was in a range [that was] competitive”.

He said ARENA, which bears part of the responsibility for the decision to go ahead with the deal, was not part of negotiations between the council and EDL over power prices.

“Those were not negotiations that we were part of,” he told the committee.

ARENA CEO Ivor Frischknecht said “the normal process” was followed to assess the power deal.

“I have a high degree of confidence that in this case the normal process was followed,” he said.

“We found this project to be of high merit.”

Kay added that “all of our projects are subjected to an extensive funding agreement” and that most of the ARENA funding for the power project had been spent.

“Call it 70 per cent – I’m not aware of the exact [figure],” he said.