SOLAR FEED-IN TARIFFS

The Hon. M. PARNELL (16:41): I move:

That this council—

1. Notes that in 2011 the Legislative Council passed amendments to the Electricity Act 1996 that restricted the ability of household and small generators to generate revenue from the SA Solar feed-in scheme by restricting payments to the first 45 kWh of electricity fed into the network each day;

2. Condemns the attempt by ETSA Utilities to retrospectively reduce the number of participants in the SA Solar Feed-in Scheme through the use of new, additional guidelines developed and made known to participants in the solar feed-in scheme only after participants had already made significant investments in solar energy infrastructure; and

3. Calls on the government to ensure that the additional guidelines developed by ETSA Utilities (namely a restriction on households with greater than 3.04 kW systems installed on meters that record less than 400 kWh of electricity per year) are no longer used to limit the eligibility of households and small generators to participate in the scheme.

This motion is quite specific, and it tackles a particular injustice that is currently occurring in our community. In a nutshell, it involves the solar feed-in scheme. As members know, last year parliament passed changes to the solar feed-in scheme to limit the amount of public subsidy that would be paid to solar households, based on the amount of power that they exported to the grid each day up to a maximum of 45 kilowatt hours per day.

This was in response to concerns raised by the government that the feed-in scheme would be used by large operators to develop commercial-scale solar farms. Whilst the Greens do not have a problem with using feed-in schemes to drive commercial-scale solar investment, it was the will of the parliament that this restriction be put in place, and I note that it had been announced by the premier well before the bill came into parliament.

In fact, I will go further than saying we do not have a problem with it. It is certainly Greens policy, and my colleague, Senator Milne, is actively promoting broader feed-in tariffs to exactly accommodate these types of solar farms. But that is not what we are talking about here. We are talking about small-scale solar feed-in under the South Australian legislation.

So, the solar industry was aware that the restriction would be in place, and they adjusted their installation and their marketing strategies accordingly but, only after the scheme had closed to new entrants and solar panels had been installed, did ETSA Utilities make up an additional eligibility criterion, that is, a new and, I say, arbitrary annual use test.

The annual use test is that, if someone has installed a solar voltaic system that is 3.04 kilowatts or greater and they use only 400 kilowatt hours of electricity per year, then they are deemed, unless they have got a good explanation, to be ineligible to be part of the scheme. This new eligibility criterion was developed after panels had been installed and after this parliament had passed legislation.

This unnecessary, additional, retrospective eligibility test is what is causing so much distress, and that is what I am seeking to have scrapped through this motion. Members need to be aware that many of our fellow citizens have invested large amounts in solar photovoltaics. People have spent a lot of money installing clean energy systems and they have done so in good faith, only to now be threatened by a retrospective change in the eligibility rules. Many of those affected are in fact farmers who have followed the advice of their solar installers.

That advice is pretty easy to comprehend. A farmer says, 'I want solar panels'. The solar installer turns up and says, 'Well, we could put them on your house, but there's a few trees in the way. We could put them over on your shed—that's completely clear and your shed has got its own separate electricity meter. Put it on your shed. You'll actually do better, you'll actually make more from the feed-in tariff and you can use that to offset the cost of electricity for your house.' Of course that is the advice the solar installers are going to give, and of course that is the advice the farmers are going to take, so that is what they do—they put the panels on their sheds.

It is unfair in the extreme for ETSA Utilities, presumably under instruction from the energy minister, to target people who are trying to do the right thing and who have followed professional advice as to the best place to locate their panels. This is not the only aspect of ETSA Utilities' behaviour that has raised concerns. Concerns have also been raised about ETSA unfairly targeting customers who, through no fault of their own, had panels or meters installed, sometimes only days or, in some cases, even hours outside the eligibility cut-off time. These people are really in despair at the lack of flexibility being shown by ETSA.

You have to recognise that some of these people, especially in the country, with one day of bad weather or a hiccup in the supply chain, especially in that hectic period as the scheme was winding up, through no fault of their own miss out by a small period of time, with no flexibility being shown by ETSA. If they can cut someone off the scheme, they will. These examples are symptomatic of a much broader concern about the attitude of critical players in the energy market towards renewable energy. I will go through some of them in a while.

For now, I want to provide a little more detail about why what ETSA is doing is so unfair. We need to go back to the statement made by former premier Rann on 31 August 2010. In his media release he stated:

Those intending to install solar panels to take advantage of the new scheme will be subject to a new eligibility criteria, including:

a limit of one generator per customer

the exclusion of additional generators installed specifically to create a profit from the scheme

the bonus will be limited to the first 45 kilowatt hours per day—this limit will not affect normal residential systems (i.e. those less than 7 kilowatts).

At the time the definition of 'specifically to create a profit from the scheme' was never defined. After that we waited in vain for some months for the legislation to be introduced so we could get some more details. In the meantime, the only guideline that the industry had to work with was from the October 2010 copy of Industry News, which is a regular update sent out by ETSA Utilities and which stated:

Customers that connect to either a new or existing network connection point that have no or very low energy consumption history (i.e., an old disused shed or a pump on a rural property), maybe classified as an excluded generator for the reason that its dominate [sic] purpose is for generating into the grid for profit.

I will repeat the critical section, the example given, 'an old disused shed or pump on a rural property'. You can imagine the surprise from solar installers and their customers when ETSA started sending out letters to customers in November 2011 that stated—and I will read some part of the letter:

I'm writing in regard to your application to install a PV SEG system and to advise you of changes to the feed-in tariff scheme under legislation passed by state parliament on 23 June 2011, published in the SA Government Gazette on 28 July 2011 and effective from 29 July 2011. Under this legislation ETSA Utilities is obliged to ensure customers who install photovoltaic systems after August 2010 meet the eligibility requirements for participating in the state government's FIT scheme. The legislation states that an excluded generator, i.e., a generator not entitled to FIT payments, is defined as:

Excluded generator refers to a small photovoltaic generator that in the opinion of the operator of a distribution network, from which permission to connect the generator is sought, would, but for the fact that the generator is an excluded generator by virtue of this definition, be installed for the dominant purpose of feeding into the network electricity generated by the generator, and the fact that a generator is to be installed in a pair or group of generators may be evidence that the generator is an excluded generator.

That is that quote. Going back to the letter:

In assessing eligibility, it has been agreed with the South Australian government that ETSA Utilities would contact customers with electricity consumption of less than 400 kWh per annum and who have installed PV systems of 3.04 kW and larger to check the circumstances relating to the minimal consumption before determining the dominant purpose (eg primary purpose is to export energy to the electricity grid).

Our records indicate that you may not have connected your proposed PV SEG system. In accordance with our legislative obligation, we have undertaken an initial assessment based on the information provided in your application for approval to connect a PV system. From this assessment, the level of your electricity consumption over the last 12 months combined with the size of your proposed installation would mean that you would not be eligible to receive FIT payments.

Basically, it is a please explain letter, but the clear threat is that you are about to be cut off. These letters set out this new test, a new test clearly devised by the government and ETSA Utilities, certainly not one that was approved by this parliament. The important aspect here is that the parliament had already legislated to limit the size of schemes for the primary reason of keeping it to small schemes, which was to meet the government's objective to prevent what it calls profiteering.

Our concerns are that it is retrospective. As I have said, these changes were introduced after panels had been installed by households. Secondly, we have a private overseas-owned corporation making up these rules and now applying them. ETSA Utilities is a private business and it is effectively setting public policy by deciding who is and who is not an eligible generator. Thirdly, there is this onus of proof question. The letters assume that the person is not eligible and it requires them to prove why they are not ineligible.

Fourthly, the figure of 400 kilowatt hours per annum analysis is based on just one year's use. Why that is particularly remarkable and particularly inappropriate is that we are talking about a product that is going to generate clean electricity for its owner and into the grid for probably 30 years. These panels are effective for a long period of time. Why on earth do you decide their eligibility to participate in the scheme on the basis of one year's electricity bill? You may well have people who have installed panels on a shed for which they have future plans to conduct a business from, for example. They may not have used much electricity last year, they might not use much next year, but maybe in five year's time they will be using far more electricity than they are generating from the roof; yet they will have been arbitrarily cut off from the scheme by virtue of these provisions.

As I have said, I have been provided with a number of examples of farmers in particular, who chose, for sensible reasons, to put the panels on sheds rather than on their homes. They were allowed to do that because they had multiple metres, and they had multiple metres presumably because the sheds on which they installed the panels had a demand—or even a potential demand—for electricity. Sure, sometimes it might just be a light globe running, but there is a range of other activities that farmers undertake in sheds that use a lot more power than a light globe. So, there are lots of reasons why the shed was the logical choice.

One example is where an installer effectively refused to put the panels on the farmhouse because it had an asbestos roof. It was a much better option to put them on the shed. There are other examples, as I have said, where houses are heavily shaded. The types of sheds on which these panels are installed—the people who are getting these letters—are not old or disused, which is what ETSA had been telling people was the test months earlier. These are active sheds used to store farm equipment and do maintenance and repair work in. As I have said, the operations in those sheds can, in fact, use a significant amount of electricity, a demand that might not be reflected in one year's bill.

So, under ETSA's arbitrary criteria, if the farmers fail to undertake major work in their shed and use lots of electricity in their shed each and every year, they are going to fall foul of these rules and they are going to be kicked off the scheme. What is remarkable is that ETSA, having come up with these rules, was not even prepared to wait for a period of time to elapse to consider alternative options; for example, a rolling average over, say, five years might have been a better test.

It is also my understanding that, unless the government acts on the urgings of this parliament to stop this, ETSA intends to target farmers and households every year for the next 17 years to see whether their use drops below this critical arbitrary threshold. So, a farmer may fulfil the eligibility criteria for the next 10 years, then they might have a lean year, not use much electricity in their shed, and then be booted off the scheme in 2022 and, really, this is a hanging sword of Damocles over their head.

I want to emphasise to members that these people are not somehow people who deserve our condemnation. They are not people who set out to deliberately rip off the system or make windfall profits. We are not talking about small investments either, for some of these people. They have spent $30,000 to $40,000, and their only capacity to recoup some of that substantial investment is if they can remain part of the feed-in scheme. These are people who have done the right thing by the environment, and they should not be penalised the way ETSA is going about it.

This also raises an issue this government is very fond of talking about—and I raised it earlier today and minister Tom Koutsantonis has raised it before—and that is this question of sovereign risk. What these farmers, I think, find most offensive is that ETSA is implying that they are somehow cheating and that these people are making windfall profits and they are using the profits from the scheme to fly off to exotic locations. These are people who have made good, sensible decisions for the environment.

The sovereign risk aspect—if it is good enough for the government to say that you cannot change the rules, otherwise capital will flee our state, why is that argument not good enough for this as well? Here we are, changing the rules after the event. The government is happy to hand out large sums to mining companies. If they think that is a problem, are they about to hand out similar sums to solar panel owners? I would be very much surprised if they do; I know they will not.

There is some indication—and I am pleased with this—that the minister is starting to realise that he cannot just wash his hands of this. This morning on ABC radio, in response to my raising this issue on Monday morning, minister Koutsantonis said the following—and I will read out this exchange because it is informative:

[David] Bevan:...Now, we were talking to Mark Parnell from the Greens earlier in the week and he said that it's just nuts that some people had been told...'You invested so much in these solar panels, we actually consider you are setting yourself up as a generator, so we're not going to give you the rebate'...where's the sense in that?

Mr Koutsantonis' answer was:

I sort of half agree with what Mr Parnell was saying, and I met with the Farmers' Federation recently...they brought me a series of examples of farmers who have put their photovoltaic cells...not on their property but on other parts that had better sun on the advice of the installers. Many farms in South Australia have more than...one meter.

The minister went on to say:

Look, government doesn't accept that it's retrospective; we made these announcements...in August 2010 and the scheme—

[Matthew] Abraham: What, you made an announcement in August 2010...your predecessor, that if you have a system that generates over 40—

Matthew Abraham is cut off, and the minister says:

No, no. If you're profiteering.

Abraham: But you didn't define profiteering did you?

The minister replies:

Well, we did, and it's in the act, and the parliament has made a decision on it.

If it is in the act why the need to make up new additional criteria retrospectively? Back to Abraham:

When did parliament make a decision on it?

Minister: It made the decision in 2011, I think October ... but the important—

Abraham interrupting again:

What, after you'd bought your systems? Because a lot of people have bought systems before—

Minister: No...that's why...I have a lot of sympathy for what Mark Parnell was saying.

Abraham:

Because what you're doing is changing the rules after people have signed up in good faith.

Minister: Well, no, what...the bill actually does is allows...ETSA—and it's not the government that does this, it's actually ETSA—the parliament decided that ETSA would do this not the Government, so it's not me who makes these decisions, it's given to ETSA.

I can't do the voices, Mr President. I would love to be able to do minister Koutsantonis' voice. I think they speak for themselves. Abraham:

But they're operating off government legislation.

Minister: Sure, yes...I understand that and that's why I've undertaken with the Farmers' Federation that if people think they've been unfairly treated to come see me and I will personally handle all these matters individually.

Abraham:

Each one?

Minister: Each one.

It is good that the minister is finally acting but I need to correct something that he said that is wrong, because he is trying to dump all this on ETSA. In the letter that was sent out by ETSA it specifically states, and I quote it again:

In assessing eligibility, it has been agreed with the South Australian Government that ETSA Utilities would contact customers with electricity consumption of less than 400 kWh per annum and who have installed PV systems larger than 3.04KK to check their circumstances.

So the government is complicit in this action and it must now act to fix up this mess. Whilst the minister has committed to personally intervene in each issue, a more appropriate response would be to change the instructions to ETSA utilities to ensure fairer interpretation and ultimately to scrap this arbitrary rule.

Otherwise, I fear that in a few years' time more innocent people will be caught up or we will have the perverse incentive of someone with a large system on their shed deliberately leaving the lights on 24 hours of the day to make sure they do not fall foul of the system. They would have a look at their meter and think, 'Geez, I'd better run some electrical equipment otherwise I'm going to get one of those letters from ETSA and I'll get cut off the scheme.' How perverse is that?

I will mention the other case of the people who, through no fault of their own, were a day or two late in getting their systems fully installed—it is mostly regional people who have fallen foul of that scheme. The example I gave was of a solar installer who was travelling to a remote part of the state only to come unstuck with bad weather so they could not actually deliver and install.

Another one is the customer who had done everything right and the solar installer simply did not turn up when it was scheduled to do so—that is not the customer's fault. So householders who have done everything right are now being penalised. They have done all the paperwork, they have paid all the money, but unfortunately the panels did not go up. ETSA should show some leniency to these people. If there are special circumstances as to why the cut-off was missed and it was not through slackness on the part of the property owner, they should be shown some leniency.

It really annoys me when we see all sorts of gaming and rorting going on by big energy players to manipulate the electricity market to try to maximise their profit from the burning of fossil fuels, yet when a very small number of decent and ordinary South Australians try to do the right thing they are mercilessly punished. What this incident shows is a wider attitude towards solar energy that is unhelpful. I have been very frustrated to see that the government's attitude appears to be that solar and wind energy, which should be a real solution, is somehow seen as a burden.

I suspect that much of the concern is that these clean energy alternatives actually attack the profit-making model of the larger energy players and they just cannot accept that individual households have now become significant generators in their own right. So my message to ETSA and to the government is that we have to get used to this new regime. We need to adapt to the new paradigm and we need to do it quickly.

Mums and dads are now electricity generators and they need to be treated with respect. This is an unfair crackdown. It does have to stop and in this motion the Greens are calling on the energy minister to reverse this retrograde step, go back to the drawing board and really honour and credit the people of South Australia who are doing the right thing by the environment, through the installation of clean, green, renewable energy.

Debate adjourned on motion of Hon. J.M. Gazzola.