History of the IMO
Towards the end of the last millennium, the Western Australian electricity industry had high prices, no real competition and no choice. Other Australian states were in a similar situation.
In June 2001, the Council of Australian Governments (COAG) recognised that the effective operation of an open and competitive national energy market would contribute to improved economic and environmental performance and deliver benefits to households, small business and industry.
This eventually led to a Commonwealth Agreement known as the ‘Australian Energy Market Agreement 2004’.
In 2001 an Electricity Reform Task Force was established in Western Australia which recommended, amongst other initiatives, a wholesale electricity market and a market governance structure that ultimately led to the establishment of the IMO.
In January 2003, the Western Australian Government embarked on a program of reform to the State’s electricity industry. The vision was to create a competitive electricity market to encourage private sector investment, improve reliability of supply and place downward pressure on prices.
The key components of the new program included:
- the development of a strong and independent regulatory framework including measures to protect smaller customers in the new market (which eventually led to the establishment of the IMO);
- the establishment of a wholesale electricity market;
- the restructure of Western Power into four Government owned entities;
- reduction in the contestability threshold to 50 megawatt hours; and
- the facilitation of sustainable energy options.
In April 2006, the Government owned Western Power Corporation was disaggregated into separate corporate business entities. These entities were:
| Company | Action |
|---|---|
| Verve Energy | responsible for power generation within the South West Interconnected System (SWIS) the area bound by Kalbarri, Kalgoorlie and Albany, |
| Synergy | responsible for the sale of electricity within the SWIS, |
| Western Power | responsible for operating, maintaining and expanding the electrical transmission and distribution network in the SWIS, |
| Horizon Power | the regional business responsible for the generation, transport and sale of electricity in areas outside of the SWIS. |
A core element of the government's electricity reform agenda was the establishment of a Wholesale Electricity Market (WEM) for the South West Interconnected System (SWIS) generally, those in Perth and the south-west. Energy trading commenced in the WEM on 21 September 2006. The market was set up to provide a mechanism for industry participants to trade in electricity.
In anticipation of the WEM the IMO was established on 1 December 2004 to run the market and ensure adequate generation capacity was available each year to meet peak demand. The IMO was to administer and operate the WEM so that genuine competition could exist and grow.
Today the IMO is well established.