Emergency Management (Electricity Supply Emergencies) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 14 October 2021.)

The Hon. R.I. LUCAS (Treasurer) (16:18): I thank whoever might have contributed to this particular second reading debate for their wonderful contribution and I look forward to the committee stage.

Bill read a second time.

Committee Stage

In committee.

Clauses 1 to 3 passed.

Clause 4.

The Hon. C.M. SCRIVEN: I move:

Amendment No 1 [Scriven–1]—

Page 4, after line 9—After subclause (5) insert:

(6) Section 27C—after subsection (7) insert:

(8) If a prescribed designated person directs, or exercises its authority over, the operator of a qualifying generator (a relevant requirement) such that—

(a) the operator is required to cause or permit the qualifying generator to be disconnected from a distribution network; or

(b) the generation, use or export to a distribution network of electricity generated by the qualifying generator is limited or prohibited,

the prescribed designated person must pay the operator of the qualifying generator compensation in accordance with subsection (9) within 30 days of the day on which the relevant requirement ceases to have effect.

Maximum penalty: $1,000,000.

(9) For the purposes of subsection (8), the amount of compensation payable to the operator of a qualifying generator is double the amount determined by multiplying—

(a) the average daily feed-in amount; by

(b) the average feed-in price; by

(c) the number of days for which the relevant requirement has effect (rounded up to the nearest whole day) or, if a relevant requirement has effect for less than one day, by 1.

(10) In this section—

average daily feed-in amount, in relation to a qualifying generator, means the average daily amount of electricity fed into a distribution network by the qualifying generator for the billing period immediately preceding the period in which the relevant requirement is given to the operator of the qualifying generator;

average feed-in price, in relation to a qualifying generator, means the average amount paid (commonly known as the ‘feed-in tariff’) for electricity fed into a distribution network by the qualifying generator for the billing period immediately preceding the period in which the relevant requirement is given to the operator of the qualifying generator;

distribution network has the same meaning as in the Electricity Act 1996;

prescribed designated person means any of the following (including their respective successors or assigns):

(a) AEMO;

(b) ElectraNet Pty Ltd;

(c) SA Power Networks;

qualifying generator has the same meaning as in section 36AC of the Electricity Act 1996;

relevant requirement—see subsection (8).

As we know, this legislation will give the minister the ability to turn people's solar panels on or off at their home so the grid can be stabilised in an emergency. As previously stated, the opposition supports that. This amendment, however, means that household solar investors will be treated in essentially the same way as AGL or Origin. If AGL or Origin are instructed by the minister to turn on their power plants in order to secure the system, they are compensated. It is therefore fair and reasonable that households should be compensated also when they are instructed to turn their solar panels off.

They should be compensated for what they would have expected to have earned, or what they would have expected to offset, had they not had their panels turned off. As mentioned, solar panels on people's homes have two positive economic impacts: the first is the feed-in tariff, and the second is the offset of one's personal power use. Without this amendment, the government's bill creates in fact a disincentive to households to invest in solar panels.

Householders have gone out in good faith and put solar panels on their roofs. Although solar panels have come down in cost in recent years, they are still very expensive—anywhere between $2,500 to $10,000, depending on the size of the capacity of the solar array. The cost increases further again of course if a battery is added on. As we know, the government is shrinking the subsidy that is available to households. Close to one in three South Australian households now have solar panels—that is one in three households that have put solar panels on their roofs—and they are right to ask this fundamental question, 'Why wasn't I told when I invested my money in solar panels that there would be a different rule for me than for other generators in the national energy market?'

The minister in the other place is on the record as saying that he anticipates the times that people's solar power panels may be turned off during a period of system security emergency will be small and rare. I am of course glad to hear that as, I am sure, all South Australians are. If the minister is right then the cost is negligible and no-one is worse off. However, if the minister is wrong and people's solar panels are turned off for extended periods of time, the consumer not only experiences a loss from the feed-in tariff but is also effectively told, 'You cannot offset your power.'

When AGL, which runs Torrens Island, or in fact any other large-scale thermal capacity generator is instructed by the operator or the government to take some action, they get paid. They are compensated for that action. Why is it that households will not? Clearly, that would not be fair. Clearly, this amendment will rectify that lack of fairness. I therefore urge members to support this amendment.

The Hon. R.I. LUCAS: I seek the indulgence of the committee. I am advised that I, on behalf of the minister, was meant to put on the record a statement. I should have done that at clause 1, I think, so as long as no member of the committee opposes I would just like to indicate on behalf of the minister and the government as follows.

The South Australian government supports electric vehicle owners being rewarded for supporting the grid. This includes accessing cheaper power at times of the day with low demand and being rewarded for reducing charging or discharging power to the grid in times of high prices. The South Australian government supported time of use tariffs and is supportive of smart charging and demand management trials to accelerate the business models.

This bill does not impact those important consumer-focused reforms because it is only used in extremis—on the extremely rare chance of a significant supply interruption, such as during a statewide blackout. In those circumstances, as the market is generally suspended, these price signals for consumers would be overridden and the market would operate under directions in any case to ensure continuity of supply to the greatest degree possible.

Having placed that on the record, which I should have done at clause 1—I apologise—on behalf of the minister and the government I indicate the government's opposition to the amendment as just outlined by the Hon. Ms Scriven. The government's reasons for its opposition are as follows.

The Australian Energy Market Operator is advised that it currently does not have the ability to comply with the administration of compensation in the manner proposed without significant costs to upgrade systems and operations. In addition, it is likely that costs to enable the ability to provide compensation would dwarf any compensation payments themselves. Key system costs would be borne by SA Power Networks which would be passed on to consumers.

The South Australian government has advised that the likely cost to SA Power Networks to establish systems would be at least $10 million. These would be shared across the 800,000-odd small customers, resulting in a cost of approximately $12.50 per customer. Further, the government is advised that it is extremely unlikely that a compensation event would occur under the proposed amendment, meaning that it is extremely likely that that cost will be imposed without any compensation paid. Were a compensation event to occur, the government is advised by SA Power Networks that, based on the level of export which is on the high side, an estimate of the compensation level is around $200,000.

This means that even if a compensation event occurs, the overwhelming majority of solar homes would be worse off as they would receive less in compensation than the cost they would pay towards establishing the system to compensate them. This measure would therefore be a net tax on solar homes. In addition, SA Power Networks advises it is likely that further costs would be borne if there was a compensation event, although these are hard to quantify as all retailers have different billing and administration systems.

It is likely that cost imposts on retailers would also flow through to higher bills for customers. It is for these reasons that the government is opposing the amendment, as the government believes it is not in the long-term interests of consumers.

The Hon. R.A. SIMMS: I speak in support of the amendment moved by the Hon. Clare Scriven. The Greens are supportive of this amendment. We understand that it is seeking to introduce a compensation regime for loss of feed-in revenue when rooftop solar is disconnected or curtailed in the case of an emergency.

The Greens are supportive of what the government is trying to achieve in this legislation with respect to emergency powers but, like the Labor Party, we do have concerns that this is imposing a new set of rules on those who have purchased rooftop solar in good faith, under a certain set of rules, without being warned that the government could, at any time, turn this off and change the goalposts.

The fact that those consumers would then lose their feed-in tariff and any ability to offset their own power use is of concern to us. I think it is fair to say that people purchased solar under the assumption that any excess energy they did not use would be sold on to the grid. The fact that this will now change is concerning.

I understand the government is saying they will not support this amendment, but the Greens believe it is only fair that when you change the rules halfway through, change the horse midstream, you should compensate those who are affected. That is a general principle and it is one that is applied in most circumstances.

The government has already allowed a sun tax to be charged on people who have installed rooftop solar and now they are going to be charged yet another fee to allow them to use electricity in their own homes. It seems to be completely at odds with trying to encourage an uptake of solar and, on that basis, the Greens are supportive of the Labor Party's amendment.

The Hon. C.M. SCRIVEN: I would just like to respond to the statements made by the Treasurer. My understanding is that electricity operators are already under legislative requirements to keep detailed records of electricity use for their customers and their feed-in tariffs for a period of time. Therefore, the comment that AEMO says it would cost $10 million to implement such a scheme appears to be unnecessary in that those records are already kept and, therefore, there is no reason for that sort of figure to be involved. I therefore encourage members to support the amendment.

Ayes 9

Noes 10

Majority 1

Amendment thus negatived; clause passed.

Remaining clauses (5 and 6), schedule and title passed.

Bill reported without amendment.

Third Reading

The Hon. R.I. LUCAS (Treasurer) (16:34): I move:

That this bill be now read a third time.

Bill read a third time and passed.