ELECTRICITY (MISCELLANEOUS) AMENDMENT BILL

Introduction and First Reading

Received from the House of Assembly and read a first time.

Second Reading

The Hon. G.E. GAGO (Minister for Regional Development, Minister for Public Sector Management, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister for Gambling) (18:04): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

The Bill I am introducing today improves South Australia's Feed-in Scheme by providing greater reward to the owners of solar generators, and makes changes to ensure the benefit can be adopted by as many South Australians as possible while balancing the cost of the scheme.

This Government has ensured that South Australia is at the forefront of renewable energy and climate change policy action. In 2008, this State was the first in Australia to implement a premium feed-in scheme for small-scale grid-connected solar photovoltaic systems owned by small customers. Nearly every other State and Territory has announced or introduced a feed-in scheme after South Australia.

Honourable Members would be aware that South Australia's Feed-in Scheme works by rewarding eligible small customers a bonus of 44 cents for every kilowatt-hour of excess electricity fed back into the grid from eligible solar photovoltaic systems. This amount is funded through distribution charges levied by ETSA Utilities on all of its grid-connected customers. The scheme extends to 2028.

The South Australian Feed-in Scheme has been overwhelmingly successful. I advise the Honourable Members that there are now around 32,000 grid-connected solar photovoltaic customers, representing nearly 50 MW of installed generation capacity.

The South Australian Government announced that once installed capacity had reached 10 MW the scheme would be reviewed. This threshold was reached in May 2009. The review was tasked with looking at several specific elements of the Scheme, including other possible technologies, retailer payments and the issue of large systems.

I am pleased to say that the review's final report found that the South Australian Feed-in Scheme has been successful and well implemented as measured against a number of criteria including installed capacity, exported energy, ease of implementation and operation and customer complaints.

The review's final report identified opportunities for further improvement, while cognisant of not changing the fundamental parameters of the scheme or adding additional layers of complexity which raise administrative costs. The recommendations also recognised the importance of educating and informing customers.

Specifically, the review's final report recommended the Government explicitly refer to the Scheme as a net scheme in legislation, make a provision to include other technologies in the Scheme, consider implementing a scheme cap, and reduce eligible capacity size for each unit from 30 kVA to 10 kVA.

It recommended that the Essential Services Commission of South Australia (ESCOSA) conducts analysis into the value of small scale renewable exports and provide a determination to the Minister of a 'minimum benchmark' rate for small electricity customers, and that the Government and retailers publish the minimum benchmark rate for small customers while also obliging retailers to publish their rates for comparison purposes.

The review's final report also recommended that the Government provide a website for customers to acquire accurate information on connecting small scale renewables, place scheme parameters in regulation, have a second review in 2012 and make a series of transitional arrangements for existing participants in the Feed-in Scheme.

The South Australian Government considered the final report and its recommendations. The Premier announced the Government's response on 31 August 2010 in his keynote address on South Australia's Leadership Within a Carbon Constrained Economy at the Committee for Economic Development of Australia's Leaders Series.

The Premier announced that the Government has resolved to accept the review final report recommendations in relation to referring to the Feed-in Scheme as a net scheme in order to make it clearer, and to implement a scheme capacity cap. To strike the right balance between the availability of the scheme and the overall cost to all electricity customers the Government proposed to close the scheme to new entrants when an installed capacity of 60 MW is reached.

I advise the Honourable Members that customer uptake of the Feed-in Scheme has been strong since the Premier's announcement. In order to provide an adequate implementation period the Government proposes to close the scheme to new entrants from 1 October 2011.

In order to ensure that as many customers as possible can access the scheme prior to its closure, the Government accepts the recommendation to reduce eligible capacity size. The proposed mechanism differs from the final report recommendation because it would be very difficult to enforce an individual unit capacity limit of 10 kVA.

Instead, the Government proposes more practical means by limiting the eligibility for the feed-in tariff to the first 45 kWh/day exported to the grid for customers that have received permission to connect from ETSA Utilities after 31 August 2010. I am advised that a 10 kW solar unit exporting 75 per cent of its power to the grid at maximum generation in summer would remain unaffected by this change. 10 kW is much larger than that in place in the vast majority of residential installations.

The Government also proposes limiting eligibility to one generator per customer and specifically excluding generators operated primarily for the purpose of generating a profit from the scheme.

I advise the Honourable Members that the Government proposes to go further than the review final report recommendation in relation to retailer payments. The Government's proposal will oblige retailers who choose to contract with solar customers to pay at least a minimum retailer rate, which would be determined by ESCOSA, for the power received from solar panels. The retailer payment will apply to power exported by all small-scale solar photovoltaic generators, regardless of whether the power exported is also eligible for the premium feed-in tariff or not. The mandated minimum retailer payment will continue to apply beyond the Feed-in Scheme's expiry in 2028 to ensure that retailers pay customers for the value they receive from power exported to the grid. This minimum rate will not be subject to the new eligibility criteria of the daily cap and the exclusion of multiple and dedicated generators.

The Government has decided not to include wind generation or any other technology in the Feed-in Scheme. This is consistent with the intent of the scheme that was specifically designed to support consumers that had installed small scale solar photovoltaic systems. Wind generation is a mature renewable technology which can already be deployed efficiently on a large scale with the support of the Commonwealth Government's Renewable Energy Target. South Australia has more than 1,000 MW of installed wind generation capacity.

A fair system of transitional arrangements is also proposed by the Government. The proposed arrangements will not result in any diminished benefit for existing solar customers, however, all customers that received permission to connect for their solar system from ETSA Utilities after 31 August 2010 (the date of the announcement) will be subject to the new eligibility criteria.

The Bill also clarifies the issue of payment of a customer's entitlement by a retailer. This typically applies where a customer is permanently in a credit balance with their retailer. At a minimum, it is proposed that retailers must make a payment of any outstanding credit balances to their qualifying customers at least once in every 12 months. This clarifies and preserves the initial intent of the Feed-in Scheme. Retailers are able to make payments on a more frequent basis if they wish.

I am pleased to advise Members that the Government has also resolved to enhance the reward for owners of small-scale solar photovoltaic panels, by proposing to increase the feed-in tariff from 44 cents to 54 cents per kWh. This will apply to all eligible solar customers, both existing and new, and will further reduce the payback period of solar photovoltaic systems. This change, combined with the mandated minimum retailer payment, is expected to make South Australia's scheme more generous than those operating in Victoria, New South Wales, Queensland and Western Australia when considering the various lengths of each scheme.

I also make a comment in passing about the New South Wales scheme. The New South Wales Feed-in Scheme is a gross scheme which contrasts with the net scheme created originally in South Australia and all other states. From inception, we have resisted the call to apply the Scheme on a gross basis as we considered the reward excessive. The New South Wales Government has now pared its benefit back so that its value is now less than our new scheme.

The Feed-in Scheme remains an important mechanism to encourage the contribution of small scale photovoltaic generation to South Australia's Strategic Plan Target of 20 per cent of renewable energy produced and consumed by 2014. This Government has also set a longer term renewable energy target of 33 per cent of the State's energy production by 2020.

The Bill also contains additional amendments to the Electricity Act 1996 to provide for the Technical Regulator's information gathering powers to apply to his electricity emergency management functions under the National Electricity Act 1996. These amendments ensure that the Technical Regulator can adequately prepare for an electricity emergency event and has sufficient information gathering powers during such an event to minimise potential impact on South Australian customers.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Electricity Act 1996

4—Amendment of section 10—Technical Regulator's power to require information

This clause amends section 10 of the Act to clarify the extent of the Technical Regulator's power to require information.

5—Amendment of section 11—Obligation to preserve confidentiality

This clause amends section 11 of the Act to clarify the extent of the Technical Regulator's obligation to preserve the confidentiality of information gained by the Technical Regulator under the Act.

6—Amendment of section 35A—Price regulation by Commission

This clause amends section 35A of the Act to allow for the Commission to make a price determination relating to the feeding-in of electricity into a distribution network under Part 3 Division 3AB, and provides for the Commission, in doing so, to have regard to the fair and reasonable value to a retailer of electricity fed into the network by qualifying customers within the meaning of Part 3 Division 3AB.

7—Substitution of Part 3 Division 3AB

This clause substitutes proposed Part 3 Division 3AB. The principal changes effected by the substitution of proposed Division 3AB are:

providing for a retailer to pay a credit to a qualifying customer for electricity fed into the network;

providing that the Commission is to determine the amount of the credit;

providing for an increase in the existing credit payable by the holder of a licence authorising the operation of a distribution network (a 'distributor') from $0.44 to $0.54;

clarifying that a credit is only payable under proposed Division 3AB for electricity fed into the network in excess of the electricity used by the qualifying customer;

providing for the exclusion of certain generators from eligibility for the payment of credits;

providing that a distributor is only required to credit a qualifying customer under proposed section 36AE(1) for the first 45kWh of electricity fed into the network each day (to be averaged across a billing period);

providing that if a qualifying customer receives a credit under proposed section 36AE(1) in respect of 1 qualifying generator, the qualifying customer is not entitled to a credit under that section for any electricity generated by a second or subsequent qualifying generator of the qualifying customer;

providing that a credit under proposed section 36AE(1) is not payable to a qualifying generator installed on or after 1 October 2011 (the 'designated day'), unless the person seeking to install the generator has received, before 1 October 2011, permission to connect the generator to a distribution network from a distributor and has within 120 days after that date made arrangements with the distributor for a new meter to be installed on account of that connection;

providing that the payment of credits to a qualifying customer in respect of electricity fed into a distribution network in a particular billing period that have not been set-off against the charges payable by the qualifying customer for the supply of electricity at the end of that billing period may be paid at the end of the billing period, or not later than 1 year after the end of the billing period (but in such an event the retailer must pay all outstanding balances at that time).

8—Insertion of section 91A

This clause provides for protection from liability for a person who furnishes information to the Commission, AEMO or the Technical Regulator in accordance with a requirement under the Act.

Schedule 1—Transitional provisions

This Schedule sets out transitional provisions associated with the enactment of the measure.

Debate adjourned on motion of Hon. J.M.A. Lensink.