STATUTES AMENDMENT (ELECTRICITY AND GAS—PRICE DETERMINATION PERIODS) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 12 May 2010.)

Mr WILLIAMS (MacKillop—Deputy Leader of the Opposition) (15:46): I indicate to the house that I am the lead speaker on behalf of the opposition, and I think I have the minister outnumbered. Notwithstanding that I am the lead speaker, I do not intend to hold the house for very long at all.

The bill before us is small, but not insignificant. It will basically allow the Essential Services Commissioner to make an interim determination under special circumstances where there has been a shift which will cause the need for a new price determination to be made. It provides that price determinations are made on a three year cycle and if a special circumstance exists: one which was not 'predicted, planned or reasonably insured against' at the time of the setting of the previous price determination or an event of a 'magnitude to disturb the fundamental basis of an existing price determination so much as to require a new determination to be made'. This is the definition that I think the minister used in his second reading explanation.

This bill will allow ESCOSA to make an intra-period variation to the existing price determination rather than having to do a complete reset for the next three year cycle. The opposition supports this as it builds new flexibility into the principal act by allowing for an intra-period determination for both electricity and gas pricing. We support that, but I take the opportunity to point out to the house that the Australian Energy Market Commission has put a lot of work into reviewing the effectiveness of competition in electricity and gas retail markets in South Australia. The first final report was issued on 19  September 2008. The second final report (I don't know how you have a first and second final report) was handed down on 18 December 2008.

The first report found that we have a very effective competition in the local market, particularly in electricity and, to a slightly lesser degree but still effective with respect to gas in South Australia. Having found that in the first final report, the AEMC, under the act, was then obliged to go and do a second report to advise the government how to move towards full market deregulation, which has been the recommendation of the AEMC.

The government has had a longstanding position of not accepting the move towards deregulation in energy pricing (gas and electricity), notwithstanding that I understand that something like 70 per cent of electricity consumers in South Australia are on retail contracts for the purchase of electricity. And there is a considerable churn rate—from memory, I think it was something like 14 per cent per annum.

I tend to think that in fact there is significant competition and certainly competition that does not necessarily warrant the time, effort and expense of having ESCOSA do price resets every three years. Notwithstanding that, the government has made its determination and it is not available for me to do other than accept the bill that has been put before us. I note that the opposition will be accepting the bill as it is.

Mr MARSHALL (Norwood) (15:50): I rise to also speak on the Statutes Amendment (Electricity and Gas—Price Determination Periods) Bill 2010. As the deputy leader said, the Liberal parliamentary team is supporting this bill, which provides greater flexibility. South Australia currently has a fully regulated system for pricing of energy, electricity and gas. Currently, price determinations are made for a three-year period.

This bill would allow the regulator, the Essential Services Commission of South Australia (ESCOSA), to determine a special circumstance where a price determination can be made within this three-year period. A special circumstance being deemed to be 'events of a magnitude to disturb the fundamental basis of an existing price determination, so much so as to require a new determination to be made.'

If an unexpected event occurs, ESCOSA will have the power to initiate a review to determine if this event is a special circumstance. Special circumstances will exist if the event was unable to be predicted, planned or reasonably insured against. The current act allows for special circumstances to be determined by ESCOSA, but all flexibility in these determinations is lost as the new determination itself has to be made for a full three-year fixed year period.

Essentially, this bill permits intra-period variations and will allow for special circumstances to be dealt with in a more timely and cost effective way. I support this bill.

The Hon. P.F. CONLON (Elder—Minister for Transport, Minister for Infrastructure, Minister for Energy) (15:52): I thank the opposition for its support. It is, as they say, a way of increasing flexibility so that the entire job does not have to be done if, in these times of some degree of uncertainty about effects on prices, one of those uncertainties is, in fact, realised. I thank the opposition for its support. It appears we will all be going home early because we had set down rather longer, but we do not need the time. Thank you.

Bill read a second time and taken through its remaining stages.

At 15:54 the house adjourned until Tuesday 29 June 2010 at 11:00.