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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
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ELECTRICITY (EARLY TERMINATION) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 15 November 2012.)

The Hon. R.B. SUCH (Fisher) (11:08): I want to make a brief contribution and, in particular, get on the record a contribution by Bruce Dinham, who older members would recall was the CEO, as we now call them, of ETSA.

Mr Pengilly: Longer serving members, not older members.

The Hon. R.B. SUCH: Who are invariably older. Thank you, member for Finniss, for that correction. He was the CEO of what used to be called ETSA, and he is very knowledgeable about electricity matters and the so-called national electricity market. I have given a copy of this to the minister, the Hon. Tom Koutsantonis, to read, and I suggest that he meets with Bruce Dinham to have a look at some of the deficiencies in the current electricity supply system.

We can debate about whether or not ETSA should have been sold and the consequences of that, but what is important to note is that we do not actually have a national electricity market in any real sense of the term. It is not a true market, and it is not truly national.

I will quote this letter written by Bruce Dinham, which was published in The Sydney Morning Herald on 17 January. It is headed 'Consumers paying for a shambles,' and he is responding to someone's article. It states:

Brian Robins' article ('Another shocker from power sector', January 15) gives an example of how the national electricity market is more an arrangement for maximising profits than minimising costs. Another example is the system of bidding by generators to derive the so-called spot price they receive. The argument that bidding creates competition leading to lower prices is nonsense. It does the opposite.

Electricity supply systems usually aim to have sufficient firm capacity (wind and solar-voltaic are not firm) to meet the maximum demand, plus a margin for maintenance and breakdown. Normally there would be little or no spare capacity to engage in competition. If there were, the system would have too much plant and be over-capitalised and badly managed.

A competent system operator would or should know the relative efficiencies and costs of generators and schedule them accordingly. The bidding system lets generators manipulate prices for their benefit.

The situation is aggravated by the setting of floor and ceiling prices that bear no resemblance to costs. This has introduced an unnecessary element of risk leading to hedging and trading in financial derivatives.

Retailers add another unnecessary cost. They don't own or operate any part of the generation, transmission or distribution systems and contribute nothing to production and delivery. They only send out bills and collect the money, adding their charges.

The argument that retailers create competition and keep prices down is also nonsense. Your electricity comes from the same generator through the same wires and the real cost of delivering it to your premises is the same, regardless of your retailer. The only competition is among retailers as to their charges.

The so-called national electricity market is an expensive shambles. There is a need for a critical examination of how it operates and the actual, real and basic costs of generating and delivering electricity as distinct from synthetic, fabricated figures made up from estimates, assumptions, manipulated spot prices and other items.

Bruce Dinham Hawthorn (SA)

I know the bill put in by the member for MacKillop is focusing on a small element of the electricity supply system, but I think it is important that it be in the context of what someone (Bruce Dinham) who knows what he is talking about is saying. I would urge all members, and particularly the government and the opposition, to have a close look at what he is saying, because the way we are going we are going to keep paying unnecessarily high prices for electricity. That is not in the interests of consumers and it represents a very unsatisfactory situation.

Mr GARDNER: The member for MacKillop had indicated that he wishes the bill to be withdrawn as events have overtaken its need. He is not present immediately, but if it is possible for it to be withdrawn without him being here then we can do so, otherwise I will move that it be adjourned.

The SPEAKER: Perhaps before Thursday 7 March the member for MacKillop, whose bill it is, can decide whether to move that it be discharged or withdrawn.

Debate adjourned on motion of Mr Gardner.

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