Report 15

Pilbara Underground Power Project

Auditor General’s Overview

Replacing above ground power poles and wires with an underground system makes the network safer and more reliable, and improves social amenity. Moving power distribution underground is not new in WA — the State Underground Power Program has been running for almost 20 years.

The Pilbara Underground Power Project (PUPP) started in 2009 as a $130 million project to underground power in Karratha, South Hedland, Roebourne and Onslow where the above ground network is exposed to cyclones and other severe weather. Using a combination of Royalties for Regions and local government funding, PUPP planned to complete all four towns in three years, a different approach to the more gradual statewide program. PUPP has not gone as planned. Instead of completion in 2012, it will now be 2018 and will cost the state and local governments well over $100 million more than budgeted.

The majority of the problems on PUPP have occurred in Karratha, where residents will have to wait longer and pay more than they expected. The City of Karratha’s share of total funding has remained at 25 per cent, half that normally required under these state-local government projects. However, the dollar amount has gone up substantially, understandably influencing local views on the project.

The explanation of why PUPP did not go as planned is a familiar one. Unrealistic estimates and inadequate early planning, coupled with governance and project management inadequately matched to risk, led to overruns and delays. It is disappointing to have to report this story again.

But importantly, the project is now on a more stable footing. To reduce risk, implementation now involves smaller parcels of work done over a longer time frame. Changes have also been made to program management and oversight. This is encouraging and helps to reassure taxpayers and ratepayers that there should be no further surprises.

Page last updated: August 12, 2015

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