Bills

National Electricity (South Australia) (Australian Energy Regulator - Wholesale Market Monitoring) Amendment Bill

Second Reading

Adjourned debate on second reading (resumed on motion).

Mr BELL (Mount Gambier) (16:03): According to a Deloitte Access Economics study, South Australian solar and wind generation capacity per head of population is already more than three times that of any other state and territory. I am a supporter of renewable energy; however, you also have to acknowledge the reality that you need base load power. People want electricity when the wind is not blowing or the sun might not be shining. That is one of the problems with solar and wind generation—it is intermittent. Covering this intermittence is expensive in terms of idling stand-by plants, and that is one of the problems.

Another problem we are going to face, which nobody has really started thinking about or looking at, is the lifespan of wind turbines. A report that I saw indicates that a lifespan of these wind turbines could be 25 to 30 years. The issue is being raised that in America, where they are starting to hit their lifespan, nobody has thought about how you decommission them—what you do with the parts, what parts can be modified or re-used—and I think that is an area we will need to start thinking about as wind turbines hit their life expectancy and the issues related to that.

The other issue is that of people disconnecting from the grid. If we start going headlong into battery storage or storage capacity, what is going to happen to the market as more people disconnect from the grid? What is going to happen to the people of lower socioeconomic means who do not have solar on their roof or who are not able to access other renewable sources? People are storing more of the electricity they generate at their place of generation for reuse.

I am really worried that the costs of poles and wires is going to be borne by fewer of the population and, therefore, if you passed year 8 economics, you should derive from that that the cost is going to go up. Again, the most vulnerable in our community, the old person down the end of the street who is the only one still connected to the grid, will probably be paying higher rates for his or her electricity.

A couple of other points that I want to make are about how there seems to be this delusion that not having coal-fired electricity from South Australia is somehow a great thing, but I ask the Treasurer where do the Victorians generate their electricity from? Lo and behold, in part it is from coal which we then bring in through an interconnector at Heywood. Of course, there is a 15 per cent loss on that electricity that gets brought across the distance from where it is generated in Victoria to South Australia. If you really think about it, they are burning 15 per cent more to generate the electricity that we use in South Australia.

I support this bill and the aim of the bill in providing additional powers to the Australian Energy Regulator to collect and publish data necessary to benchmark the performance of electricity and gas network service providers, to clarify the AER's functions and powers in respect of compulsory powers to collect information, performance, reporting function, including annual benchmarking reports and the publication of information, and of course enabling to obtain that data solely for benchmarking reports which is currently restricted under legislation, and also impose an up-front obligation on service providers to make an express claim of confidentiality when submitting the information and to provide justification at the time without which otherwise information can be made public. With those final comments, I commend the bill to the house.

Mr PENGILLY (Finniss) (16:09): I will make a small contribution to this debate. As has been indicated by our side of the house, we will be supporting both pieces of legislation. It is important to recognise that the information, benchmarking and whatnot are all part and parcel of the great Australian electricity experiment which seems to be in something of a conundrum at the moment. I might add that I have in my electorate, at Starfish Hill, the first wind power turbines in the state, which were opened by former premier Mike Rann of blessed memory, who has suddenly become an instant expert on renewable energy again.

The member for Mount Gambier raised the issue of the expiry date of these turbines. From memory, they went in in about the early 2000s (I cannot remember the exact date), but they were supposed to have a 20 to 25-year lifespan. The house may or may not be aware that when these things do go—and we have already lost one through a fire, after which it doubled up and fell over—they have 20 tonnes of concrete on the bottom of them, so there is going to be a huge requirement to remediate should the towers go out of commission, become outdated or if new towers need a firmer foundation.

I am not quite sure what will happen, but we take some pride in having that wind farm down there. We are good proponents of renewable energy in my electorate. Indeed, we have some innovative people. Mike Davidson from Victor Harbor came up with wind turbines for homes some years ago and there is a large investment in solar: solar power and solar cells. We ourselves have solar hot water, for example. I would like to go to all solar to get off the grid, but storage is the problem at the moment.

Storage is the problem that the state has; it is the base load power production that is being talked about, as opposed to the storage capacity of renewable energy. You just cannot store either solar or wind energy to the needs required. I think there is a future in wave attenuators; in fact, I am jolly sure of it. Some years ago, in another capacity as mayor, I got Professor Brian Kirk from Flinders University, who was around at that time, to come and speak about wave attenuators, and I think they have developed quite a bit further from then.

My view is that a place like Backstairs Passage has enormous tidal movements, as do the top of the gulfs. I think there is a capacity to use wave attenuators, which of course run 24 hours a day as the tide ebbs and flows a couple of times a day. I think that is the way of the future for South Australia. Personally, I would stick in a nuclear reactor. I am a nuclear power advocate, along with a number of others in here, and I think in the future that is the way to go. This is very much a personal view: I would like to see a nuclear reactor and our selling power to the Eastern States rather than getting power from the Eastern States.

The recent blackout was a real wake-up call to South Australia. Although there has been a lot of if-ing and but-ing and toing and froing, the people who actually need more information on this and want to know where we are going are the poor old consumers of electricity in South Australia, whether they be businesses, households or whatever. They are all over the place and I am sure other members in this place get constant streams of complaints about the price of electricity, how they can afford to pay their power bill, whether they own the place, rent the place or whatever.

I will not, but I could give you names of people who are disconnected from the power because they simply cannot pay the bill. People in my electorate are surviving on candles because they do not have electricity, so it is something of an interesting exercise. I spoke recently in the house about the issue that I had in my electorate office on Kangaroo Island when the power went out, only to find it had been disconnected because the bill had not been paid for 6½ years, which was extraordinary. It was not the fault of the government or the electorate office. That is by the by, but the good people of South Australia want to know how on earth they can pay these power bills that are going through the roof.

Interestingly enough, when we did have the major blackout in South Australia a couple of weeks ago, I know of only a couple of places that had power, apart from the new Royal Adelaide Hospital, which was a Yes Minister triumph in that you had a brand new hospital with no-one in it fully lit up by its own generator. God knows what that cost to run with the generators.

The places that did not go out were the APY lands, where the power is generated near Umuwa, which had power right through, and my electorate of Kangaroo Island, which lost power only briefly. I pay full tribute to SA Power Networks over there, who had a fair idea of what was coming and organised themselves. They had generators put in some years ago, and they kept the show running, which was great. Former minister Pat Conlon and I had discussions some years ago about the national electricity regulator, when he would not put in another cable. The old cable is still going—

The Hon. A. Koutsantonis: We've got a new cable coming.

Mr PENGILLY: Yes, I know that, minister, I am fully aware of that. I will take credit for it; you put it in. Minister Conlon and I were at that stage quite adamant that the cable needed to be replaced. He said that we needed to get rid of the national electricity regulator and, sure enough, that happened. It is interesting that the only lights that kept the show going were on the APY, which has 2½ thousand-odd people, and KI, which has about 4½ thousand people, plus a few road houses around the place and the odd business that had its own generator. It is really a conundrum for South Australia. People are particularly cranky, and after what happened a couple of weeks ago they are even more cranky.

I am not sure that these bills are going to help, but it needs to be said that, if these changes bring more things to fruition and we somehow get an answer to this electricity problem, South Australia will be a whole lot better off. The disasters that were perpetrated on Port Pirie and Port Augusta in particular were really bad news for South Australia and sent out all the wrong messages. I do not think we need to go back over what was in the newspapers, the cartoons, and whatnot. If it helps, the opposition in this state is more than happy to assist the government in getting this legislation through.

I will finish by talking about the power blackout on the Fleurieu. The dairy farming industry was hit particularly hard by this. There is a dairy farmer who has their own cheese factory and retail outlet. They could not milk their cows for 22 hours, and they had to throw out the entire contents of their fridge.

Everything went out, so they had nothing whatsoever for their retail outlet. There is nothing to aid them with that. It may sound a bit agricultural, but once you stop milking cows for 22 hours you tend to get into a hell of a mess because the cows dry themselves off. Fortunately, the power came back on.

The vast majority of the dairy industry cannot afford to put in the generators required to provide power during an outage. It is hideously expensive, and it has caused major problems. The very fact that animals are also put under stress by this is not good. Minister, I cannot really blame you for the power blackout, as much as I would like to, but you must have had a part in it, I am sure.

Mr Treloar interjecting:

Mr PENGILLY: Well, we will blame him. With those words, I endorse the legislation and look forward to its speedy passage.

Mr WINGARD (Mitchell) (16:18): I also rise today to speak on the National Electricity (South Australia) (Australian Energy Regulator—Wholesale Market Monitoring) Amendment Bill. Like the member for Stuart, who before me spoke very eloquently (I will speak only for a few minutes), I have some issues that I think need to be addressed. A lot of people in my electorate have contacted me as well.

In the wake of the blackout on 28 September, which shut down the entire state—a blackout of the entire state—I have bumped into a number of people who have come across to South Australia from Sydney, Queensland and Victoria. They were staggered that our state blacked out. It is the first thing they mentioned to us. The damage done to our reputation and our industry should not be overlooked; it is highly alarming.

The Treasurer—who is, of course, the energy minister as well—will be known as the blackout minister. That is what he has presided over, and that is what we have here in South Australia: a state that was blacked out. I spoke to one businessperson, a very powerful businessperson from Belgium—

Members interjecting:

Mr WINGARD: Yes, a very big player in the market. The problem was—

Members interjecting:

The DEPUTY SPEAKER: Order!

Mr WINGARD: —there was no power in South Australia because the Treasurer failed to deliver.

The DEPUTY SPEAKER: Order! Stop the clock. When everyone can be quiet, we will start again.

Mr WINGARD: This person I was speaking to—

The DEPUTY SPEAKER: Hang on, I do not know if everyone is going to be quiet. Start the clock.

Mr WINGARD: Thank you, Deputy Speaker. The person I was speaking of, who runs quite extensive businesses in the Northern Hemisphere and in South Australia as well, was very upset that he was being attacked, pretty much, by people criticising the fact that he was doing business in South Australia because we had become the blackout state. Questions were being asked along the lines of whether we were like India, or why South Australia—or Australia, in fact—would have a state that would black out, and it really is damaging. It might have been cute and nice for people to have candlelit dinners—

Members interjecting:

The DEPUTY SPEAKER: Stop the clock. The member for Elder has to be called to order, and I would not want to do anything to the Treasurer, but I might have to later. Start again.

Mr WINGARD: Thank you, Deputy Speaker. It is interesting that the Treasurer heckles from that side, perhaps he does not take this seriously.

The DEPUTY SPEAKER: No need, no, back on task.

Mr WINGARD: Perhaps he does not take the matter seriously, but I know that on our side of the chamber we certainly do. You cannot afford to have a state blacked out; it really is a big setback.

I mentioned that people may have enjoyed having a candlelit dinner on the night, and it might have been quite cute to play some games with the kids without television on. I know people appreciated that. This has done damage right throughout Australia and internationally. Businesses that are looking to move here are looking at our state and saying, 'We know South Australia. It's on the map for being the blackout state.' We have to look at why this happened.

We have talked about analogies in the house, when your toaster or your kettle goes a bit dodgy: you plug it in, and it shorts out the power point that it is plugged into. The entire room might black out but not, generally, the whole house. You can go out and flick the switch, and the safety switch will get the house lights and power back on again.

What does not happen when you plug in a dodgy appliance is that it does not shut down the whole house. It does not shut down the whole street, or the whole suburb, and it does not shut down the whole city, but that is what happened in our case on 28 September. When we look at why that happened, and we look at our electricity supply, we know there is an issue with base load power supply in South Australia. We know there was a storm. No-one is denying that. We know that electricity towers went over, and we can have a debate about what was right or wrong with that.

With that going down, we have to ask: why did the whole state shut down? Unfortunately, the system that the Treasurer has presided over that we have in South Australia gives us no base load power to get the system going, or keep the system up and running. So, we turned to wind power, and being an intermittent source of electricity, when that was shut down, either because it was blowing too hard or not blowing enough—probably in this case blowing too hard—we lost that wind power and had to go to the Heywood interconnector.

That was a major concern because the drawing of electricity out of the Heywood interconnector, of course, shut down the whole system. The draw was too great, the interconnector could not provide the electricity needed and, as a result, South Australia went into blackout. We know the jobs that will be lost as a result of this, and we know the damage that it has done to South Australia's reputation, internationally and also nationally. Now businesses are saying, 'Are we going to have this problem again in the future? How can we guarantee that it is not going to happen?'

Interestingly, questions were asked again of the Treasurer today in question time about what other options there were, whether he has had a look at the Port Augusta power station because we know that since that went offline power prices have skyrocketed in South Australia. We know that amongst businesses. He refused to outline whether or not keeping that Port Augusta power station open a little bit longer could have helped alleviate this problem with base load power, given that the Port Augusta power station can provide reliable base load power.

It is not a matter of debating about whether or not this is a renewables or non-renewables issue. I am very happy to support renewable energy, but it is about the consistency that the Treasurer, the energy minister, knows we need here in South Australia to provide consistent supply of electricity. Security of electricity in South Australia is also vitally important for businesses to survive.

We know, of course, that thousands of jobs will be lost in the Upper Spencer Gulf and the outback as a result of power being suspended for two weeks—and over on the West Coast, too, it was quite disturbing to see how long the power was off over there. I know that big losses were experienced over there not only by the local supermarket but also by industry and the like. Again, the Treasurer was asked today to put a figure on that, and I think he is still working on that. He is going to get back to the house with an answer, which will be appreciated.

Again, the problem, and the concern for me, is the damage that was done with us being known as the 'blackout state'. The Treasurer has presided over this. He was the one who was at the wheel when this happened, and it is to do with the mix of energy that we have here in South Australia.

Alarming as well is the fact that there were warnings put forward. I mentioned the rise in price on the market as soon as it was announced that the Port Augusta power station was closing. The prices pretty much doubled overnight. That was a warning. Then groups like Deloitte Access Economics, the Australian Energy Market Operator (AEMO) and Frontier Economics also put forward concerns to the government to say, 'This is going to have an impact on base load power supply and also potentially on the price of electricity.'

We must note at this point that South Australia pays not only the highest price for electricity in South Australia but also it has the most unreliable energy supply. You do not need to be big in business or big in industry to know that to have that situation is not beneficial for growing industry in South Australia, so it is a very big concern.

I mentioned those groups that said to the government, 'We've got worries, we've got concerns about what is going on here. Maybe we could do a different phase-out, a different model, a different role in how we close down the Port Augusta power station and move across to renewable energies', which, of course, we know we cannot store and it has that intermittency in its supply. But the government did not listen and as a result we had that major blackout because we did not have that base load power supply.

We know that was also a key factor in switching back on the power. Once South Australia had been blacked out we needed that base load power to refire the generators, and that made it quite difficult for South Australia. They are some of the concerns that have been raised to me. I have had a number of people contact my office and talk about the issue, too, and they have grave concerns as well.

I should run through a few of them because this is what people are saying in my electorate, in my area, about how disappointed they are with the state, how disappointed they are to be known as the 'blackout state' and the concerns around not being able to access petrol through bowsers because there was no electricity. This is right across the metropolitan city of Adelaide and pretty much the entire State of South Australia—no communication warnings to say that mobile phone networks will go down, loss of production in retail businesses and farming, no traffic lights, no banking access to cash and the list goes on.

Life support equipment in hospitals was also affected. Sadly, in my electorate, one of my constituents had some embryos at the Flinders Medical Centre and, of course, with the power going out there they lost those embryos, which is incredibly sad in terms of the human side of what has gone on here. Those sorts of things really do hit home. One of my constituents talked about the fact that there were storms. They admit that there were storms. No-one is hiding from that fact, and our electricity towers did get hit by lightning. We understand all that, but, as they point out, this is 2016 and not the 1950s. For a tower to go down and the whole state to be blacked out really is unacceptable.

Again, I have made a couple of points, but they are made again by people who have contacted my office about the unreliability of our power supply and the fact that we have such high prices here in South Australia. We know that it is potentially only going to get worse because the power supply and the history of what has happened has made it harder. I have spoken to a number of businesses about the fact that we had that blackout.

The Treasurer often talks about businesses negotiating a new deal with their supply company, and I have spoken to a number of businesses that say they have been in the throes of negotiating a supply deal for power, and since the blackout those deals have been taken off the table. I know of a number of companies that have had their prices rise exorbitantly in recent times. They have got operations here and they have got operations in Queensland. I think they said that the price for electricity here in South Australia has risen by 70 per cent and in Queensland it has gone up by 14 per cent; so, a massive hit to their business.

When they are looking at expanding their businesses and potentially growing their businesses and they have an operation here and an operation interstate, those prices are forcing them to say, 'Hey, let's have a look at the interstate operation. Let's invest in the interstate operation, not the South Australian operation.' That is alarming. We need to be growing jobs for our young people and we need to be growing jobs for the next generation. This situation that has been created by the Treasurer is a real setback for South Australia and really is very disappointing. We need to get that better base load supply to ensure businesses can continue to operate.

I talked about businesses having two operations, one here and one interstate. Western Australia and South Australia was another comparison that was done. A business I visited recently said that they do 20 per cent more production in WA than they do here in South Australia, yet their energy bill here is 20 per cent higher. Again, the Treasurer says to go out and negotiate a new contract. These people have gone to power suppliers and asked, 'What contract can I have? What can you offer?' They have also spoken to a number of brokers, who put forward offers to them and, lo and behold, after the statewide blackout they went back and asked, 'Can we do these deals?' and they were told, 'No, those deals are off the table.' They are having trouble getting brokers to get companies to give them a contract, so that is causing great concern as well.

These are very serious issues that I think need to be addressed and if, in any way, this bill can go towards addressing them, I support it. I have my concerns, as do a lot of people in my electorate and a lot of businesses across South Australia. Power supply is incredibly important to grow industries here in South Australia, and the security and the price must be addressed to help businesses in this state.

After 14 years of this Labor government, I know that people are left scratching their heads wondering how and when South Australia is going to get off the bottom of the table when it comes to jobs and economic prosperity. This state really has a lot of work to do, and I look forward to doing my part to help get South Australia off the bottom of the table, but being known as the blackout state really does not help.

Mr WHETSTONE (Chaffey) (16:31): I, too, make a brief contribution on the National Electricity (South Australia) (Australian Energy Regulator—Wholesale Market Monitoring) Amendment Bill. Much has been said about power prices in this place and much has been said about the blackout South Australia endured a few weeks ago, but what really concerns me, and what really concerns the businesses of South Australia, is that we have this continual blame game: 'It's not our fault. It's not my fault. It was the Liberals' fault back when the sale of ETSA happened.'

Let's be really clear about this: the sale of ETSA happened 17 years ago. The current state government has been watching with bated breath how we are going to move into this new renewable energy phase. Yes, I think the world is looking to be in a healthier place by using renewable energy, but this is about the transition that this state has not prepared itself for. It is almost premature, Treasurer. What has happened is that you got in front of yourself before you could actually deal with the real issues here at hand—that is, that we are going to strive for more renewables and a cleaner energy source. But we cannot do it overnight or over one year.

I am sure that the Treasurer (Minister for Energy) knew that, without some support for the Port Augusta power station, we were going to see a huge spike in stand-by power and a huge spike in power prices, particularly when the wind did not blow and the sun was not shining. Every business in South Australia is paying the price. Investors who looks to come to South Australia are shaking their head and walking away. Large businesses particularly in my electorate, and many large businesses in South Australia, are looking at ways that they can transition away from making capital expenditure in South Australia and doing it in other states. I know that two very large businesses in South Australia are doing exactly that as we speak.

Broadacre horticulture is looking to transition into New South Wales, and meat processors have large power bills. They do not want large power bills and so they have gone down the road and found efficiencies in their business models, but they still cannot compete because they can directly collate the evidence, the power usage here in South Australia. They have the same type of business model in New South Wales and Victoria and, again, they are making a direct comparison between operating here and operating there and it is chalk and cheese. It is a real issue.

We heard from the Premier that we had this storm event, that we had lightning hits and that we had wind. We have had a lot of storms, we have had a lot of lightning hits, we have had a lot of wind and we have had a lot of tornadoes. It was not the tornadoes that ripped the towers out of the ground: it was the harmonics of the lines. In my previous life auditing towers, powerlines and all sorts of telecommunication lines, we saw cable sway in wind, and that pulls towers over. When we hear that the tornado ripped the towers out of the ground, where are the qualifications to say that that actually happened? Where are the qualifications to say that we have had an audit on those towers? When was the last audit done on those towers?

When was the last cable change done on those towers? When that last cable change was done, was that line upgraded? Is it a heavier gauge line? Were the towers upgraded? Have the towers been audited to say that they needed to be upgraded, that they needed to have more gussets and that they needed to have more steelwork to make them more compliant with today's regulations, whether dealing with bigger and worse storms? Those are the questions that should have been answered. I have been on work crews that have done upgrades on those towers.

They have come out with all the excuses under the sun. Was any homework done on towers and cables to help negate that power spine falling over? When one tower falls, it creates an effect on the next tower, on the next tower and on the next tower, and they just pull one another over. There is no question about that, but again it was clear that the harmonic effect, the cable sway, pulled one tower and then moved on and pulled over a number of other cables. I can say that with some authority because I have been in the industry and I have been a part of the audit process when it comes to the remediation of those towers, but that is something that is privately owned and something that they will have had to have dealt with; whether they have dealt with it, that evidence remains to be brought out into the open.

Many parts of South Australia had power outages, and Adelaide was brought back on line in some areas some six hours later, but what about the reputation of the businesses that took almost two weeks to have power fully installed back to their regions and centres? The member for Finniss stated that Kangaroo Island was able to get through reasonably unscathed from the power outage. Last week, I visited the APY lands and they were able to get through without power outages because they have their own power generation.

Food-producing areas are highly reliant on power, particularly lifting water and pumping water into highly pressurised pipes and putting it into micro-irrigation. A lot of transition has happened in the last five or maybe 10 years, and we have seen that, through water efficiency gains brought on by droughts, those businesses that have invested many hundreds of thousands of dollars, and in some cases millions of dollars, to make their properties more efficient are using more power because to be more water efficient you have to be more power hungry, putting more pressure into pipes.

Nowadays, we are looking at a lot of crops that you do not water just on the weekends and do not water just at night: you water when the plant needs it, and that is normally when we have peak power demand. A lot of those businesses are paying peak power because they have to: they are not paying peak power because they want to. Particularly in the Riverland region, the Central Irrigation Trust and their customers have been hit with a forecast increase of $1.3 million in their power bill over the next 12 months, let alone that what they encountered over the last 12 months was somewhere in the vicinity of $1 million.

They are going to be paying 30 per cent more for their electricity in the 2016-17 year than they did in the previous year. Every year, there seems to be a 30 per cent increase in power prices in South Australia. Why are we seeing large horticulture and large investment schemes going elsewhere? Why are we seeing those jobs going elsewhere? Why are we seeing investment going elsewhere? It really is sad to see. The increase will see CIT operating at a loss of about half a million dollars in the 2016-17 financial year instead of with an expected budget surplus of about $120,000. If power costs remain at the current level in 2017-18, the trust would have to increase its water consumption prices for irrigators by about 15 to 30 per cent.

Again, it is another cost being passed on to consumers, passed on to employers, passed on to businesses, passed on to exporters and taken away from the state's bottom line. CIT and the Riverland irrigators using electricity is not something new: they pump water. Those high electricity prices are really negating all their efficiency gains when better utilising water and doing more with less. In essence, what we have seen is a lack of planning for a transition phase going away from fossil fuels into our renewables sector.

Port Augusta could have been given some form of recognition that they are playing an important part while we develop the R&D needed for battery storage or for power storage, whether we look at how solar thermal will be of benefit. It is very expensive, yes, but businesses, companies and the world are looking to find better ways to utilise green power. They are looking at ways in which they can transition away from fossil fuel, but we are not seeing kneejerk reactions right around the world. What we are seeing is a kneejerk reaction in South Australia.

Recently, I went to some of my outlying South Australian horticultural properties that have businesses both here and in Victoria. As a matter of fact, when you look at what they are paying here, you can throw a rock across the border and they are paying half. At peak demand, they are paying half the cost of power in Victoria. That is something people talk about when they want to invest. They are looking to invest elsewhere, and that really is quite a sad indictment on South Australia.

Through that storm and through the increased power prices, South Australia was made a laughing-stock. Other governments in this country, state and federal government, looked at the situation South Australia found itself in and they laughed. They laughed to see that we have a Third World state in this country. South Australia has no lights, it has no power, it has no impetus to put in a mechanism to try to entice businesses to come to make it a better state because it has a government that did not plan. It did not plan for a transition from fossil fuel to green energy.

Our largest employers in South Australia are also our highest electricity consumers, and they have been particularly hard-hit, and this has been pretty widely documented and reported. BHP, Nyrstar, OZ Minerals, Thomas Foods International—what a great family business we have here—some great employers are looking at ways in which they can improve their efficiencies elsewhere because they can see the writing on the wall in South Australia that the price of power is just so expensive.

Members of the Central Irrigation Trust (CIT), which is one of the largest water pumpers in this state, are also scratching their heads and wondering exactly what they are going to do. Almond processors in South Australia are now investing tens of millions of dollars in New South Wales because of the cost of power. They are large power consumers, using power for processing, cracking and packaging. These businesses are very power hungry and they are now looking at moving interstate. These skyrocketing electricity prices are hurting South Australian businesses and, as I said, they are also driving away investment. Manufacturing Australia Chairman, Mark Chellew, said:

The lack of stability and high power prices in South Australia are threatening both existing and future manufacturing investment in a state already reeling from automotive closures…

The more expensive and unstable our energy system, the more difficult it is to make the economic case for building new manufacturing plants, or making necessary re-investment in existing plants [in South Australia].

Previously, Bank SA's Trends economic bulletin also raised concerns about the cost and reliability of our electricity system. They state:

…South Australia runs some of the risks around electricity supplies and prices that have recently been evident in Tasmania.

In effect, the state's energy security may prove to be at risk of vulnerability as greater variable renewable energy, combined with mothballing of traditional generation capacity, place strain on the state's electricity infrastructure.

I really hope this bill could assist with any power-related issues in South Australia. Continuing the blame game of a previous Liberal government for the privatisation of South Australia's power is wearing a bit thin. You can only bash a dead carpet for so long and get so much dirt out of it. The Treasurer continues to go down that line, and it is wearing thin with people because they know that this tired government is creating an economic disaster in South Australia. They have been in government for 15 years. You cannot look back 15 years and continue to blame something that happened then for the sake of blaming someone else.

Today, the Treasurer blamed the federal government. We see the federal government getting blamed at every corner. What I would like to say is that, if this amendment bill does have some impact and creates some stimulus towards helping South Australia's high power prices, helping us with our power security and helping us gain a reputation that we can be great economic driver in the national scene, I support it.

Mr TRELOAR (Flinders) (16:48): I, too, rise to contribute to the National Electricity (South Australia) (Australia Energy Regulator—Wholesale Market Monitoring) Amendment Bill. It is quite a mouthful and quite a bill. It is a very important bill. South Australia is the lead parliament for national energy legislation. The proposed bill was developed by the COAG Energy Council's Energy Working Group in response to issues raised by the Australian Energy Market Commission, which is the national governing body for our energy markets.

This bill has been packaged together along with the next bill as part of a national electricity law and national gas law amendment package. In 2013, the AEMC identified vulnerabilities in the national electricity market, resulting in potential barriers to entry into the wholesale electricity market for generators and structural factors that may be limiting competition. As a result, the COAG Energy Council agreed to introduce an explicit wholesale marketing monitoring function for the AER to identify these issues and propose possible solutions. That is why we are pleased to support this bill; in fact, it is very timely. There have been many contributions to this bill, many from this side of the house.

The Hon. A. Koutsantonis interjecting:

Mr TRELOAR: I haven't finished yet, Treasurer.

The DEPUTY SPEAKER: He hasn't finished yet.

Mr TRELOAR: On the back of the blackout two weeks ago, I think everybody is taking the opportunity to highlight some of the issues, around not just price but also reliability, within the state's power network. As a result of the blackout two weeks ago, which really brought these issues to a head, more so than this well thought out bill has, it has become patently obvious that our current system is failing to deliver reliable power at a reasonable price. This bill essentially is around monitoring of price and allowing prices to be competitively set.

We have high prices in South Australia, and I am going to relate a few examples in a moment that I have heard about firsthand, and they have been attributed to a number of things, including the high proportion of renewables within our system. We are looking at about 41 per cent renewable electricity into our grid, and that is much higher than any other state. It has certainly been suggested that that has been part of it, although it is not entirely responsible. We are getting our base load power from Victoria which is a long way away. I note the member for MacKillop talked about the losses that occur when power is transmitted over a long distance, and those losses add to the cost.

The Treasurer is very keen to talk about the privatisation that occurred almost 20 years ago now, and we would have to say in response to that that Victoria, too, is a privatised system and was privatised at about the same time, yet they do not seem to be suffering the same high prices or lack of reliability as we are. I have spent a lot of time in the last two weeks fielding calls about the blackout that occurred right around the state, but particularly on Eyre Peninsula, and people are wondering why and how it occurred to the extent it did.

It was patently obvious that Eyre Peninsula was on the end of the line, particularly at Port Lincoln, where it took four days for power to be restored. It was disappointing to me, and many others and probably the Treasurer as well, that a company by the name of Synergen has a contract with ElectraNet to provide power through generation to Port Lincoln should they be required, and they were not able to do that. There are some very serious questions to be asked about that. I think if they had been able to fulfil their contract, the extent of the losses and the community angst would not be anywhere near as much is what it is.

However, on the back of that, I was talking to some local businesses about the losses that were incurred over that period of two to five days, particularly with regard to communications. I want to talk to you about a fish processor who operates a factory in Port Lincoln. They highlighted to me some weeks ago, not just since the power blackout but some weeks ago, their concerns about the price of power in this state. It is a fish processor, not a big operation; they process some pilchards, sardines and salmon and so forth, the things that come—

The Hon. A. Koutsantonis: Important work.

Mr TRELOAR: Important work—into the largest fishing port in the Southern Hemisphere, which just happens to be in the beautiful city of Port Lincoln in the electorate of Flinders. Their total power bill costs them $128,000 a year. Of that, the breakdown is $50,000 worth of electricity; $70,000 apparently goes to SA Power Networks, and another $8,000 goes in renewable fees which are put onto the account. So, it costs this relatively medium-size business $128,000.

I was also talking to a cafe owner in Port Lincoln who is paying 7¢ a kilowatt at the moment. For a cafe, his annual power bill is $42,000. He is selling coffee and a few meals. He cannot get a contract for next year yet but he has been told that when he does it will be 15¢. His power bill will double. These are concerns that people are bringing to me, and every other member in this place, I am sure. These are the things we are hoping this legislation will address.

It is very important that we do address this issue because members on this side in particular talk about the lack of competitiveness that exists in South Australia. The member for Hammond was scoffed at by the other side for suggesting that, if he was looking at setting up a new business, he may well look to Victoria. The reality is that the cost of power is much, much less in Victoria, so it is a more attractive business proposition.

The blackout from the other week highlighted that we are totally reliant on electricity for everything. It has been suggested that we live in 2016, not 1960, and it is important that we have our power supply. In fact, our power supply is more critical now than it ever was in 1960. When the power went off on Eyre Peninsula for a period of days, everything went out: not just the household appliances but all the businesses, all the coolrooms, all the fridges, all the mobile phone towers, all the landlines, all the internet and all the EFTPOS. Eyre Peninsula ground to a halt and it highlighted how critical security of supply is to the way we live our modern lives and the way we run our businesses.

I would like to talk about communications on Eyre Peninsula and on Lower Eyre Peninsula in particular where the outage lasted longer. When communications failed completely, it was really difficult to source good and reliable information in regard to the blackout and when the power supply might come back on. In speaking to some of the local media, both ABC regional and the local commercial radio station that were trying to sit in on some of the strategy meetings around the blackout, they were actually escorted out of those meetings. I find that disappointing because they were there as part of their community service obligations, and both those radio stations take those community service obligations very seriously. They were not able to pass on in a timely fashion good and reliable information.

The government quickly set up recovery centres in both Port Lincoln and Ceduna. People were able to go there to get basic supplies, such as tea and coffee, etc., but to also make an application for hardship and need reimbursements or claims. I understand there were about 6,000 claims made in the Port Lincoln district and almost 1,000 claims made in Ceduna. This is all well and good, but once again the rules seem to be changing day by day. It was a bit of a moving feast and, once again, the people who were manning those recovery centres did not always have good, reliable and timely information to pass on to the people they were dealing with.

The difficulty with having recovery centres at Ceduna and Port Lincoln is that there is 400 kilometres in between and that there are a lot of people in between who were not able to physically arrive at those destinations and lodge their claims, but those issues are being worked through. I am not quite sure how claims are assessed or judged on need and hardship, but that is being taken care of.

It has long been recognised on Eyre Peninsula that we are at absolute capacity with regard to incoming transmission. The ElectraNet system extends from Whyalla to Yadnarie, then across to Wudinna, and there is another spur line down to Port Lincoln. The draw on that line is at absolute capacity. I know that for some years now ElectraNet has been talking about upgrading that line and increasing the capacity of the power transmission into Port Lincoln. Unless that upgrade occurs, we will not have the new industries that we are looking at and hoping for.

The Treasurer would be well aware of the proposition at Warramboo, the mine proposal that has been put up by Iron Road. There are a few hurdles that they have to jump yet, including finance, but one thing that could be a show stopper—and I have this on reasonable authority—is the lack of power into Eyre Peninsula. There will need to be a resolution of that, and a significant amount of power will be required not just for that project but for any similar sort of project to get up and running, but they cannot do it at the moment.

I am a supporter of renewable energy. I think there is nothing more majestic than a wind farm. We have two wind farms on Eyre Peninsula. The first wind farm is on the south-west coast at Cathedral Rocks west of Port Lincoln; it is within sight of Port Lincoln. The other one is in the Cleve hills. We only have two wind farms, but I would love to have more.

To all these precious peri-urbans who complain about wind farms I say: send them over to the West Coast because we would welcome them. Once again, we have a very good wind resource, but we do not have the ability or capacity to transmit that out of the regions and into the national grid. Once again, it is the capacity of the transmission line that comes into question. I know that there is a concept plan going around, and many people are talking about how we better incorporate this state into the national grid, and how we better incorporate even Eyre Peninsula into the national grid, and be a net contributor, rather than drawing on the national grid.

There are options for that with regard to wind power as storage improves and renewables are better able to provide base load over time, but it is not going to happen tomorrow. In the meantime, we are wrestling with this inability to provide enough base load power reliably enough and priced affordably enough to be of benefit to businesses and households in South Australia. People have been taking things into their own hands. Those who have the resources put in place their own generation capacity. Lots of small farms, houses and small businesses had their own generators running while we were blacked out. I understand that not one generator could be bought from any of the retail outlets in Port Lincoln within a day or two of the power going off.

It is not unusual: it is the second time that the power has been off in six weeks, and for much of Eyre Peninsula it is the third, fourth and fifth time in a year, so questions about reliability and price remain constant. I look forward to the passage of the bill, and I look forward to this legislation assisting South Australia to become competitive in the way our electricity is supplied and priced.

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (17:02): I thank the member for Flinders on what I think was an articulate, well-reasoned, sensible argument about what occurred in his electorate, the impacts of the storm on his electorate, his knowledge of the bill and the research he has done. He prepared himself when he came to the parliament, he read the bill, he knew what it was about and he spoke on it. I have to say that I should not have been surprised because I know him, but what a pleasant surprise, as opposed to the ill-informed rants by the speakers prior to him. Let us start with Mr Harmonics—

Mr Whetstone interjecting:

The DEPUTY SPEAKER: Order!

The Hon. A. KOUTSANTONIS: The Australian Energy Market Operator is full of technical experts, and these technical experts speak to the people on the ground who run the assets, the assets of course that are owned by the private sector. The private sector owns these assets. They are regulated by many laws that are governed by this house. This house is, thankfully, the lead legislator for the nation. Every piece of electricity law that passes here affects the entire country. It is done by cooperation through the COAG Energy Council and its operator. The shadow trade minister said that he knows without looking what occurred. Do not worry about the engineers reports: he used to audit these very towers. These very towers he audited personally.

Mr Whetstone: No, read the Hansard.

The DEPUTY SPEAKER: The member for Chaffey is on his second warning and unfortunately—

The Hon. A. KOUTSANTONIS: Well, if that is not what he said, I apologise.

The DEPUTY SPEAKER: Order! Just a minute, I am on my feet. You are on two warnings. I will have to send you out of the chamber if you open your mouth again. The Treasurer is entitled to be heard in silence.

The Hon. A. KOUTSANTONIS: Apparently, what brought our system network down was a harmonic event through the swaying of the lines and the towers. There is an issue about maintenance, there is an issue there about the quality of the lines, how often they are upgraded, how often they are monitored. He implied that this was somehow the government's responsibility, not the private operators who the—

Mr Whetstone: Read the Hansard.

The DEPUTY SPEAKER: Member for Chaffey, leave the chamber. You are on your second warning—30 minutes.

Mr Whetstone: I don't have to listen to the misquote the whole time I am out.

The DEPUTY SPEAKER: You will listen to it, I am sure.

Mr Whetstone: No, I will not.

The DEPUTY SPEAKER: Order, member for Chaffey!

The honourable member for Chaffey having withdrawn from the chamber:

The Hon. A. KOUTSANTONIS: The misinformation that the member for Chaffey was giving to the chamber was that it was harmonics. I went out on site and saw one of these towers—not the ones that had collapsed over but one that had been concertinaed down. I spoke to one of the engineers, and I posted his description of what had occurred. He claimed that in his 20 or 30 years' experience he had never seen that occur before. He had seen towers topple over through this domino effect people had spoken of, but what he claims occurred at that site was that he thought that was where the tornado had actually touched down and concertinaed down the tower.

I suppose what occurs with these events when people see images is that a little bit of knowledge is dangerous. There are some people who think they can tell us exactly what occurred by simply looking at a photograph or hearing anecdotal evidence. It is one thing for it to be in the front bar of a pub, but it is another thing for it to be at a sub-branch meeting, or when you are speaking to people in the street, or at a street corner meeting or in a shopping centre.

When you are in the Parliament of South Australia, and you stand up using parliamentary privilege and then expound to the house, the parliament, the country and the state what it is that caused these issues, and you say a ridiculous thing like the member for Chaffey said, it makes you really wonder how well serviced the people of Chaffey are with that type of intemperate, ignorant and illogical rant to the parliament. I have to say that the member for Flinders put his colleague to shame. That is not what his intention was. He was not trying to embarrass his colleague—I am sure they are good friends, and he does not want to embarrass him.

Compare the contributions of the two; one was about the social impact on his electorate of the generators failing—absolutely the government shares his concerns. Quite frankly, there were a lot of questions to answer of ElectraNet, and this parliament, and the regulator about why they were not able to operate when they were required. They pay considerable amounts of money to be available when they are there, and they make some very nice tidy profits when they do operate in times of higher cost. When the state needed them they were not there, and I think you will find that they will put their hands up pretty quickly and say that they were at risk.

The deputy leader came in and made some comments, reading from board papers, saying that the AER has not called for these changes to the act and that these changes are simply because of my boasting outside of a COAG energy meeting. I have here the submission that the Australian Energy Regulator made to the Australian Energy Market Commission's report, which was its final determination of potential generator market power. They released this, of course, on 26 April 2013. Within this report is the genesis, of course, of the legislation we are considering today.

I have the AER submission, which the Deputy Leader of the Opposition, after her extensive research into the bill, did not find. This is the extent of the research by the Deputy Leader of the Opposition who, might I add, has no shadow portfolio responsibilities, none whatsoever, yet you will note that the shadow minister did not raise the AER support or otherwise of this.

The shadow minister did not get up and start reading out board pronouncements on the operation of the AER, but the Deputy Leader of the Opposition intimated to the house and to the parliament that the AER has not called for these extra powers, so why would they bother? I refer to a submission dated 18 March 2016 by Paula Conboy, the AER chair. It states:

Dear Energy Working Group members,

AER submission on National Electricity Law and National Gas Law Amendment Package.

It is publicly available, and members can get it. She goes through what the bill proposes, and members can find it. On the second page, in the fourth paragraph down Ms Conboy states, 'We support these principles and a number of the proposed drafting changes.'

The Deputy Leader of the Opposition's entire contribution, and her extensive research into the bill, was that the AER was not particularly interested in any of these changes. Therefore, they were not particularly interested, and it was just me attempting to sugar coat what was a crisis in the electricity market by bringing about these changes, rather than what the member for Flinders said—that is, that this was part of a COAG process after an inquiry by the Australian Energy Market Commission, that a working group was established, that we established principles and the COAG agreed on this legislation. It was reasoned and articulate as to why this occurred, rather than, quite frankly, an ill-prepared speech simply attempting to try to embarrass the government. What has actually occurred is that I think the Deputy Leader of the Opposition has humiliated herself by making remarks that, quite frankly, are not accurate.

Then we go to the contribution of the member for Mitchell which, quite frankly, was an incoherent rant making absolutely no sense, trying to link the blackout to intermittent energy, trying to link the storm event with South Australia's energy mix. I have said repeatedly that it is a fair debate for the opposition to say to the government, 'We are concerned about the penetration of renewable energy into the South Australian grid. We would like to know how the government is managing that integration. Intermittent energy has particular qualities that can cause instability. How do you manage that?' But it is quite separate from the storm event. Let's be clear about this.

The Australian Energy Market Operator's report found that wind generation separated—perhaps when it should not have—not because of its intermittent nature but because it did not ride through a voltage event. I am advised that that could be because of software, it could be because of a safety mechanism within those generators. It is not unique to all wind generation because some wind generators did ride through those voltage events and were able to power on through.

Then what occurred was that, because of the drop-off of that generation, the system went into shutdown and, rather than overload the interconnector—which the member for Mitchell quite eloquently described in his very best sporting analogy as 'trying to drag it across'—the interconnector shut down. The reason it shut down was to protect the system so that we could have restart relatively quickly.

I remind members opposite, as I said the day after the system blacked, that the East Coast of the United States went out for nearly 38 hours—the financial centre of the world. New York was out. There was rioting in the streets, there was looting, and law and order was not maintained by city officials, yet in South Australia, because of the mechanisms we have in place, we were able to be back on again from a system black within about four hours. If only the East Coast of the United States could have had the same record.

Then we were told by the genius member for Mitchell that this has done substantial reputational damage to South Australia, that we are now the 'blackout state'. Well, I would like to make a comparison between the South Australian economy, or any other economy perhaps the member for Mitchell would like to quote, where there has been a system black. He likes to compare it to India. How about I compare it to the financial centre of the world, New York State and New York City, and how they compared and how they got their power on. Find me anyone else in the world who would make the outlandish comparison between a Third World nation and New York City. There is no-one, because members, like the member for Mitchell and the member for Chaffey, are not here to make a considered contribution to the debate. What they are here to do is to try to assign blame.

Why do they want to assign blame? For fear that the public will finally realise that the reason that we do not control our assets, the reason that we are not investing as much as we would have had we owned these assets into the National Electricity Market to have more base load generation in the market, is that members opposite sold it to the private sector, and the private sector does what the private sector does best: they return capital to their shareholders and they work generation that they have and the assets that they have harder than the government would.

If the government owned these assets, there would be a continual program of reinvestment, as you are seeing in SA Water, as you are seeing in other state-owned facilities—a continuing investment to maintain reliability. But of course we do not have that because we are at the mercy of the markets and all that we have now is regulatory power, which is what this bill is about. This bill is about trying to unpick that market power.

Why do these generators have market power, why do they exert market power, why do we suspect that they do it? Because they were given a monopoly through the privatisation. All roads lead back to Rome. So, you cannot just ignore it and say that it was 17 years ago or 20 years ago. Why is it that generators can exercise monopoly power in the Australian energy market? Why is it?

Mr van Holst Pellekaan interjecting:

The Hon. A. KOUTSANTONIS: We will get to Victoria in a moment, but why is it that in South Australia they can exercise monopoly power? Have a look at the MOU torn up by the former Olsen government into the interconnection into New South Wales. Why did they tear up that interconnection MOU? It was for a very simple reason: they tore it up because they wanted to create more market power in South Australia, to make our generators more profitable, so that when they sold them they would get a bigger return. It is pure and simple.

Mr van Holst Pellekaan interjecting:

The DEPUTY SPEAKER: Order! The member for Stuart actually only has a call to order.

The Hon. A. KOUTSANTONIS: No, he has been quite reasonable. He asked a very good question: how many generators are in this monopoly? Monopolies can be markets, and markets are governed by rules, and rules are set by governments, and governments that own their assets and attempt to privatise these assets make damn sure that the rules that are set in place by the government maintain that monopoly power.

If you want to make changes to the National Electricity Law and you want to make changes to the national electricity system, you need the unanimous consent of all the states. I point out to the shadow minister that the New South Wales government is currently privatising their assets, so of course they going to agree to laws that demonopolise their generation that will give them a lower return on their asset sales. Of course they will not—their treasuries will not allow them, the same way that the Treasury in this state, when the Olsen government was privatising its assets, would not allow any national rules to interfere with the sale of these assets and maximising their sale price.

What did they do? They constructed a national electricity market that benefited them, the people who were selling the assets. We were told there was immense risk and, 'We have to sell these assets.' The immense risk and the monopoly power we were trying to flee through privatisation in fact was cemented by privatisation. While the shadow minister throws his arms up in the air, perhaps he should read the debate of the many members who came here and never spoke to the bill once. Rather than getting frustrated, he can sit quietly and listen. What he can listen to is the tale of tragedy a former government has imposed on this state with a contract that will last over a hundred years.

Ms Digance: Shame on them! Shame!

The DEPUTY SPEAKER: Order!

The Hon. A. KOUTSANTONIS: You can see, Deputy Speaker, the Hon. Tom Playford looking down on the parliament, looking at his paternal party and thinking, 'What have they done?' Tom Playford nationalised the electricity system because it was not delivering for the people of South Australia. It was not giving us effective, cheap base load energy. It was not giving us energy that was reliable and it was not allowing industry to grow, so he bought it and he invested in it. There is a reason they called the Playford power station Playford—because he wanted it built.

They went out and found coal and mined for coal, then they went out to the Cooper Basin and found gas, and they built a pipeline to Adelaide and we had Torrens Island. We had gas-fired generation and we had coal-fired generation. Then, the heirs and successors of Tom Playford decided, 'This electricity caper is all too much for us. We are going to sell it.'

They did not do what Geoff Kennett did when he sold his assets, that is, ensure that he retired debt with the proceeds, which is what the former government did not do—in fact, they increased debt after they sold ETSA. Then, rather than make sure that they left South Australians in a competitive energy market with interconnection to New South Wales and Victoria and our own in situ generation, what did they do? They consigned us to one interconnector and they tore up an MOU for another.

Do you know why Victoria has cheaper power? They have access to Snowy Hydro and they have access to Tassie hydro. They are interconnected into three jurisdictions plus their own source power as well. If only South Australia had that type of interconnection, if only we had that type of competition. But members opposite—not the ones who are here now—who voted for the privatisation of ETSA consigned us to monopoly generation and now they dare complain about the outcomes of their decisions to create a monopoly market.

Here we are today, attempting to get every jurisdiction to agree to break up that monopoly and that market power, and the only way we are able to do it is because we have a Labor government in Queensland and because the New South Wales government is selling its assets and its generation. They do not want to leave their constituents behind. They do not want to break up the market because the contracts are done. So, here we are. That is why we are here today.

But of course the members opposite who argue that it was something completely the opposite would never admit to the South Australian public that that privatisation was a mistake. I say to the people in the Liberal Party who are here today that they owe nothing to the Olsen government. They owe absolutely nothing. It is in the same way that I owe nothing to John Bannon and I owe nothing to the people who subjected this state to the State Bank disaster—not a thing. I condemn them.

I joined the Labor Party and swore to myself that I would never let that occur again. I am the Treasurer of this state and I will make sure that we never allow a financial institution to do that kind of damage to the people in this state. The very least the opposition could do today is disavow themselves of what the Olsen government did. They should disavow themselves of the decisions of the past, but they cannot. They just cannot do it, so instead they come in here and make up excuses and, quite frankly, almost mislead the parliament.

The member for Mitchell said that a business in my electorate had contract offers torn up after the blackout. I am going to check that because he told the parliament in this debate that energy companies were offering contracts, through a broker no less, who, the moment the blackout occurred, said those offers no longer stood. That is something we can check and we will see if the member for Mitchell is accurate in his description of what occurred because he held a press conference at that business and I know where that business is. Let's wait and see whether or not he was actually telling us the facts or whether it is really that all of these people are rushing up to the member for Mitchell and telling him their concerns just randomly. I want to thank the opposition as well on the other hand because—

Mr van Holst Pellekaan interjecting:

The Hon. A. KOUTSANTONIS: Exactly. You could not tell from the contributions.

Mr van Holst Pellekaan: You could tell from mine.

The Hon. A. KOUTSANTONIS: I could tell from yours and that of the member for Flinders, who, again, I think made an excellent contribution and is a credit to his community.

This is an important piece of work and this is an important piece of legislation and it is the nation's business, not just South Australia's, because this will allow us to actually delve behind the deals and give the Australian Energy Regulator the teeth it needs to find out what is going on. In my experience in politics, the best disinfectant is sunshine. The more you know about what is going on, the better the outcomes. I have very severe suspicions about market power and I will give you an example.

We are being told by a number of energy retailers that prices had to go up by 12 per cent for residents and we are told by the spot market that electricity has to be more expensive across the forward curve, but, of course, if you look at the spot market today, you get a very different outcome. The spot market today has actually been very low and people right now are paying $43 a megawatt hour and previously it was minus $45.

But these companies will have the South Australian public believe that the cost of operating their plants from last year has gone up by 30, 40 or 50 per cent and that the offers that they have to make into the market have to be more expensive. We know what the price of gas is. We have seen their enterprise agreements. We know their running costs. What has changed? Members opposite would say, 'Northern.' I would say, 'Market power.'

Market power needs to be smashed into a thousand pieces because I believe in a competitive National Electricity Market. I believe that we are seeing market power being exercised right now. The great thing about what is occurring today in the parliament, for those of us who were actually paying attention to the bill, is that this bill will give us the opportunity to find out what is going on, and when we find out what is going on, and if we find out that companies are exercising unfair market power in the National Electricity Market, there will be consequences.

The consequences are not in this bill. The consequences are those to come because imagine the indignation of the Australian public if they find out that certain generators are mothballing in an attempt to increase power prices, or that some people are deliberately not offering contracts when they can supply to try to affect power prices, or that people are doing one bilateral trade publicly to set a gas price, but secretly purchasing it at something else or, even worse, contracting with a company, trading the gas deliberately and then buying it back more expensively to try to charge more for electricity. All of these things will be found out, and once we know what they are, we can act, but I suspect it is going on.

I suspect that there is market power and I suspect that there is not a person in this chamber who does not want to see it stamped out. That is why I want to thank Josh Frydenberg, Liberal minister Anthony Roberts and minister Groom from Tasmania, all from Liberal governments, who unanimously agreed with this approach to smash up market power and find out what the root cause is. Unfortunately, we have had to wait a bit of time to get there, but we are here now. I commend the bill to the house.

Bill read a second time.

Committee Stage

In committee.

Clause 1 passed.

Clause 2.

Mr VAN HOLST PELLEKAAN: Just for the record, I would like to make it clear to the house that the deputy leader, while not the shadow minister for energy, is the shadow minister for state development and so is certainly entitled to ask any questions, do any research or contribute in any way that she would like to. I have a very straightforward question on commencement. The act will come into operation on a date fixed by proclamation. Treasurer, do you have an intention for when you would like this to come into force?

The Hon. A. KOUTSANTONIS: It is a very good question. I would like it to start immediately, but there are some inconsistencies between the commonwealth statute and the COAG-agreed legislation. An inconsistency has been identified between the wholesale marketing monitoring amendment bill and the Competition and Consumer Act 2010, which is commonwealth legislation. The wholesale marketing monitoring bill prohibits the Australian Energy Regulator from disclosing confidential supply information, while section 44AAF of the CCA allows the Australian Energy Regulator to use and disclose information in performing its functions.

Changes will need to be made to the CCA. These provisions provide the AER with the power to obtain confidential information from generators, also referred to as wholesale electricity suppliers. Section 44AAF of the CCA, which is the commonwealth act, requires amendment to ensure it is consistent with the COAG Energy Council's policy to maintain the confidentiality of information and maintain investor confidence in the regulatory framework.

I understand that the commonwealth government is acting to rectify this matter and that it is just a matter of procedure. I also understand that the Labor states will be lobbying the Labor opposition to support these amendments, and if the Labor opposition and the LNP support the bill, there should be a speedy passage through the parliament. I cannot speak for the Australian parliament.

Clause passed.

Clauses 3 to 5 passed.

Clause 6.

Mr VAN HOLST PELLEKAAN: Minister, this really goes to the heart of it; this is about competition. Have you done, or has your department done, any modelling at all to indicate what sort of savings you expect? I do not mean to the cent, because I understand that this is all about trying to understand whether there is room for improved competition, but do you have any modelling at all, or any understanding of the scale of the savings that could be made in the generation market which would then flow through to consumers?

The Hon. A. KOUTSANTONIS: The bill does not provide for more competition: this bill provides powers for monitoring. The reason we want to monitor is that if we do find aspects of market power that are being exercised either unfairly or in breach of any statute about fair competition, then we can act. The long, slow and laborious process of COAG energy reform is one step at a time. First, let's find out what is actually going on. Once we find out what is going on, then we can act. If we find out through the monitoring that market power is occurring, then we can start looking at a solution.

Mr VAN HOLST PELLEKAAN: I understand that, but your speech made it very clear that you believe there is going to be room for significantly improved competition once this monitoring is done. Has there been any modelling at all done in the department to even estimate what the savings to consumers might be?

The Hon. A. KOUTSANTONIS: I do not think we have that capability in-house. I have heard the opposition say, 'Our $30 million energy group,' many times. Most of that money is spent on the RAES program, which is for making sure regional and remote areas have energy, so we do not have the capability of that detailed modelling. This is a COAG energy reform. There is fact sheet by the Australian Energy Market Commission, which is publicly available, to which I refer the member. It states:

The Commission considers that, taking account of all the evidence, it is not clear as to whether substantial market power has existed in the South Australian region to date. However, the Commission's analysis has demonstrated that South Australia may have some characteristics that may make it different from other NEM regions and potentially more prone to inhibiting efficient investment and promoting the likelihood of substantial market power.

The commission, through its work, has found some evidence but like any modelling, until we actually take a look under the hood, we will not know. That is why it is important. This is basically stage 1. The long answer is the one I just gave you, and the short answer is: no, we have not done any modelling.

Mr VAN HOLST PELLEKAAN: This extra responsibility that is going to the AER will obviously include some extra work. Has the extra cost of that work—the labour and the effort that will go into doing this monitoring and reporting—been identified? How will that flow through to South Australians?

The Hon. A. KOUTSANTONIS: It will be funded by commonwealth Treasury.

Mr VAN HOLST PELLEKAAN: So there is no flow-through at all to South Australians?

The Hon. A. KOUTSANTONIS: I would like the AER to be a separate body like ESCOSA and to charge the people that they regulate a fee, and remain completely independent. The commonwealth and the states are in negotiation about that. My understanding is that currently the AER is an arm of the ACCC, which is an arm of The Treasury. They submit budgets like every other agency and they are funded through commonwealth Treasury. I am not aware of any provision in any of the bills to recover any of the costs of this extra function. To be clear, I would like the AER to be completely independent of government and charge the industry for its regulation, the same way ESCOSA does, but that has not yet occurred.

Clause passed.

Clause 7.

Mr VAN HOLST PELLEKAAN: My question is about the transitional provisions related to the AER and the reporting time. Under section 7(1), it says the first report prepared under this section must relate to the period of two years and the second report to four years, so that it can grow and get up to that five-year period. When will these reports be published after the close of those periods? When the AER provide them to COAG and the states, and when will they be made public?

The Hon. A. KOUTSANTONIS: I have been advised it is a matter for the AER when they want to report, but what we are setting is the data range for them to collect the information. The data range will be a two-year period, but as they are collecting information, the AER are free to make interim reports as often as they like. It is a matter for them. The bill is not prescriptive about when they should. I am advised that the minimum period is two years. If you read the bill, it provides:

(1) Despite section 18C(3)—

(a) the first report prepared under section 18C(2)(a) must relate to the period of 2 years after the relevant day

That is the period of time that they are assessing, so they can do it for a month of that two-year period and report immediately. It is a matter for them, and we want to give the AER as much scope as possible. The minimum is every two years, but I suspect that, given how I know the AER, if they uncover something, they will be reporting much more frequently.

Mr VAN HOLST PELLEKAAN: How soon after those reports are provided to COAG will the public get access to them?

The Hon. A. KOUTSANTONIS: When any report is made by the AER, it must publish it on its website, in reference to this market power.

Mr VAN HOLST PELLEKAAN: So, it doesn't go to the government first?

The Hon. A. KOUTSANTONIS: No, it must publish it on the website.

Clause passed.

Title passed.

Bill reported without amendment.

Third Reading

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (17:36): I move:

That this bill be now read a third time.

Bill read a third time and passed.