Energy Prices

The Hon. S.L. GAME (15:31): I seek leave to make a brief explanation before directing a question to the Minister for Primary Industries and Regional Development, representing the Minister for Energy and Mining, about the effect of rising power prices on South Australian businesses.

Leave granted.

The Hon. S.L. GAME: The impact of our rush to renewable energy has been laid bare by some startling information from one of the state's most iconic and respected producers, Nippy's. The Riverland-based business has revealed its monthly power bills are doubling, from $51,600 to $109,580, even though Nippy's has installed a million dollars worth of solar panels and is using 6,200 fewer hours of power.

The state government recently released details of round 2 of its Economic Recovery Fund which offers grants of between $2,500 and $50,000, which must be matched by the applicant, for small businesses to reduce their energy costs. A total of 12 manufacturing businesses won funding in round 1, but when you consider that businesses like Nippy's are looking at an extra $684,000 per year for power and scores of businesses are feeling the pinch, the Economic Recovery Fund grants are a drop in the ocean.

Our office reached out to Nippy's and other Riverland growers recently and it is obvious that rising costs of business, including power, are leading to disastrous outcomes. One grower said their daily input charge has gone up by 27½ per cent, their peak charge is up by 25 per cent and their off-peak is up by 22½ per cent. Recently in The Advertiser, the Hon. Tom Koutsantonis was quoted as saying—

The Hon. I.K. HUNTER: Point of order.

The PRESIDENT: The Hon. Mr Hunter has a point of order.

The Hon. I.K. HUNTER: Sir, brief explanations by leave of the council are meant to be brief.

The PRESIDENT: I know the Hon. Ms Game is about to ask her question.

The Hon. N.J. Centofanti: You're not listening to your minister's replies to Dorothy Dixers; they're not brief.

The PRESIDENT: Order!

The Hon. S.L. GAME: Thank you, Mr President. My questions to the minister are:

1. Will the government release data that show how much less South Australian business operators who don't win one of the Economic Recovery Fund grants can expect to pay on their power bills for the coming quarter?

2. Will the government acknowledge that state and federal Labor are driving up power prices via their policies and that, rather than addressing the cause of these increases, they are simply applying taxpayer-funded bandaid solutions like the $150 million Economic Recovery Fund?

The Hon. C.M. SCRIVEN (Minister for Primary Industries and Regional Development, Minister for Forest Industries) (15:33): The Minister for Energy and Mining has provided me with the following information. We share the frustration of larger businesses in South Australia—

Members interjecting:

The PRESIDENT: Order!

The Hon. C.M. SCRIVEN: —and appreciate that they are currently facing increased costs if they are exposed to the wholesale electricity market. Wholesale prices in the market can be extremely volatile. Recently, low wind speeds and reduced rainfall in the southern states of the National Electricity Market increased reliance on gas-fired generation. During periods of abundant generation and low demand conditions, prices to minus $1,000 per megawatt hour can be experienced, while during tight supply and demand conditions, prices can approach the market price cap of $17,500 per megawatt hour. Retailers serve as an interface between these volatile prices in the wholesale market and the more stable prices wanted by consumers.

To secure the most cost-effective retail contract, large businesses are recommended to sign on when wholesale prices are low rather than waiting to explore options later on before renewal of their contract. Larger customers that procure electricity directly from the wholesale market would expect to be exposed to increased volatility in electricity pricing. Additionally, electricity distribution network component prices of electricity bills have risen, reflected by rises in inflation, along with under-recovery of revenue due to milder weather conditions over the last year.

Energy prices are a national issue, not just a South Australian issue. The most recent report on quarterly wholesale prices, published by the Australian Energy Market Operator (AEMO), shows average prices in South Australia increased by $11 per megawatt in the second quarter of 2024 compared to the same quarter in 2023. However, prices increased in all regions of the NEM except Queensland. Prices in South Australia ($135 per megawatt hour) were cheaper than New South Wales at $173 per megawatt hour and comparable to Tasmania and Victoria.

The default market offer (DMO), which applies to small customers, is an illustration of the energy price trend for the state. They were cut by 8.5 per cent or $497. The government welcomed the cuts to electricity prices from the 2024-25 DMO which applied to both South Australian residential and small business customers from 1 July 2024.