Electricity Policy

Mr BELL (Mount Gambier) (12:40): I move:

That this house notes the government's electricity policies have delivered the highest rate of electricity disconnections, the most customers on hardship programs and the highest average electricity debt per capita in the national energy market.

Let's see if this private member's motion has the same unanimous support as the previous one; somehow I doubt it.

According to statistics from the Australian Energy Regulator, South Australia had the highest proportion of disconnections in the nation. In fact, from January to March more than 2,500 South Australian residential customers were disconnected. This state also has the highest proportion of customers on hardship programs. There is no doubt that many households in South Australia are doing it tough, and I am going to focus on them for a minute and then move on to business and implications for our wider economy.

With summer here—but it will quickly turn back into winter again—the situation that South Australians face, those who are on either hardship programs or who have moved on to disconnection, is truly alarming. It reminds me of a time a number of years ago when I was an attendance officer for the education department and picked up a family every morning and took them to school. They had had their electricity cut off. The difficulty that those young, early primary school kids faced really brought it home to me that when somebody's power or water is cut off it exacerbates and accelerates the spiral down in terms of poverty and, from a parent's point of view, the ways in which they can escape the situation they are in; often, that can lead to substance abuse or other activities.

No running hot water in a house, due to the hot-water service being electric, meant that these kids were having cold showers, if indeed they were having showers at all. McDonald Park Primary School was fantastic in its response: the kids would rock up, a female staff member would organise hot school showers, there would be spare clothes at the school and, whilst the changeover of clothes occurred, the old clothes would be washed.

It is not an easy situation that the state government finds itself in—I understand that. We have rules and regulations around the energy market that limit some of the responses I am sure the state government would like to make in terms of getting power prices down. This is where I think some leadership actually needs to occur, not necessarily in the argy-bargy of this house, but certainly with AEMO and changing some of the regulations or mechanisms the energy market has put in place and getting agreement with other states. Some of those relate to generation of power.

The state government is concerned that if it enters the market as a generator, as a third or fourth provider of power, that can discourage other private investment in that market. I understand that. It is going to be interesting, now that the government has said that they are going to purchase these backup generators, how that is going to play in. In my mind, $110 million to lease generators for 13 months was a very expensive option. Of course, you can argue that when the lights go out across the state, the entire cost to the state will be more than that, but it is $110 million for these generators to sit there for 13 months.

They cannot be turned on to bring the price of power down. Even if it hits its cap of $10,000 per megawatt, these generators cannot be turned on and return a dividend to the state. We pretty much have to sit there and watch the other providers generate pretty sizeable profits when it comes to that. If there is no blackout, these generators are going to sit there for 13 months at a cost of $110 million and not even be turned on. That is $8.5 million every month for the 13 months. It is a very expensive backup option. Again, it takes funds away from other areas.

In terms of now purchasing these backup generators, which will run on diesel, I am led to believe that they will take 80,000 litres of diesel per hour. If that is correct, it is a sizeable amount of diesel going into these generators. I wonder whether the people who actually have an understanding of what 80,000 litres per hour would look like would want to live around the location of those generators at this point in time. After the 13 months, they are going to be taken out and relocated to a more permanent base.

Millions of dollars are being spent on the connection, the site plans for where they are at the moment and running the cables to connect these generators into the grid. It is a huge expense for 13 months to then relocate them somewhere else. I believe that the cost of the purchase is $360 million. We are going to lease them for 13 months at $110 million, and then we are going to purchase them after the 13 months for $360 million. If that is true, it is $470 million for these generators.

The questions I have go back to my original statement. If the rules prevent the government from turning these things on to lower the price of power, then it is not a power plan: it is a blackout plan. It is a blackout plan to prevent blackouts; it will do nothing to drive the price of power down. The only real way of driving the price of power down, in my mind, is to work with AEMO and COAG to get these rules changed so that we can have some autonomy around generating power in this state.

One of the very simple things that could be done would be to talk about bid-in price. To understand the energy market, these companies bid in at a certain price at five-minute intervals, but they know what the demand is. If the state gets close to its demand on what is produced in South Australia, it can very quickly work out that it can bid in at the highest capped rate and make a sizeable amount of profit for its shareholders, but that profit comes at the expense of South Australians, who are paying the price.

They know the system and they can game the system based on the usage versus the capability or capacity in South Australia at that time, and can bid in at certain intervals at a much higher price. Of course, within the five minutes they can withdraw an offer and resubmit it at a higher rate. Again, that allows some gaming of the system to maximise profits. Those rules need to be changed. We need to look at how South Australia, Victoria and Tasmania can work as one part of the energy market and actually start transferring electricity at bid prices equal to that as one jurisdiction.

One of the problems we have is that everyone thinks we have a national energy market, but we do not: we have five separate and individual markets. They come together with certain rules around it, but they are individual in their nature. We need to be looking at options within the rules to get that price of power down so that South Australia does not have the highest number of disconnections or the highest average electricity debt per capita. These are the real things that need to happen.

In terms of $470 million diesel generators, which will be converted to gas, this house needs some assurance and clarity about whether that can actually generate power for South Australia or whether the rules are going to prohibit it, or whether the state government is going to on-sell it to a third or fourth provider so that it can generate electricity and pay the state government a lease or rental fee for those facilities that the people of South Australia have purchased. These are the real questions we should be debating in here. We should be up-front and honest with each other and work together so that the people actually benefit.

At the moment, there are some question marks around the forward prospects of generating electricity in this state, and I am one of the very few who understand that we have to have more generation here. Some of the ideas around getting more generation in South Australia are the right things to do, because that is how you have a competitive market, but you cannot have the state government using taxpayers' money to have a very expensive blackout plan that does not put electricity into the grid to lower the price for everyday South Australians. With those final remarks, I conclude my comments.

The Hon. P. CAICA (Colton) (12:52): I will say from the outset that I think the member for Mount Gambier has said quite a few sensible things. I did not agree with everything he said, but I thought a lot of what he said was pretty sound, and I congratulate him on that—in fact, to the extent that I wish he had not resigned from his party—because their policy would be a lot sounder if they incorporated what he said today. As I said, that is not to say I agree with everything he said, but I certainly think is it a shame he resigned from the Liberal Party. That was his own decision in the face of the support that was being provided by the now leader.

I rise on behalf of the government to respond to this and begin by saying that the state government is acutely aware of the impact the failure of the National Electricity Market has had and continues to have on South Australian energy consumers. Indeed, the member for Mount Gambier himself spoke about that, saying that we do not have a national electricity market; we have several different marketplaces across the nation. I put the reason for there not being a national electricity market squarely at the feet of the federal government, which has shown no leadership in this area in this nation since it has been in government.

That is a horrible and sad thing, but it being a horrible and sad thing has meant that as a state we have had to do things we would not have necessarily had to do if there were an effective and coherent energy marketplace in this country. We know that coal-fired power stations across Australia are shutting down and an absence of a coherent national energy policy has led to underinvestment in the much-needed new energy sources. This is what I cannot understand sometimes about the Liberals. They bark and they bay at the marketplace and say the marketplace will sort things out.

Well, it needs some security. The marketplace needs some security and certainty, and in the absence of a national policy we have seen people and organisations reluctant to invest in the new technologies that are required. South Australia seems to be a little bit different. While we cannot manage the national marketplace, we can make sure that there are measures in place, and checks and balances in here, that have an incentive for some organisations and companies to invest in South Australia. We are seeing that.

The other thing we have to draw to people's attention is that the member for Mount Gambier comes from a party, although he is not a member of it now, which privatised the state's energy assets, which has led to a lack of competition between the few energy companies which operate in South Australia. It appears that the system we have in place backs the incumbents without the ability to be able to attract new operators into that marketplace.

Deputy Speaker, given the lack of energy competition which is pushing up electricity prices, the South Australian government, as you would be aware, has unveiled a comprehensive energy plan to take charge of the state's energy future to deliver reliable, affordable and clean power to South Australians. I am very proud that we have done that. It is a coherent plan. We have said we cannot rely on anyone else. We cannot rely on the commonwealth. We can only rely on ourselves to remedy as best we can the situation that we are have, knowing full well that we could manage it a damn sight better if those other areas were addressed, in particular the commonwealth's negligence, for want of a better term, in the area of national energy policy.

Our plan in South Australia builds Australia's largest battery to store energy from the wind and sun as part of a new $150 million Renewable Technology Fund which supports clean, dispatchable and affordable power. It builds a government-owned 250 megawatt gas-fired power plant to provide emergency backup power and system stability services and, in the meantime, procures temporary backup generation.

I was very impressed with the presentation that was made to the Public Works Committee on this matter. It taught me a lot more about how it will operate and how effective it will be. The member for Finniss was on it because he is a much better contributor than the person who replaced him on the Public Works Committee. I am being kind to you today—two legacies so far: Public Works Committee and the other one.

Getting back to the point that I am trying to make, the changes that we have made in this state also introduce new ministerial powers to direct the market to operate in the interests of South Australians, which is a very important piece of legislation, and to underpin our plan as and when it is required for the minister to intervene. We have also incentivised increased gas production to ensure that more of our state's gas is sourced and used in South Australia.

We have also introduced an energy security target to ensure our power system uses more clean, secure energy generated in South Australia and, last but not least, the use of government purchasing power through its own electricity contract to attract new electricity generators to increase competition in the marketplace. As a member of this government, I am proud of the fact that we are doing something in this particular area. I am very pleased that we have gone down this road because if we had not, no-one else was going to do it.

The energy plan is a key priority and the South Australian government is fast-tracking its rollout. The Department of the Premier and Cabinet received about 90 expressions of interest to build battery storage and 31 for the 250 megawatt power plant. The expressions of interest evaluation process is progressing rapidly. The South Australian government has now short-listed potential candidates and technical specifications and draft contract terms have also been finalised.

The Emergency Management (Electricity Supply Emergencies) Amendment Act 2017 was proclaimed on 26 April 2017 and will ensure that in times of an electricity supply emergency, as I mentioned earlier, the minister will be able to make directions to protect the needs of South Australia. With that, I seek leave to continue my remarks.

Leave granted; debate adjourned.

Sitting suspended from 13:00 to 14:00.