Statutes Amendment (National Energy Laws) (Wholesale Market Monitoring) Bill

Second Reading

Adjourned debate on second reading.

(Continued from 9 April 2024.)

The Hon. C. BONAROS (16:01): I rise to speak on the Statutes Amendment (National Energy Laws) (Wholesale Market Monitoring) Bill 2023. Based on the information that we have from government, this bill is aimed at addressing a number of issues around market behaviours in the electricity and gas market.

Under the current National Electricity Law, the Australian Energy Regulator has responsibility for monitoring and reporting on the wholesale electricity market. The AER has powers to gather information about the wholesale electricity trade to monitor and report on the competitive function of the market, and based on advice that has been received from government there were some instances that occurred in 2022 which brought about the need for these reforms.

They have been outlined by the government, but in effect the changes themselves relate to issues around monitoring and reporting of competitive functioning, ensuring better oversight by the AER and transparency in the gas and electricity markets, overcoming limitations regarding accessible information about trading and levels of liquidity in electricity contract markets, the exercise of market powers, market participant behaviours and improving visibility of the market, and generally improving transparency and accountability with the aim of reducing imposts on businesses and protecting commercially sensitive information, amongst other things.

My focus today is on some related issues concerning our national energy laws, noting, of course, that we in South Australia are the lead legislator. It is quite timely that we are having this debate today, for me at least, given discussions I have had with the minister's office and others and given, I think, yesterday's publication of an article in ABC News—or this week, anyway—about the rollout of smart meters, which fall under our National Electricity Law.

It is timely because whilst this bill seeks to do a number of things to ensure improved market behaviours, transparency and accountability, it does so against the backdrop of growing concern around what has previously been agreed to in related changes around smart meters and the impacts that they will have on households, and in particular lower socio-economic households, as a result of the Australian Energy Market Commission's recommendation of 100 per cent uptake of those smart meters by 2030, with an accelerated deployment program to commence in 2025.

These concerns have been well canvassed and indeed are entirely consistent with the position of the good people at SACOSS, who have been making representations by submissions to the government at a state and federal level around our National Electricity Law. For the benefit of members who perhaps were not here at the time—I do not know if that is the case or not—in September 2020, we passed regulations in SA requiring retailers in South Australia to have a standing offer for smart meter customers that includes a time-of-use tariff structure or demand tariff structures for residential prosumers or a tariff structure determined by the retailer.

Generally speaking and in a nutshell, SA households from the date of that deployment, all new builds and any replacements, will see the installation of smart meters in South Australia against the backdrop of that deployment of smart meters across the state, accelerating in 2025 and with that end date in 2030 or thereabouts. In effect, SA households with smart meters are being transferred as a result of this to a time-of-use tariff plan via energy retailers. The concerns are around the fact that that is occurring with no consent, with no advance notification to consumers, with very little or no education on peak or off-peak times of use or solar sponge tariffs, with no information on the need to change energy use patterns and no option to choose a flat-rate tariff.

It is this last point that is particularly interesting because, according to the most recent data released by the AER for the 2023-24 period, here in SA something like just shy of 90 per cent of AGL's smart meter customers are on a time-of-use tariff, just shy of 98 per cent of Alinta's customers are on a time-of-use tariff and almost 100 per cent—99.9 per cent; you cannot get any closer—of Origin's customers are on a time-of-use tariff. There is no requirement for the provider to notify those customers of the rate that they are being charged or the fact that they do not offer an alternative fixed-rate charge.

Customers do not have the option to stay on their current plan prior to the installation of a smart meter or opt out of the time-of-use tariffs. It is only when you perhaps sustain what some are calling 'bill shock' that you might ring your provider and ask those questions and find out that if you are looking for a fixed-use tariff then your only option is to change providers, but that information is not required to be provided to you. In effect, if you have a smart meter and you are with one of those three major providers, the main three providers, a time-of-use tariff is the only option available to you. With the 100 per cent rollout of those meters by 2030, that means that consumers will have no choice to stay on a flat-rate tariff, even if that suits their households better.

The problem with this, and the reason I raise this, is that notwithstanding the fact that we are rolling this out, the government currently has information that is available publicly on smart meters, tariff structures and time-of-use tariffs, but there is no broader communication strategy in place in South Australia to ensure that we are proactively educated on smart meters and tariff implications. There is no funding in place to support low-income households to meet things like site remediation costs associated with the accelerated deployment of the smart meters in that time frame proposed, and it is assuming a lot about all of us in terms of our electricity usage.

We know, inevitably, it is the households who can afford it least that are impacted the most by these sorts of changes. We know that it is those households also that do not respond to time-varying prices. We know that caregivers follow family rhythms, leaving little room to adjust peak activities. I know in my household, if you told me what the busy time is in terms of electricity usage, it falls within those time-of-use tariff time frames. We know also that the elderly and people with disabilities face greater increases in electricity bills and worse health outcomes under some of those time-of-use electricity rates.

That was the subject of a story this week on the ABC, where the same energy companies we are talking about, which are the subject of this bill and these national energy laws, came under fire for, effectively, punishing time-of-use tariffs. There was an example of a person in Berri who received a quarterly power bill for $2,000. That was more than double the previous bill she had received, and it came against the backdrop of having changed absolutely nothing in her family's behaviour at home in terms of their electricity usage. There were no extra appliances. Nothing changed other than the fact that a smart meter was installed and time-of-use tariffs came into effect.

That is what we are talking about when we talk about bill shock. Instead of paying a flat rate throughout the day, the person involved had her property moved to a so-called time-of-use, or cost-reflective, tariff. Under that tariff, charges were significantly higher between 6am and 10am and 3pm and 1am, and that is a total of 14 hours in every day. But, again, she had no idea that she had been changed over to a time-of-use tariff. Indeed, there was no requirement for her to be notified of that.

The provider of energy in that instance did say on record that they can confirm that the customer is on a time-of-use tariff—well, we know that because that is the only option that was available to her—and, although the tariff changed, 'We did not change the customer billing and therefore we are not required to notify the customer.' So the provider themselves has confirmed those concerns that have been raised by SACOSS and others in terms of the lack of notification and so forth around smart meters.

Mr Womersley, someone who is known to all of us in this place, has been quoted in that story about the concerns he and SACOSS have about the failure to properly notify and inform consumers about the changes and effects that would be felt, and the concerns that this is going to become an increasing problem as we near the deployment of that 100 per cent smart meter rollout.

He labelled it as extraordinary, and I have to agree that the 14 hour a day application of peak rates in South Australia is something that consumers do not have an option about. You do not have a choice. This is what you are getting, because those same providers who fall within these national energy laws and who are the subject of the changes before us now in terms of market behaviours do not have to provide you with details of that.

The concerns also were, of course, that the tariffs were entrenching inequality and badly hurting many people who could least afford it. That is, I suppose, the crux of the issue that I am getting at. With all these sorts of changes—and we have had this debate in this place about electric vehicles or solar panels—inevitably the people who ultimately end up paying more in the short term at least, with diabolical consequences for their budgets, are always those who can least afford the changes that are being implemented around them, and effectively picking up the slack for those who can afford the changes. It is those people who are likely to have the capacity to implement any of the new measures that are being rolled out that really protect them whilst others who do not have the financial capacity end up paying the higher cost.

I say all that because, whilst we are the lead legislator and we have had this recommendation, which is now being rolled out for 100 per cent smart meters, the current bill brings into question whether enough is being done not only in terms of ensuring better oversight and transparency in the gas and electricity markets, and the exercise of market power at a wholesale level, but the same has to apply at a retail level.

I accept wholeheartedly—because it has taken me a while to get my head around all this—that this is a very complex area and we are dealing with private marketplaces and operators. I think what this bill does is highlight the fact that in addition to the concerns that we have around wholesale marketplaces, it is very important that we focus also on those retail market prices, both of which are intrinsically linked, obviously. It also brings into question what this government is doing to ensure that we do not see a spike in cases like the one that I have just referred to of the person in Berri.

If you speak to those people who are watching this space closely, they can tell you categorically that over the next five years you can absolutely expect more and more and more of those cases unless something is done by our regulator to bring it under control. That is a hugely important issue, particularly given all the discussions we have in this place pretty much on a daily basis during sittings about the cost-of-living crisis.

I have spoken to experts who have said to me, whilst we go ahead and forge ahead with these sorts of changes, South Australia really is ground zero when it comes to this issue. We are also the lead legislator. We have a reliance on renewables that is in excess of 75 per cent, I think at the moment, and so there is a lot of focus at the moment on South Australia when it comes to our national energy laws, and the impacts that this will have on consumers more generally, and not just as a result of the issues that this bill canvasses around wholesale electricity markets but particularly as a result of the rollout of smart meters.

It should surprise none of us that SACOSS and Mr Womersley have identified this issue, and I suppose forewarned us, about their concerns that once again we are forging ahead with changes in the national energy law context that are very, very likely to adversely impact those customers, or indeed all customers, because there is no choice—that is the first thing—but more severely those customers who can least afford it. There does not appear to be a plan by this government, and certainly nothing that is being foreshadowed to address these concerns.

I place those words on the record because, whilst we have already moved towards those commitments around smart meters, as I said, these issues are all intrinsically linked. I certainly suspect that we will be back here in due course, talking about this as more and more people sustain what is loosely referred to as 'bill shock' as we go down the path of rolling out these meters.

It is not just in terms of bill shock, there are obviously a number of other issues associated with that, including privacy concerns; your ability to access the information from a smart meter, which does not exist, compared to your provider, who has all the information available to them; and of course the lack of options around time-of-use tariffs versus fixed-use tariffs.

I say all that again not only because—if I use myself as the example, I can loosely get my head around this and still struggle to go home and work out when is the best time to turn on the dishwasher or the dryer, given that there are probably multiple devices working at the same time. These are the practical realities of probably every household who has the luxury of being able to afford them, but of course we know that we are now living in an environment where a lot of people cannot afford to turn on the lights or the heating, let alone a dishwasher or a washing machine or a dryer. I think it is a bit rich of us to be expecting them, if you cannot afford those basic amenities, to also be armed with the job of measuring when you are going to use what you can afford to use to ensure that you are keeping your costs low, simply because there is no other option available to you.

I make those comments against the backdrop of this bill and foreshadow that I suspect that we will be having many more discussions around market powers and market participant behaviours in time to come, particularly as we approach the rollout of smart meters across the state. It is going to happen; it is inevitable. We have agreed to it and it is happening. We need to be prepared to deal with the consequences of that.

I think, when it comes to oversight, transparency and monitoring, we also need to go back. I hope the government has some intention of doing this and taking on board and heeding the concerns that are being raised more and more around the impacts that these smart meters are going to have on consumers more broadly and on the cost-of-living crisis. With those words, I look forward to the debate in the committee stage of the bill.

The Hon. C.M. SCRIVEN (Minister for Primary Industries and Regional Development, Minister for Forest Industries) (16:23): I thank each of the honourable members who made contributions on this bill, and for their acknowledgement of South Australia's important role as lead legislator for reforms to national energy laws. It is a role we take seriously to protect consumers as far as possible in this privatised market.

The bill creates powers for the Australian Energy Regulator that have been requested by energy market bodies to improve transparency. We know there is a huge imbalance between the cost of the physical delivery of electricity and the trade in derivative markets. Futures trade in electricity was worth more than $109 billion at face value in calendar year 2023, according to the Australian Securities Exchange 2023 market review report. That is considerably more than the traded value of physical electricity.

The Australian Energy Regulator report, 'State of the energy market 2023', for the 2022-23 financial year recorded turnover on the National Electricity Market at $27.2 billion. That shows that roughly four times as much trade is taking place on the financial market than the physical market. But market bodies do not know the extent to which that trade on the ASX derivatives market is the tip of the iceberg, because a considerable volume of over-the-counter trade in derivatives is conducted privately and hidden from view.

This bill gives the AER the power to look below the surface to inspect private electricity and gas contracts and get a more comprehensive picture of the state of the markets. That information will assist the AER promote competition and deliver better results for consumers. I commend the bill to the chamber.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. C. BONAROS: I did not indicate to the minister that I would, but given the contribution that I just made, perhaps I will: is anything afoot in terms of the government's legislative agenda or discussions that are taking place at the national level, given that we are the lead legislator, to deal with those issues that I have outlined around the rollout of smart meters when it comes to market behaviours and the electricity market generally?

The Hon. C.M. SCRIVEN: I have confirmed that smart meters do not have any direct relationship whatsoever with this bill. In terms of additional information that might be available, that would need to be directed to the minister in the other place.

Clause passed.

Remaining clauses (2 to 17) and title passed.

Bill reported without amendment.

Third Reading

The Hon. C.M. SCRIVEN (Minister for Primary Industries and Regional Development, Minister for Forest Industries) (16:28): I move:

That this bill be now read a third time.

Bill read a third time and passed.