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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2009-09-24 Daily Xml
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ELECTRICITY (RENEWABLE ENERGY PRICE) AMENDMENT BILL

Introduction and First Reading

Mr WILLIAMS (MacKillop) (11:00): Obtained leave and introduced a bill for an act to amend the Electricity Act 1996. Read a first time.

Second Reading

Mr WILLIAMS (MacKillop) (11:00): I move:

That this bill be now read a second time.

This is a new bill introduced to effect something that would already have been effected if the government had supported an earlier bill—the Electricity (Feed-In Rates) Amendment Bill—that I brought to the house on Thursday 4 June. The government voted down that bill on 18 June this year. I will come shortly to the reasons the government gave for voting down that bill.

First, I want to speak on the bill directly and what it is about. Last year, this parliament introduced a bill to provide a feed-in tariff to the owners of small photovoltaic generators, principally householders who put some photovoltaic cells on the roof of their house. Also, amendments made in the other place, supported and encouraged by the opposition in the other place, extended it out to small businesses and not-for-profit groups (such as churches, clubs, etc.) that wanted to participate in saving the planet by putting small photovoltaic generators on the roofs of their premises.

We introduced a net feed-in tariff whereby 44¢ per kilowatt hour of net power was fed back into the grid by photovoltaic cells and was paid to those qualifying owners of small generators, and definitions of small generators, etc., have been put into the principal act. That is to reduce the payback time for the principal cost of installing a photovoltaic system from something approaching 30 years—which happens to be about the life expectancy of such systems anyway—back to something of the order of 15 to 17 years.

Before the parliament passed that legislation and before it was enacted, the electricity retailers in South Australia were paying to the generators of electricity a net tariff based principally on the amount those same customers would have been buying electricity for off the grid—about 20¢ a kilowatt hour. That is about the price that customers buy electricity for off the grid and that is, by and large, what the retailers in South Australia were paying those who had installed small photovoltaic generators.

With the introduction of the feed-in tariff legislation and its enactment thereof, the 44¢ that is now paid to the owners of those small generators is actually paid for by all other electricity customers in South Australia because, under the Electricity Act and the regulations, it is defined as what we call a flow-through event and it is paid for by ETSA Utilities, which runs the distribution network because it is much simpler for it to operate the system of paying this money. However, the money actually comes out of the pocket of every electricity consumer through a slight increase in the price they pay for general electricity purchased. I do not have a problem with that, and we supported it when it came through.

At the time, we questioned the motive of the government and suggested that it was more about getting a headline. The Premier, we know, was most anxious for us to be the first state to have a feed-in scheme and, at every opportunity, he says that we were the first state to introduce a feed-in scheme. What he does not say is that we introduced a scheme that was flawed, and that virtually every other state provides a greater incentive to householders and small business operators to put photovoltaic cells on their roofs, or wherever, to create electricity. We give the least incentive. The other states have instituted much better schemes. They have feed-in tariffs which reflect the electricity that is fed back in, but the retailers actually pay for the electricity as well.

What happened in South Australia was that, when we introduced that 44¢—which, as I said, was paid for by every other consumer—the main retailers in South Australia stopped paying the 20¢ that they had been paying to generators to that date. One stopped paying it altogether; another one was paying a nominal rebate of I think about 5¢ or 6¢; and one retailer continued to pay 20¢, and that was TRUenergy. It continued to pay the 20¢ and, in addition, 44¢ was rebated to its customers by ETSA Utilities. So, the customers of TRUenergy were receiving around 64¢ per kilowatt hour net electricity put back into the grid, which is about what the industry has called for across the nation as being a realistic figure for a net feed-in. In fact, the industry suggests that it should be based on gross generation capacity, not just net. There are a number of other things that I could bring to this debate; however, I am not arguing that, because this flaw needs to be corrected and it needs to be corrected quickly.

When I last put this matter before the house, the government made a number of arguments, not the least being that the market would sort it out. These major retailers are paying nothing for the electricity. They are on-selling as green power electricity for which they are not paying anything. What has happened in the market? TRUenergy has said, 'Why are we the fools and why are we paying this 20¢ when the other two major retailers'—which, by the way, are much bigger than TRUenergy in the South Australian marketplace—'are not paying it?' So, TRUenergy has actually cut the amount that it pays back to about 6¢. When the Premier was questioned on this matter earlier this month (I think it was on the 1st of this month; he was certainly on one of the TV stations), he said:

The electricity companies which are now basically dodging their responsibilities need to be labelled as rip-off merchants.

The Premier today has the opportunity to support the bill that I have brought to the house, to correct that anomaly. I have changed the way that we would set the price, because the government questioned that in the last bill, and I think I am presenting to the house a much simpler bill to correct the anomaly and to force electricity retailers in the South Australian market to pay a fair and reasonable price for electricity, which they then on-sell and profit from. How do I suggest that we arrange that price? I suggest that we use the default price set by the Essential Services Commissioner which, exclusive of GST, is around 17¢ a kilowatt hour. I think that is a fair and reasonable price to set.

When we last debated a bill to achieve a similar end, the spokesperson for the government was the member for Light, who argued a couple of things when giving reasons to the house why he and his colleagues on the government benches would not support my bill. One of the things he said is:

I fully agree that PV customers should receive fair value for the energy they export to the grid. More importantly, though, the question arises: what is a fair value—

I have just explained that, I think, and I might come back to that in a moment—

and how should retailers pay for this energy? Despite what the member for MacKillop says, someone does pay for this. Other consumers will ultimately pay for it if it is not properly done...

Well, I suggest the member and his colleagues on that side of the house look at the principal act. If they look at section 36AD, particularly at subsection (2)—and I will read it, because I know that most of them will not look at it.

Mrs Geraghty interjecting:

Mr WILLIAMS: It provides:

(2) It is a condition of the licence of the electricity entity that has the relevant contract to sell electricity as a retailer to a qualifying customer who is entitled to a credit under subsection (1)(b) that the retailer will, after taking into account any requirements prescribed by the regulations—

(a) reflect the credit in the charges payable by the qualifying customer for the supply of electricity; and

(b) provide to the qualifying customer...

How it will happen is already set out in the principal act. The member for Light does not understand the principal act and, in spite of the protestations of the Government Whip just now, the member for Light obviously had not read the principal act when he spoke on this matter on 18 June. That is why I am directing him to it, and he will see that the mechanisms are already in the legislation, such that, for the retailers, whom the Premier describes as rip-off merchants and who are currently on-selling this electricity without having paid for it, the principal act already has the mechanism there for them to do the right thing: to pay for it.

The member for Light also said that he was not supporting my bill because he did not agree that—I think that one was setting a price of about 20¢ a kilowatt hour—that was probably a fair and reasonable price. What the member for Light and the government did was encourage TRUenergy to stop paying the 20¢ a kilowatt hour and reduce that back to 6¢ a kilowatt hour. This is what the member for Light said in this house on 18 June:

The advice available to the government is that it is worth in the order of 6¢ per kilowatt hour.

He told the world that that was the advice to the government. So, why would we expect TRUenergy and the other retailers to pay 17¢ or 20¢ when he has told the world that the advice to the government was that they should be paying only 6¢? He also told the house, on 18 June, that there would be a review—I think a statutory review—once the uptake reached 10 megawatts, which it did in May this year. He indicated to the house:

It is anticipated that the government will be in a position to advise the parliament of the outcome of these deliberations [the review] in September this year.

I can advise the house that today is the last day of sitting in September of this year, and we have seen nothing from this government other than the Premier getting his face on television and calling the electricity retailers rip-off merchants. The Premier has had since May to address this issue. Instead of doing so, however, he allowed his backbencher, the member for Light, to come into this place and say, 'We as the government believe that the retailer should be paying only 6¢ a kilowatt hour.'

I can tell you, Mr Speaker, the industry out there and those people who are writing to me daily—those people who have already spent thousands of dollars to install photovoltaic cells—have an expectation that they will be paid fairly for this electricity. This government has walked away from them. It has received its headline. It gets the Premier onto TV again (on the 1st of this month I think it was), calling electricity retailers rip-off merchants, but he does nothing to close the loophole. He does nothing to redress the wrong; in fact, he has compounded the wrong, as the member for Light did on the 18th.

I implore the government to do the right thing this time. I implore the government to acknowledge that it got it wrong in the first instance, as I told the house it would and as I told the house that it was doing for the wrong reason—it had the wrong motive. I implore the government to now acknowledge that it got it wrong and to accept the matter I have put in front of the house. If the government has been carrying out a review since 1 May and they anticipated to have something to bring to the house by the end of September, which in practical terms would have been today, and if the government has done that work and it disagrees with the way that I propose that we determine a fair and reasonable price (and that is the determination which is already made from time to time by the Essential Services Commissioner), it should be in a position to make an amendment.

However, let's get on with it; let's solve this matter, close the loophole and act in good faith. That is something that I do not believe the government has been doing in this matter. It has not been acting in good faith for something like 12 months. The industry, the people who are trying to promote the installation of photovoltaic cells, and those people who are spending their own hard-earned cash to install them deserve to have a government that does the right thing by them.

I implore the government to indicate as quickly as possible that it will support this matter and, at the next opportunity, pass this bill so that we can have it enacted as soon as possible and bring those recalcitrant rip-off merchants (as the Premier would have them labelled) into line. I commend the bill to the house.

Debate adjourned on motion of Mrs Geraghty.

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