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Legislative Council - Fifty-Second Parliament, First Session (52-1)
2011-05-18 Daily Xml
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REMOTE AREAS ENERGY SUPPLIES SCHEME

The Hon. J.A. DARLEY (15:44): I rise today to speak about the problems that outback communities, particularly Coober Pedy, are facing with regard to rising electricity prices. In 1996, the South Australian government established the Remote Areas Energy Supplies (RAES) subsidy scheme, as a result of the major review into the management of the off grid electricity subsidy scheme.

Under this scheme, domestic customers within communities who meet the eligibility requirements receive a subsidy on their electricity tariff. This is to ensure that they pay no more than 10 per cent above the main electricity grid standing contract price. Eligibility requirements for the scheme include: minimum usage for the town, general infrastructure in the town and a stable or growing population. In addition to setting and administering the subsidy, the South Australian government also sets the electricity tariffs for RAES communities.

The RAES scheme is administered by the energy division of the Department of Transport, Energy and Infrastructure. I understand that, previously, prior to any increase in electricity tariffs, the energy division would discuss the proposed increases with the Coober Pedy council and negotiate an increase that was reasonable and acceptable to both parties. I am told this usually occurred well in advance of the proposed date the increase would take effect and that the tariff would be set by both state government three energy division and the Coober Pedy council.

However, I understand this process was not followed with the latest increase in electricity tariff and that the Coober Pedy council was notified by email that the electricity tariffs would be increasing 10 working days prior to the date they were to take effect. No negotiations were entered into, and I understand the council and the community are particularly disappointed that these increases were merely dictated to them.

Whilst customers who consume less than 8,000 kilowatt hours per annum will continue to receive the subsidy that ensures they will pay no more than 10 per cent above the regulated on-grid tariff, larger domestic customers and all commercial customers will face enormous increases in their power bills. In a town which relies so heavily on tourism, these increases will cripple the town and cost jobs.

The local supermarket has seen their bill increase from about $9,500 to nearly $20,000. The Desert Cave Hotel—the world's only four-star underground hotel—has seen their electricity increase from about $12,500 to over $28,000. These businesses will not be able to absorb these increases and therefore will have no other choice than to pass the cost on to tourists and consumers, resulting in a price increase for all goods and services in town. Further to this, the desalination plant which services the town expects their account to increase from just over $16,000 to over $35,000. So, not only will residents be paying more for their goods, services and electricity, they will also be paying approximately 25 per cent more for their water.

In response to the community concern, the minister has announced that the tariff increase will be phased in over the course of three years rather than one. This is only prolonging the pain of the Coober Pedy community, which already feels cheated, as South Australia is the only Australian state which does not have equalisation for electricity prices. In addition, the minister has announced that the government has engaged KPMG to undertake a review of the RAES scheme and to analyse and identify long-term solutions, such as connection to the grid and renewable energy alternatives.

I understand the Coober Pedy council has already explored possible renewable energy alternatives, including solar and wind power; however, it discovered these options were not viable. From this, it would appear that connection to the electricity grid would be the most viable option. It would be worthwhile for KPMG to familiarise themselves with the outcome of the council's investigations before undertaking their own review, rather than wasting their time and taxpayers' money to conduct their own analysis.

Time expired.

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