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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-04-08 Daily Xml
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ELECTRICITY (FEED-IN RATES) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 29 October 2008. Page 468.)

The Hon. J.M.A. LENSINK (19:47): I rise to indicate that the Liberal Party supports this bill. The feed-in scheme passed through the parliament in February last year, and I think the benefits of solar electricity installation on private homes and, indeed, on other places as well is fairly well understood by many people. However, my understanding is that this bill relates principally to households.

Solar electricity is a much more environmentally friendly alternative to other options on the grid. It avoids transmission losses, because the transfer is very local. It is peak friendly, unlike wind power, which unfortunately often tends to be generated in the winter months when our peaks are clearly in the summer months. Unfortunately, it is costly and, therefore, incentives need to be provided to assist people to take that extra step to install solar panels.

I am told that the premium of the feed-in scheme at 44¢ equates to a 15 to 20 year payback on installation. Feed-in tariffs are very important to provide not only an upfront incentive for householders but also to decrease the payback time, which is a critical factor in people deciding whether or not to install these solar panels.

The Clean Energy Council has provided me with some information from an Access Economics report, which the council commissioned into gross feed-in schemes as being a net. They state that, given the economics of solar PV, complementary measures such as a gross national feed-in tariff program will be necessary to bring forward investment in the technology. They also state that Spain, France, Italy and Korea have enjoyed considerable growth in 2007 because of similar schemes and, in particular, Germany is an outstanding example globally because of the incentives it has provided. Indeed, since the implementation of a gross feed-in scheme in 2000, Germany has experienced the highest rate of growth of solar PV in the world. During that same time frame, Australia's share of global PV has dropped considerably.

Unfortunately, after the bill was passed last year, many retailers stopped paying for solar electricity themselves and instead allowed ETSA to pay the 44¢ per kilowatt to householders for their solar electricity. On-selling the electricity generated by households back to other consumers is now being seen by retailers as a windfall, which I think is quite bizarre. If retailers are trying to claim that they are good corporate citizens, this is clearly a rebuttal of that.

AGL and Origin were paying 16¢ to 24¢ per kilowatt hour for electricity being fed into the grid prior to the bill. If they were to continue with that regime, they would receive up to 68¢ per kilowatt hour for their solar electricity. The information that we have received from the Clean Energy Council is that AGL does not provide any extra, Origin is paying 6 per cent per kilowatt on an incremental basis, and TRUenergy pays the highest level of 20¢.

In a letter to the editor, Chris Hart refers to the feed-in scheme. He says that he finds himself at odds explaining to his solar customers how they have to shop around to find a retailer who continues to pay the base rate for solar of 18¢, as a number of retailers did before the advent of the 44¢ feed-in tariff. He says:

Surely such an anomaly should be cleared up to avoid all the unnecessary confusion that is now associated with the FiT.

I have also received personal emails from various constituents urging us to support this bill. These are clearly people who have installed the panels with a view to being able to access the feed-in tariff. One chap—I will not name him because I have not sought his permission—is from Salisbury Heights. He says:

When the government introduced the rebate of 44¢ KWh AGL, my supplier, ceased to pay me anything for the power I fed back into the grid. I only received the 44¢ KWh courtesy of all the domestic electricity consumers. AGL and Origin are getting the free electricity fed into the grid by our solar generators and then on selling it to consumers at the full going rate. They are ripping us off and selling the free electricity to their customers and making large profits. I urge you to vote in favour of the... bill.

One couple at Berri who have emailed Mr Conlon have forwarded the email to us. It states:

I understand that a bill is before parliament proposing that ordinary household people... be remunerated for power that they push back into the grid as a result of power generated by their solar panels that the householder at their own expense has erected...if you are concerned about global warming, seriously interested in conservation and wanting fair play...you will support a proposal that [forces] power companies to pay the daytime rate (because that is when solar power is manufactured and pushed back into the grid) to the solar power households that push power back into the grid.

In June 2008 I put 32 solar panels on my roof at a personal cost of $14,000. At the time AGL were paying almost the daytime rate that they normally charged for power that I pushed back into the grid which was in addition to my daytime requirements. I understood that other AGL customers were being the same and I expected that to continue. AGL had not given any indication that this 'policy' was to change. But from July 1 AGL stopped paying the customer for power that they received from solar powered households and only passed on the government funded amount. They, by stealth, were now stealing my manufactured power that went back into the grid.

It is fairly obvious that there was an intention that this parliament made clear in that bill which was passed in February last year. Unfortunately, consumers who have installed panels at great expense to themselves are not now getting the benefit of that. I think it is quite bizarre that, since the passing of the bill, a number of these retailers have decided unilaterally that they will pocket the amount—I think the proponent of this bill said it was a windfall of some $350,000. So, I think this is a sensible way to clarify the intent of the parliament, and I urge all members to support the bill.

The Hon. I.K. HUNTER (19:55): I rise to advise that the government will not be supporting the Hon. Mr Parnell's Electricity (Feed-In Rates) Amendment Bill 2008 at this point in time. The government believes that the scheme should be reviewed before being overhauled in the manner described.

The Hon. Mr Parnell notes that, currently, some big retailers are essentially getting something for nothing which, of course, was not the intention of this legislation when it was introduced. Some of the large energy providers in South Australia are using the implementation of the feed-in tariff scheme as a pretext for failing to continue to pay their customers who are exporting electricity produced by their solar panels back into the grid.

One could understand the feelings of the Hon. Mr. Parnell and members of the community; if you like, they might be being ripped off slightly. However, we must remember that the act was only declared in July 2008, not even 12 months ago. Before any amendments are proposed, surely it would be prudent to undertake a thorough review of the scheme.

The Minister for Energy has promised to conduct a review of the feed-in scheme when the capacity of installed solar electricity reaches 10 megawatts. The tariff has been so successful that we expect to reach that target in the coming months. The government has already begun discussing that review and will be considering the issues that the Hon. Mr. Parnell has raised in his bill as part of that review.

However, we need to be realistic. We need to make sure that any obligations that are placed on retailers will not deter them from offering contracts to small customers, including those with solar energy that they might feed back into the grid. Competition for customers, who have solar electricity systems, is still in its infancy. It is true that only some of the companies offer packages to these customers. It is also true that the packages differ from retailer to retailer.

As the Hon. Mr. Parnell noted in his original speech on 29 October 2008, TRUenergy is one company that has continued to pay for the electricity that it receives in this manner. I for one encourage customers to shop around for the best package of price and services to meet their needs. It is this sort of competitive behaviour that will encourage retailers, one hopes, to adjust their offer to consumers.

When the tariff was introduced, we were not proposing to include an obligation on retailers to purchase energy; but, if that is what is going to make them competitive in the marketplace, it is up to individual companies to determine for themselves. As a retailer-based obligation would act as a barrier to entry into the retail energy market and thereby potentially impact on the competitiveness in that market, the government adopted a distributor-based model to avoid these issues.

In implementing the scheme, the sustainability and climate change division of the Department of the Premier and Cabinet has strongly encouraged electricity retailers to continue to pay a fair price for the excess electricity that they receive, in addition to passing on the solar feed-in payment to solar customers.

The government is watching the situation very closely, but we believe that, at this stage, it is too early to agree to any new amendments to the feed-in law prior to the government reviewing the legislation. Therefore, as I said, we will not be supporting the bill at this point in time.

The Hon. M. PARNELL (19:58): I will conclude the second reading. I would like at the outset to thank the Hon. Michelle Lensink for her contribution and the Liberal Party for its support for this bill. I would also like to thank the Hon. Ian Hunter, although, it will come as no surprise to him that I am disappointed with the content of his contribution.

I would also like to put on the record my thanks to the Clean Energy Council, and particularly Andrea Gaffney, who has helped with a great deal of the research, which effectively just told us what we already knew: that our electricity retailers are exploiting a loophole in the legislation, and they are ripping off the owners of solar panels by not paying for them for the electricity that they use. It is electricity which they effectively on sell to someone else, or at least they avoid having to go back into the market to buy other electricity, so they are making a windfall profit.

I will briefly comment on the Hon. Ian Hunter's reasons as to why the government cannot see fit to support these sensible amendments at this stage. The point he makes is that it has promised to review the legislation. It will be reviewing it when it reaches the 10 megawatt mark, which it expects to happen shortly, and then it will start the review.

He points out that the scheme has not been in operation for even a month. However, we knew after one month and we were certain after two months as to what the energy retailers were doing: they had shifted from a position of paying the owners of solar panels for the electricity that they produced, to a position of not paying for that electricity. Certainly, one company (TRUenergy) continued to pay about 20¢ a kilowatt hour but the two big providers (Origin and AGL) did not. As a result of the Greens campaign to put pressure on these retailers, we now have Origin paying 6¢ a kilowatt hour, which is better than nothing but it is certainly not the price that they are charging their customers to buy electricity from them. AGL is still not paying anything.

The honourable member talked about disincentives to people entering the marketplace in South Australia. I do not accept that for one minute. I think that we are proposing a very level playing field where everyone who wants to do business in this state is obliged to pay the people who own solar panels an amount for their electricity which is more or less equivalent to the amount that we pay them to buy their electricity.

I do not see that this is any form of market distortion at all. However, I think the heart of what the Hon. Ian Hunter says is that the government knows that we are right and the government knows that this bill deserves support. That is why he said the government is strongly encouraging retailers to do the right thing and to pay for the electricity they are collecting from these rooftop solar panels.

The government's strong encouragement has not worked because we still find these companies ripping off consumers and not paying them. We come back to the fact that it was good enough for these companies out of their own pocket to be paying the small electricity producers before 1 July yet, magically, they stopped after 1 July because the legislation was not clear enough as to what they had to do. Their compliance people, no doubt, got onto them and said, 'There's a loophole. The parliament simply requires that we pass on the 44¢; it doesn't require us to pay for the electricity separately and, therefore, we won't.'

I think it is very disappointing that the government now wants to vote against this bill and come back in a very short period of time, with probably the identical bill, by which time it will be their initiative—and that is fine; we do not want to be precious—but every day that goes by before this loophole is plugged is a day that people are being ripped off by not being paid for the electricity from their solar panels.

I think it is appropriate for us to pass this bill now. It has been professionally and conservatively drafted. It does no more than I have said it does. We know that it is workable and it simply forces companies to do the right thing. I urge all members, including those who have not yet spoken, to support this bill.

Bill read a second time and taken through its remaining stages.

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