ELECTRICITY (RENEWABLE ENERGY PRICE) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 28 October 2010.)

The Hon. S.W. KEY (Ashford) (11:09): I rise on behalf of the government to oppose this bill. The member for MacKillop's intention is to restore the amount paid by electricity retailers to solar customers to a rate previously received. The feed-in scheme works by rewarding small customers who install eligible solar photovoltaic systems with a legislated amount of 44¢ per kilowatt for electricity fed back into the grid. This amount is funded through distribution charges levied by ETSA Utilities on all of its grid-connected customers. There is now in excess of 25 megawatts of installed capacity of grid-connected small solar photovoltaic units in South Australia.

Some retailers offer a top-up payment of between 6¢ and 8¢ per kilowatt for electricity remitted to the grid, which is not recovered from all electricity customers. No-one disputes that the power remitted by owners of solar panels back to the grid has a value to retailers.

The government does not support the bill because it has two fundamental weaknesses which the member for MacKillop has simply repeated from his identical bill in the last parliament. First, the member for MacKillop mistakenly believes he is obliging retailers to pay for the electricity they are receiving from solar photovoltaic customers exporting to the grid. In fact, his bill places no obligation on retailers.

The bill attempts to increase the current feed-in tariff of 44¢ by a rate set at the default contract price. The distributor, ETSA Utilities, is obliged to pay this amount, not the retailers. Additional cost is then passed through to all electricity consumers.

Secondly, the member for MacKillop assumes that a fair retail rate includes all components such as network charges (equating to around 45 per cent of the default contract price), retail margin, retail costs and administrative costs, in addition to the energy price.

The government believes that the standing contract price regulator, the Essential Services Commission of South Australia (ESCOSA), is better placed than the opposition to determine a minimum fair retailer rate for the value of the solar electricity exported to the grid. For this reason, the government proposes to go further than the feed-in review's final report recommendations and will be seeking parliament to legislate for ESCOSA to make such a determination which will oblige retailers who choose to contract with solar customers to pay for a minimum retailer rate for the power they receive from solar panels.

The house would be aware of the Premier's announcement of the government's response to the feed-in review of 31 August 2010, delivered in his keynote address on South Australia's Leadership Within a Carbon Constrained Economy at the Committee for Economic Development of Australia's Leaders Series. The Premier announced that the government proposes to enhance the reward for owners of small-scale solar photovoltaic panels by lifting the feed-in tariff from 44¢ to 54¢ per kilowatt. This will apply to all solar customers, both new and existing, and will reduce the payback period of solar photovoltaic systems.

To strike the right balance between the availability of the scheme and the overall cost to all electricity customers, the government proposes to close the scheme to new connections when an installed capacity of 60 megawatts is reached. The government will table its own comprehensive legislative amendments to the Electricity Act 1996.

The feed-in scheme remains an important mechanism to encourage the contribution of small-scale renewable generation to South Australia's Strategic Plan target of 20 per cent of renewable energy produced and consumed by 2014. This government has also set a longer term renewable energy target of 33 per cent of the state's energy production by 2020, which is likely to be met by large-scale renewable generation. As of February 2011, South Australia has a total renewable generation capacity of more than 1,060 megawatts. The bulk of this installed capacity (1,018 megawatts) is supplied by wind.

On a final note, honourable members would be interested to know that the feed-in review final report found that the South Australian feed-in scheme has been successful, implemented well and can be measured against a number of criteria, including installed capacity, exported energy, ease of implementation and operation, and customer complaints. The government, for all these reasons, does not support the bill, which it believes will weaken the integrity of the scheme.

The Hon. I.F. EVANS: As a point of clarification, Madam Speaker, can someone from the opposition speak on behalf of the member for MacKillop and close the debate as he is not here, or does the member for MacKillop need to be here? I am sure that he would want to put it to a vote given that everyone has spoken.

The SPEAKER: The normal process is that we have the member here to close the debate and, if he wishes, give him the courtesy to respond. If you are absolutely certain that he would want the debate closed, we do not need to have him here, I guess. You are absolutely certain that we do not need to give him that courtesy? However, just have a little think about it for a minute.

The Hon. I.F. EVANS: I am advised that he is happy for it to be adjourned.

Debate adjourned on motion of Mrs Geraghty.