NATIONAL ELECTRICITY (SOUTH AUSTRALIA) (SMART METERS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 13 October 2009. Page 3475.)

The Hon. D.W. RIDGWAY (Leader of the Opposition) (15:41): I rise on behalf of the opposition to speak to this bill. This year, South Australia has passed a number of bills modelled on the national electricity law, and our state is the lead legislator. All the bills contributed to the successful implementation of the National Electricity Market. Once again, COAG instigated this move back in 2006, when it decided on a progressive rollout of smart meters and the Ministerial Council on Energy was instructed to facilitate the program.

Smart meters are electricity meters that are capable of measuring and recording energy consumption at short intervals. They are also capable of two-way communication, which enables energy providers to read and control the features of the meter remotely. The use of this technology will mean that householders can monitor the cost of electricity throughout the day and adjust their consumption accordingly. For example, consumers will be able to restrict their use of particularly energy-intensive appliances to off-peak times. Effectively, smart meters (also known as advanced metering infrastructure) will provide two-way communication between the electricity meter and the power company, making more immediate information about one's electricity use available to the provider and the consumer.

It will be easier to connect and disconnect power when you move house, and power companies will be able to identify outages and restore power more quickly. It will also mean the end of estimated bills or staying in for meter readings. The rollout of smart meters would also be a key step towards future smart electricity grids, which we need so that more renewable energy can be fed into the grid.

Victoria was the first state in Australia to give the go-ahead for the widespread rollout of smart meters. It will cover around 2.2 million homes and 300,000 businesses. The decision to implement this legislation is backed by a national cost benefit analysis, funded by the Ministerial Council on Energy, as a precursor to a national rollout of smart meters. This analysis found that the smart meters project will deliver net benefits to Victoria of up to $700 million over the next 20 years.

I am not sure whether the minister has any advisers here, but I would like to ask a question about the projected cost of smart meters to the average household and the savings that might come from having a smart meter. As I said, the national analysis found that smart meters in Victoria will deliver benefits of up to $700 million over the next 20 years. I am intrigued to know whether that is $700 million to the power company, $700 million to the manufacturers of smart meters or $700 million to the consumers. From my notes, I see that the Ministerial Council on Energy is undertaking coordinated pilots and business case studies to decide whether the analysis is accurate. I would like an update from the minister on whether this information is accurate.

In briefly looking at that analysis, it is clear that there are possible opportunities for South Australia to benefit from rolling out the smart meters; however, I think the findings for South Australia were far less certain. So, while I am sure it will allow power companies opportunities to see where the power outages are occurring, I recall from my days on the farm that, when you rang to say that the power was out, you would be told, 'Yes, we know it's out east of Bordertown,' but no-one quite knew how far east and particularly where the outage was located. Of course, smart meters may well help locating the problems and getting them fixed quickly.

Although South Australia is involved in neither the initial roll-out nor the pilot business program, the government should certainly be busy investigating the opportunities for South Australia. Ultimately, the bill gives the Minister for Energy the power to decide the scope and the timing of the smart meter pilots and roll-outs. The minister has stated a number of times that he is opposed to smart metering. The opposition certainly hopes that his position will not prevent further investigation into the viability of such a program in South Australia.

If possible, I would like the minister to respond to those questions about the actual financial benefits to consumers here in South Australia. With those few words, I indicate that the opposition is happy to support the bill.

The Hon. M. PARNELL (15:45): I rise to support the second reading of the bill. Smart meters, I think, are the way of the future, and there are a number of advantages that I think tell us that this bill is deserving of support. One of the biggest advantages of smart meters—and there is a range of advantages—is the ability for people to track in realtime their energy consumption. It is particularly useful in that this energy consumption can be tracked remotely. That has huge advantages for business and industry where they can, in realtime, determine where their power is being used.

Members can imagine a situation where a night watch person can discover in fairly rapid time that banks of lights have been left on or an air conditioner has come on in the middle of the night and remedial action can be taken. It is important for people in industry and business. My understanding is that currently these types of meters are compulsory only for the largest commercial electricity consumers, and that 160 kilowatt hours is the threshold, which represents some 160 tonnes of CO₂ equivalent per year.

These are substantial polluters and, if we can get their energy use down, emissions will come down accordingly. One question I would ask the minister to address is whether it is the government's intention to make smart meters compulsory for more businesses and, in particular, whether it will drop the threshold and, if so, what that new threshold might be. The critical issue with smart meters is the question of who controls the data. If it is the retailer who is controlling the data, the information is unlikely to drive behaviour change. In fact, the information is that smart meters are really likely to benefit only the retailer in that they will not have to send out meter readers anymore; they will be able to save on billing costs.

If a consumer of electricity has full access to the data, that information can be used to change behaviour. My understanding is that, at present, the providers of smart meters are charging customers to access the data. I believe it is something like $1 a day; and, whilst that might not seem like much, for $365 there are many people who would not bother spending that extra money to access the information. It is in fact an impediment to customers accessing the data and therefore accessing the information that they can use to change their behaviour.

If you do not know how much energy you are using in realtime, it is difficult to change your behaviour. My question for the minister in relation to both business and, in particular, households is whether consumers will have free or cheap access to this data, because most of us have no idea how much electricity we use. At this stage, I will put in a plug for the scheme that is being operated through municipal libraries where you can in fact borrow a device—I think they are called meter mates—which you plug into your power outlet. You then plug your appliance into the device and it tells you how much electricity you are using at different stages.

For example, you can test your computer in stand-by mode and you can test it in full operating mode. You can test all those appliances, the glowing red lights of which actually keep our houses lit in the evenings. People are often surprised to find out that an appliance with a glowing red light that is not being used, perhaps for 99 per cent of the day, might be using five, 10 or more watts of electricity. So, if you can find out in real time and easily how much electricity you are using, you can take steps to change your behaviour.

The other thing worth saying is that South Australia has one of the peakiest demands for electricity and it is that peak that results in our having a number of power stations that only operate for a few days per year. If we can control our energy demand in the peak, then we can do away with some of those peak supply power stations.

I have discussed the issue of smart meters on a number of occasions with Mr Lew Owens of ETSA Utilities. He has described to me the trial they have conducted at Glenelg, which involves the electricity companies remotely switching, for example, air conditioners in customers' homes to reduce demand during peak times. The concept or idea of big brother turning off the electricity without your knowing about it horrifies many people, but I understand from the trials that turning off the compressor rather than the fan for short periods results in almost no noticeable difference in the internal climate of people's homes—they do not even know it is happening—but it can save large amounts of electricity.

Clearly, what is overlying all our concerns in relation to energy is climate change. If anyone is not paying attention to climate change then they are probably living on a different planet. We will be going to Copenhagen shortly. As a global community we will be discussing our contribution in trying to restrict carbon accumulation in the atmosphere. As a wealthy country, Australians are expected to show some sort of leadership.

Smart meters will not deliver the cuts to carbon dioxide emissions that we know are necessary to keep the earth's climate below 350 parts per million of CO₂ equivalent, but they do provide a useful tool to get us part-way there. Once we have weaned ourselves off coal, once we have a serious renewable energy economy, once we have a smart grid, then smart meters will be the icing on the cake to help us reduce our emissions. With those remarks the Greens are happy to support the second reading of this bill.

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (15:52): I thank the Hons Mr Ridgway and Mr Parnell for their contributions and other members for their indications of support for the bill. The Hon. Mr Ridgway asked a question about the benefits of smart meters for local customers. I guess we can deal with that further, if necessary, during the committee stage.

I assume the question was about the results of the cost/benefit analysis of smart meters for South Australia. The minister has indicated that the South Australian government is not prepared to mandate a roll out of smart meters in this state at this time but, of course, this legislation is necessary in order to let other jurisdictions do so. The work of their pilot programs undoubtedly will be of some benefit to this state in terms of the information it will provide.

In answer to the question of the Hon. Mr Ridgway, in April 2007 COAG committed to a national mandated roll out of electricity smart meters to areas where benefits outweigh costs. As indicated by the results of the cost/benefit analysis, taking account of different market circumstances in each state and territory and the circumstances of different groups of consumers, the cost/benefit analysis indicated that the range of net benefits from a roll out of smart meters in South Australia varied from a very significant net present value (NPV) of minus $108 million to a best case of $146 million. This uncertain result would come at a total cost of around $188 million to $308 million net present value.

The potential for further downsides was also identified from the consultant's findings. South Australia's approach to not roll out trial smart meters based on the cost/benefit analysis results is consistent with the COAG commitment in 2007.

The results of the cost benefit analysis for South Australia show that, for a rollout of smart metering to have a net positive benefit, it is necessary to have costs at the low end of the range estimated. Per customer business efficiency benefits are lower in South Australia than the national average, mainly due to much lower avoided costs for special reads (15 per cent of the national average, driven by lower property churn and much lower reading costs), lower avoided costs for routine meter readings and less reduction assumed in the cost of calls to faults and emergency lines. Demand response benefits may assist in meeting any shortfall between costs and benefits in South Australia but would not result in a rollout becoming net positive if costs were at the high end of the range estimated, even taking into account the additional demand response that may be achievable with the inclusion of an interface to the home area network.

That is the position of the government, but the Minister for Energy in his concluding speech on this bill in the House of Assembly stated:

I make the point that you can get one—

that is, a smart meter—

if you want one: we are not preventing it. Anyone who thinks there is an advantage in real-time metering is free to get one, but I would say that you would have to be a very large customer.

I think the Hon. Mr Parnell alluded to the fact that certainly demand management has significant advantages and, obviously, for large customers the benefits of that information could be significant. However, obviously for smaller customers, given the cost of these meters, the return is likely to be much less. The minister went on:

That ability has been around for a very long time and I must point out that very few large customers have taken it up, which I think supports the case we have made in South Australia.

It is an important piece of legislation for the national electricity market and, in terms of smart meters, it is far more important in other jurisdictions than it is here. It will allow us to embrace those technologies if there is a benefit from them and if people want them.

The only other issue raised by the Hon. Mr Parnell (and, if necessary, we can pursue it further in the committee stage) was about the availability of data. My advice is that this is the subject of discussions at national level, but under the terms of the bill a determination on such matters would be jurisdiction-based so, obviously, it would be up to those jurisdictions taking up the scheme as to what they would wish to have provided. With those comments, I commend the bill to the council.

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