STATUTES AMENDMENT (NATIONAL ENERGY RETAIL LAW IMPLEMENTATION) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 27 March 2012.)

The Hon. D.W. RIDGWAY (Leader of the Opposition) (16:30): Mr President, members who were listening would be aware that I have already made a contribution on this bill in conjunction with the contribution I made on the previous bill—

The Hon. G.E. Gago: You were very comprehensive.

The Hon. D.W. RIDGWAY: —very comprehensively, so I will not burden the chamber with a repetition, but I indicate the opposition will be supporting the bill.

The Hon. M. PARNELL (16:31): In speaking to this bill, I want to draw attention again to something that the Greens believe is very unfair and unreasonable, and that is the crackdown by ETSA Utilities on electricity consumers and, in particular, those who have solar panels installed and are part of the feed-in scheme for renewable energy. Along with the Hon. David Ridgway, we have taken the view that this Electricity Act now being opened up for review gives us an opportunity to fix this unfairness.

I am not going to go into a lot of detail because I have, in the not too recent past, given a range of examples in this place as to why the approach of ETSA Utilities is unfair, and I refer members to contributions to my motions on the solar feed-in tariff on 29 February and 28 March of this year. That was a motion calling on the government to scrap the unfair crusade being waged against renewable energy. I was delighted that that motion passed, but the government has still failed to act. So, now that the Electricity Act is before us for amendment, it is an appropriate time to fix this unfair situation.

In summary, there are three situations to which I am referring. The first is the situation where farmers in the main were encouraged by solar companies to put solar panels on their sheds rather than on their homes, and they could thereby take advantage of two things; one is often better solar access but, secondly the fact of a separate meter on farm sheds meant that they would actually improve their return from the feed-in tariff. The reason why these properties had multiple meters is that in the past there was a special rural electricity rate, and to get that rate you had to have a separate meter on your shed.

The second situation is in relation to people who have upgraded the number of panels on their roof to match the size of their inverter, and the third situation is in relation to people who have more than one property with solar panels. In relation to that first situation I described, where farmers have solar panels on their sheds rather than on their home, and where they can take advantage of having that separate meter, the ETSA crackdown has involved sending what can be described as 'please explain' letters.

As a result of those letters, they then either cut the people off the feed-in scheme, or in other cases they deliver them what can only be described as ultimatums; that, unless they combine the electricity both generated and used on their home and their shed, they will be cut off. As a result, what we are finding is that some people are spending large sums of money seeking to comply with what are in effect unreasonable demands of ETSA Utilities.

I just want to briefly refer to one piece of correspondence that I have received which I think sums it up pretty well. I will not name the people (I do not have their permission to do that), but they are country people, and their short email to me reads as follows:

We've just read the article in the Advertisertoday about the feed in tariff problems and you were mentioned. We've been trying to negotiate with ETSA utilities regarding this issue for several months now. We've been cut off and we don't know how to take it further. They cut us off prior to an ETSA utilities person coming out to our property and looking at what our options are. We have done nothing wrong but we are getting treated like criminals by ETSA utilities.

We put the system on a generator for the shed as this was the only option at the time as advised by our electrician. The shed was previously a working pig shed. We don't currently have pigs so it wasn't using any power. We have now hooked up a fridge out there and it's now using the required minimum. This in itself is very inconvenient as the pig shed is 100m away from the house.

We have three generators on our farm and a fourth on a different property. Our system only covers our usage over the entire lot. We thought we were doing the right thing by the environment and future proofing our electricity bills as much as we could. We are very low income earners and borrowed to put it in. Can anyone help us?? We are very angry about the way in which we have been treated. Surely some common sense and leniency applies when they are dealing with legislation that wasn't in place when we put the system in. And why haven't we been given time to comply?

Hope you can help.

It is an unfair situation, and I know certainly the Hon. David Ridgway is aware of examples, as is his colleague Mitch Williams in another place.

The amendments I have on file are in fact the same amendments as those moved in the other place by Mitch Williams, which I understand are proposed to be moved now by the Hon. Mr Ridgway to this bill, and we will certainly be supporting those amendments. As I say, ours are identical. The amendment allows the electricity used and measured by all the meters on a property to be taken into account in determining eligibility.

Another related amendment deals with those who upgraded their systems to the size of their inverters in the period before the legislation was passed. It was common for people to put up a larger inverter than they needed and fewer panels so that they could upgrade their system as funds allowed. This amendment makes it clear that these upgrades will be treated the same as new installations which, if approved before 1 October 2011, apply for the feed-in tariff.

We believe that customers should not be discriminated against because they planned in advance. Of course, the maximum size limit on installations still applies, so it is not open slather to install massive systems panel by panel, even though, as I have said before, that would be a most welcome outcome, but it is not covered by this current scheme. What we do need to do, through amendment, is remove some of this unfairness.

The rules that are around customers with more than one installation are also unfair and they are inconsistently applied. In fact, the predictions that I raised some months ago about the ability of ETSA Utilities to apply these new rules fairly have turned out, sadly, to be correct. I have received a briefing from the department and I have been provided with examples to show how these criteria are being implemented, and what they show is that a completely arbitrary set of rules has been developed that discriminates against ordinary people who hold property in their own name, and it preferences those who use companies or family trusts as vehicles for holding property, even though the people behind these entities are identical.

For example, on the chart that was provided, in the case of a couple, Joan Smith and John Smith, if the first system was John Smith's on the house and the second system was Joan Smith's on a second property, then they are both eligible, but if both properties are owned by Joan and John, then they are ineligible. The one that struck me as particularly unfair is if John Smith owns the first property and the Smith family trust—which may be completely controlled by John—owns the second, they are eligible as well because they have used artificial entities, if you like.

Then there is this example: private schools—church schools, for example—can be eligible for the feed-in tariff for solar panels on each of their schools because they are generally held in the names of different entities but, if it is a state school that is involved, then all the state schools are owned by the Department for Education and Child Development and therefore only one government school in the state is eligible for the feed-in tariff.

You could have every single Catholic school or Lutheran school or other private schools all being eligible, but you can only have one state school. Now, that makes no sense at all, especially in an age when schools, through their governing councils, are being encouraged to take more responsibility, for example, for their energy use. Yet, here you have got a system that actively discriminates against those in public schools.

So, these rules, I think, are arbitrary and unreasonable. I would urge the government to address that situation, to go back with ETSA and have a look at this crusade against people who are alleged to be ripping off the system because they have more than one solar panel system. Mostly, we are talking about people who have two. As I have said, there are plenty of circumstances where both will be eligible and plenty of circumstances where only one but not the other will be eligible, and it is completely arbitrary; it is a complete fluke of history in how the properties happen to be structured whether someone is eligible or not.

What I would like the minister to do when we get into committee is to answer some questions, if she may, in relation to these rules that were developed by ETSA Utilities after the legislation was passed. By rules, what I am talking about are the rules for measuring eligibility. There is the rule that said you have to use at least 400 kilowatt hours of electricity in a year in order to qualify as a small generator. If you did not use at least that much electricity on your property, you were therefore deemed to have installed your panels for the purpose of 'profiteering', is the word that is used, or for the purpose of putting electricity back into the grid.

Where did that rule come from? Where did that number come from? Is ETSA Utilities solely responsible for that number or is the government responsible for that number? Industry people tell me that when they say to government that this is an unfair rule, government says, 'Don't blame us. Go to ETSA Utilities.' When they go to ETSA Utilities, they say, 'Nothing to do with us. Having now written this rule, we are not allowed to change it.' I want to know what the truth is. Is it government; is it ETSA Utilities; can it be changed?

I have the same question in relation to this multiple property situation. Who came up with the notion that two properties—one owned by a flesh and blood person, one owned by a family trust—were both eligible, yet two properties jointly owned by a Mr and Mrs were not eligible? Who came up with those rules? Who is responsible for them? If they can be changed, how can they be changed? Is it ETSA Utilities that has to change them? Can the government tell ETSA Utilities to change them?

It is very unclear and, as has been said before, these rules, if you like, or these yardsticks, were put in place after the legislation had passed and, therefore, the claim that I have made and Mitch Williams in another place and David Ridgway in this place as well is that they are retrospective and they are arbitrary. When we get to these amendments, we can explore these issues. The Greens are generally supportive of this legislation, but we are taking the opportunity represented by the opening up of the Electricity Act for amendment to fix these clear injustices in the system.

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for Tourism, Minister for the Status of Women) (16:43): I understand that there are no further second reading contributions to this bill. Given that, I wish to thank honourable members for their contributions and their indicated support for this bill and look forward to dealing with the committee stage expeditiously.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. G.E. GAGO: I would just like to take this opportunity to provide an answer to a question that the Hon. Mark Parnell asked during the second reading, and that was: who was responsible? I have been advised that ETSA Utilities is in fact responsible for implementing the feed-in tariff provisions in relation to the dominant purpose and multiple generators provisions.

Clause passed.

Clauses 2 to 13 passed.

New clause 13A.

The Hon. D.W. RIDGWAY: I move:

Page 6, after line 22—Insert:

13A—Amendment of section 36AC—Interpretation

Section 36AC—after its present contents (now to be designated as subsection (1)) insert:

(2) For the purposes of the definition of excluded generator, if there are 2 or more meters for measuring the consumption of electricity on a site owned or occupied by 1 customer, in assessing the purpose of the installation of a generator on the site to determine whether or not the generator is an excluded generator, the operator of the distribution network must take into account the electricity consumption of the customer on the site as a whole (despite the fact that, for example, most or all of the electricity consumption on the site is recorded by a different meter from the meter to which the generator is connected).

I will make a few brief comments. As has been outlined by the Hon. Mark Parnell, the Greens and the Liberal Party have been made aware of the unfairness in relation to some of the operations of this act, especially the Electricity Act in relation to solar feed-in. The Hon. Mark Parnell cited a couple of examples. He had received some emails. I have recently been contacted by two customers in the South-East who had similar issues in relation to their properties and dealing with ETSA, especially considering that this legislation was retrospective.

These feed-in amendments, which went through the parliament last year, included the definition of an 'excluded generator'. This definition stated that a small photovoltaic generator was not to be installed for the dominant purpose of feeding electricity back into the grid, i.e., for the purposes of profiteering.

On the very last day of that scheme, 30 September 2011, the government met with ETSA to set these criteria. One of them was that a generator would be excluded from the scheme if less than 400 kilowatts of electricity was used per annum at the meter where the generator was installed. This electricity use was measured for the 12 months prior to the system being installed.

Many of our members—as I said, I had two in the South-East, and many members of the opposition—have been contacted by farmers who have found themselves excluded from the scheme owing to the fact that they have had more than one meter on their property and have connected their solar system to a meter where they are not using 400 kilowatts of electricity per annum. Previously there was a rural electricity rate, so it was not uncommon for properties to have more than one meter.

These farmers have found themselves excluded from the scheme despite having a total electricity use on their properties which far exceeds the 400 kilowatts threshold. That is certainly the example that the Hon. Mark Parnell used with the piggery that was not in use but had its own separate meter. I can recall that on my farming property, we had about six—

The Hon. G.E. Gago: That's a long time ago.

The Hon. D.W. RIDGWAY: It was a long time ago. It has been about a decade since I came here to look at the intelligent people on the other side of the chamber. I had a number of meters on my property, and certainly one on the shearing shed. I no longer had any sheep on the property and was no longer using it as a shearing shed; in fact, it was just used as a storage shed. There would be the occasional turning on of the lights, but virtually no electricity was used. So, I can understand how those sorts of anomalies could have occurred.

Another group of people who found themselves excluded from the scheme are those who received approval to upgrade their solar systems before 1 October 2011 (i.e., they had approval from ETSA to have more solar panels installed) but had not had these panels installed before 1 October 2011. These people now find themselves excluded from the scheme entirely if they put up these panels after 1 October.

These people had received approval from ETSA for that upgrade before the cut-off date but were not aware that they would be excluded from the scheme if they installed their panels after this date. This leaves them in the unfortunate position of either having purchased thousands of dollars worth of panels that they cannot use, or having them installed and losing the feed-in completely. This stems from a section in the act which states that, after 1 October 2011, a generator cannot be altered in any way to increase its ability to generate power.

So we are moving two amendments. They are exactly the same, so I am sure that I can count on the Hon. Mark Parnell's support. We just see it as an opportunity to rectify a couple of anomalies that have cropped up.

The Hon. G.E. GAGO: The government rises to oppose this amendment. It seeks to alter the definition of an excluded generator in the Electricity Act 1996 so that if there are two or more meters measuring consumption on a site then ETSA Utilities must take into account the electricity consumption of the site as a whole when enforcing the provision, excluding solar systems. Honourable members will recall that amendments were passed in this place in June of last year to limit the costs of the solar feed-in scheme borne by all electricity consumers, who pay for it through their electricity bills. A key provision was to exclude solar systems that are, in the opinion of the distribution network operator ETSA Utilities, operating for the dominant purpose of feeding in to the grid.

As members would recall, the scheme was explicitly designed as a net scheme rather than a gross scheme; that is, the intent of the scheme was to first meet the consumption on the customer's connection point, with the feed-in tariff only paid on any additional electricity generated and exported to the grid. The government opposes the proposed amendment as it weakens the dominant purpose provision and if passed would result in this council taking a conscious step away from the solar feed-in scheme's original intent and make it a gross scheme for the customers, thereby increasing the costs of the scheme on all electricity consumers.

The government also asks the council to give due weight to the problematic nature of the amendment in light of the action by ETSA Utilities to carry out the dominant generator provision. ETSA Utilities advises that 126 solar customers out of the 143 who had the option to re-wire or move their solar system to another connection point on their property to remain eligible under the scheme have now actually done so at their own expense. So, the vast majority have already taken action in accordance with this. For those reasons, the government will not be supporting the amendment.

The Hon. M. PARNELL: I want to explore a little further with the minister the contribution she has just made and the answer she gave earlier, and that is to ask: what is the process for reviewing eligibility? The minister has explained that if ETSA has determined that someone has not used enough electricity in the previous 12 months that they will be cut off the scheme because they will be deemed to have installed their panels for the dominant purpose of generating electricity. The example I gave was: a few years ago the shed was used as a piggery, and in a few years time it may be used as a piggery again. These panels last for 20 years, or longer—they are guaranteed for that long; they will probably be generating electricity for 30 years or more. So, my question of the minister is: what is the process for a person who has been cut off who then, in the following year, starts using more electricity at the property that the panels are connected to? How do they go about getting themselves reinstated to the feed-in tariff scheme?

The Hon. G.E. GAGO: I have been advised that ETSA Utilities established criteria that would only identify generators with a capacity of 3.04 kilowatts and above and at connection points with nil or very low levels of consumption (400 kilowatt hours or less) in the 12 months prior. The consumption threshold is lower than a single 50 watt light bulb operating constantly. We understand that ETSA has indicated that it is not going to allow the reinstatement.

The Hon. M. PARNELL: I need to explore that a little further. What the minister has just said is that you have a product that is going to operate and generate electricity for, say, 20 or 30 years, but you may be unlucky enough that the one year in which the measurement was taken you did not actually use much power in that building and the meter did not record much electricity use (400 kilowatt hours), but in fact two years earlier when it was running as a piggery it used lots of power and in two years time when it runs as a piggery again it will use lots of power. It may well be that for 29 of the 30-year life of these panels power is used in that shed that would lead to eligibility.

Is the minister's answer that, on the basis of an arbitrary one-year measurement of electricity used in a property connected to a meter, a person's ability to be on a 20-year feed-in tariff will be either gained or lost? Is that what the minister is saying? There is no way that fairness can prevail and that that person can go back to a normal situation of actually being connected to the system: is that the minister's answer?

The Hon. G.E. GAGO: I have been advised that that is so, that ETSA established the criteria, which were those generated within a 12-month period prior.

The Hon. M. PARNELL: Did ETSA Utilities negotiate these criteria with government or discuss them with government before bringing them into effect?

The Hon. G.E. GAGO: I understand that ETSA advised the government of the criteria that it had established.

The Hon. M. PARNELL: The minister said that they were not consulted but were told after the event. Does the minister know whether anyone else was consulted in relation to these criteria? In particular, was anyone in the solar energy industry consulted before ETSA Utilities unilaterally developed criteria for determining who is and who is not eligible to receive the feed-in tariff?

The Hon. G.E. GAGO: I have been advised that we are not aware of any other stakeholders that ETSA consulted with. However, the act does provide powers for ETSA to establish these criteria.

The Hon. M. PARNELL: And that brings us back to the original answer the minister gave to my question, where the legislation says that, if ETSA Utilities forms the view, then ETSA Utilities forms the view. But what I find remarkable in this situation is that what we are talking about here is a scheme that the former premier proudly launched—he proudly announced it at the Solar Energy Congress here in Adelaide, an international conference, and announced it in front of thousands of national and international guests.

We were the first state to get this feed-in tariff in place. It was a matter of some pride to the government yet, when it comes to the threshold question of who is eligible and who is not, we give the job to a private overseas company, registered in the Bahamas, from my recollection. It decides—it does not consult with government or industry—who South Australian law applies to and who it does not apply to. What a remarkable situation!

So, that is why I am very pleased to support this amendment. I do not think it is good enough for this parliament to simply say, 'Oh well, if ETSA Utilities, a private overseas-owned company does something unfair, we just have to live with it.' We do not have to live with it: we can change it. We can give some direction, we can tell ETSA Utilities to back off, and that is what this amendment does. The Greens are very pleased to support it and we urge all honourable members to do likewise.

The Hon. D.W. RIDGWAY: For the information of honourable members, shortly after my colleague Mitch Williams moved this amendment in the House of Assembly he then sent out this amendment for consultation, and ETSA was one of the companies he sent it to. At the time of my last discussing this with Mitch Williams, which was yesterday in our joint party meeting, ETSA had not responded to the particular amendment.

The Hon. D.G.E. HOOD: Very briefly, Family First will support the amendment. I think the main reason is that it comes down to what the motivation was for people when they installed their solar panels in two different places. Was it (a) to rip off the system, or was it (b) just simply for their convenience? I think there is no doubt that in the overwhelming majority of cases it was simply for their convenience, and so we support the amendment.

New clause inserted.

New clause 13B.

The Hon. D.W. RIDGWAY: I move:

Page 6, before line 23—Insert:

13B—Amendment of section 36AE—Feeding electricity into networks—requirements on holder of licence authorising operation of distribution network

Section 36AE(6)(a)—after 'electricity' insert:

, unless the alteration was approved before 1 October 2011 by the holder of the licence authorising the operation of a distribution network to which the generator is connected

I will not prolong this, but I urge all members to support this amendment. It is not consequential, if you like, but the same issue we are dealing with.

The CHAIR: The Hon. Mr Parnell, do you support this?

The Hon. M. PARNELL: I will hear the minister's response first.

The Hon. G.E. GAGO: The government rises to oppose this. Although it is obviously related to the previous amendment, I would just like to put on the record that this amendment seeks to permit solar customers who receive approval from ETSA Utilities for an upgrade prior to 1 October 2011 to carry out the upgrade at any time and retain eligibility for the feed-in tariff.

The government has been advised that this amendment would result in an additional cost to the scheme of approximately $1.65 million per annum, which would be paid by all electricity consumers. This is inconsistent with this council's intent when it passed the changes to the scheme in June last year that limited cost impacts to all consumers. In August 2010, solar customers were made aware of the proposal to prohibit upgrades of solar systems for the purpose of the receipt of the solar feed-in tariff. Accordingly, solar customers had the opportunity to fully complete an upgrade of their system between 31 August 2010 and 30 September 2011 to remain eligible for the 44¢ kilowatt an hour feed-in tariff.

This prohibition of upgrades is imperative to limit the costs of the solar feed-in scheme on all electricity customers. It recognises that the 44¢ kilowatt per hour feed-in tariff has been closed to new entrants and, accordingly, those with existing entitlements under the 44¢ kilowatt per hour feed-in tariff should not be able to continually increase the benefit they receive under this scheme by increasing their system size. For these reasons, the government advises the committee that it opposes the amendment.

The Hon. M. PARNELL: The important thing to remember here is that the panels people would be putting on their roofs to match the maximum size of their inverter would still be governed by the maximum size of the system set out in the legislation that we passed. It is just that they have not done it all in one go. There is no attempt here to subvert the parliamentary intent. No-one is going to get a feed-in tariff for putting in a system that is too large. Whilst the measure we use has changed over time, it is effectively a 10-kilowatt system. Very few people have systems that size; very few people even put in inverters to cope with a system that size.

However, the most remarkable thing about the minister's answer in relation to this amendment and whether the feed-in tariff might cost the community a little bit more is this. I remind all members that when we debated this last year we were debating a government proposal to increase the feed-in tariff to 54¢, which would have been a massive extra cost on the community. We would have loved to have given all those solar panel owners a present, an extra gift of an extra 10¢ for 20 years, but I think the Legislative Council did the right thing, the economically prudent thing: we saved the former premier from his own folly; we did not end up supporting the 54¢ and we kept it at 44¢ and thereby brought about savings.

The fact that a few more people are going to get a few more panels on is absolute chickenfeed compared with what the government was trying to do in giving an extra feed-in tariff to people who did not ask for it and, arguably, did not need it—they had made their investment—and that was where the blowout in the costs would have come. The Legislative Council, in its wisdom, saved the government from its folly, but I think now what we are doing is reinjecting a little bit of fairness back into the system.

I think this is a sensible amendment. It has very limited application. As I have said, no-one is South Australia is going to be able to put a system on their roof that is larger than set out in the legislation. That is the main cap, and that is the one we should be focusing on. This amendment is worthy of the support of all members.

The Hon. D.G.E. HOOD: I will speak very briefly. I do not believe that the suggestion that has been made by the government of an extra cost of, I think, $1.6 million (I think that is the figure quoted) will actually bear out to be the case. The truth is that, when people have added the panels in the first place, they have enjoyed the commonwealth government's very substantial subsidy when obtaining the panels, but they have had and it is gone.

In buying any further panels to increase the capacity of their system up to the capacity of their inverter, they will not enjoy that subsidy. So, it becomes substantially more expensive to add additional panels. For that reason, I think that the $1.6 million is probably substantially overstating the extra cost that will be involved should this amendment pass.

That having been said, I believe that, when people entered this scheme, they did so on the understanding that they would be able to add panels at a later date—certainly, that is what many of the companies were telling customers—and, for that reason, we should not change the rules on them later. For that reason, Family First will support the amendment.

New clause inserted.

Remaining clauses (14 to 38) and title passed.

Bill reported with amendment.

Third Reading

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for Tourism, Minister for the Status of Women) (17:07): I move:

That this bill be now read a third time.

Bill read a third time and passed.