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Legislative Council - Fifty-Fifth Parliament, First Session (55-1)
2024-11-26 Daily Xml
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National Electricity (South Australia) (Orderly Exit Management Framework) Amendment Bill

Introduction and First Reading

Received from the House of Assembly and read a first time.

Second Reading

The Hon. C.M. SCRIVEN (Minister for Primary Industries and Regional Development, Minister for Forest Industries) (19:47): I move:

That this bill be now read a second time.

As Australia responds to climate change, the National Electricity Market is transitioning from a centralised energy system that relies on thermal generation to a modern energy system containing widely dispersed renewable generation. The pace and scale of this transition brings new opportunities to Australia for cheaper and cleaner forms of energy; however, this transition also brings key challenges to the National Electricity Market.

Thermal generators face long-term difficulties from challenging market conditions and an ageing fleet. To maintain system reliability and security, it is essential that, as thermal generators retire, there is adequate renewable generation and supporting network infrastructure in place. Governments are doing much to support the transition, including through support for new generation, such as the Australian government-supported Capacity Investment Scheme and through support for new network investment, including through the Australian government's Rewiring the Nation program.

South Australia is fully committed to a national approach, becoming in July 2024 the first state to sign a final Renewable Energy Transformation Agreement. This agreement includes Australian government underwriting support for a minimum 1,000 megawatts of new wind and solar projects in the state and 400 megawatts of new storage capacity in the state. But there are practical limits as to how much infrastructure can be put in place in a given timeframe, leading to the possibility of timing mismatches associated with the exit of coal or gas-fired generation, and risks of reliability or system security shortfalls. As well, key projects may be subject to delays.

In this context, existing mechanisms in the National Electricity Law and Rules, such as market pricing and settings, including the market price cap and the Retailer Reliability Obligation, may not be sufficient to address all potential risks associated with the early closure of a thermal generator. As a result, there is a need for a mechanism to ensure the potential early exit of thermal generation does not adversely impact on reliability and system security needs.

The National Electricity (South Australia) (Orderly Exit Management Framework) Amendment Bill 2024 serves to meet this need by establishing an orderly exit management framework. On 17 September 2024, energy ministers approved this bill and, with South Australia the lead legislator for the national energy laws, it is being debated here today. The framework establishes a transparent process that enables jurisdictions to, firstly, identify whether the early retirement of a thermal generator creates system reliability or security risks; secondly, investigate alternatives to replace the outgoing capacity, undertake voluntary negotiations with the generator; and, thirdly, as a last resort, direct the generator to continue to operate until the risk of its retirement is managed.

It is important to note that the framework will only apply in a jurisdiction if that jurisdiction opts in by making the necessary regulations in their respective application act. The cost of the framework will be met by consumers in the jurisdiction in which the generator is located. The intention of the framework is that any reliability or system security issue arising from the proposed early closure of a generator should first be addressed by identifying an alternative solution or seeking a voluntary agreement with the retiring generator. Only once these stages have been fully explored can the minister then take the step of directing a generator, via a mandatory operation direction, to provide system services for the period required to avoid a system needs shortfall.

The first stage, or gateway stage, of the orderly exit management framework is where a generator submits or has submitted an early closure proposal for a generating unit. This stage aims to identify whether a generator bringing forward the closure date of a generating unit will create a shortfall in reliability or systems security. As part of this gateway stage, the minister can elect to obtain a system-needs assessment from the Australian Energy Market Operator. This advice assesses the impacts of the proposed closure of the generating unit on the reliability and security of the electricity system.

If the minister believes there is likely to be a system needs shortfall, the minister can decide whether to trigger the next phase of the framework. As part of this next stage, the minister issues a direction to the market operator to perform a search for alternative solutions to address the system needs shortfall. Additional action such as market sounding activities may also be undertaken at the discretion of the minister. The minister must decide whether to engage in negotiations to establish a voluntary agreement with the generator to extend its operation. This can be done either following or in parallel to the search for alternative solutions.

The bill enables the minister to issue a mandatory operation direction as a last resort. Such a direction requires the generator to operate if the minister is satisfied that giving such a direction is necessary to maintain power system security or system reliability, or for reasons of public safety. Before issuing a mandatory operation direction, the minister must be satisfied there are no reasonably practicable alternatives to issuing the direction, must obtain advice from the market operator on alternative solutions, and must ensure good faith negotiations with the generator.

The generator may be required to provide prescribed information which will help facilitate informed negotiations. A mandatory operation direction to a generator will set out amongst other things the capacity to be supplied, the way in which the generating unit may be operated, the period for which the generating unit must be operated, and the circumstances in which the minister must consider amending the direction. The generator and affiliates that provide services to the relevant generating units are required to comply with the terms of the mandatory operation direction. A generator that is subject to a mandatory operation direction will be compensated for its continued operation.

The bill provides for a jurisdiction to establish a financial vehicle to make payments to a generator under a payment order issued by the minister, with the amounts to be received by the generator under the payment order being determined by the Australian Energy Regulator. The payment order may include the payments the generator is to receive for the reasonable costs of operating and maintaining their generating unit, a risk management margin, a fair margin and other costs to be prescribed by the rules. The bill provides for a mechanism to recover the costs of a voluntary agreement, a mandatory operation direction and administrative costs.

The orderly exit management framework process will be highly transparent, support good governance and provide confidence in the process to consumers through the release of key advice from market bodies. The bill allows for the South Australian minister to make initial rules. The initial rules are in the process of being finalised and are expected to be progressed to energy ministers in December 2024. If adopted, the Minister for Energy and Mining will make the initial rules pursuant, as provided for in the national energy law.

I will now step through some of the key provisions of the bill in more detail. Division 1 includes key definitions and establishes that, as I mentioned before, the orderly exit management framework will only apply if a jurisdiction decides to opt in. Jurisdictions can, by regulation, also specify the extent to which the part applies, potentially including the application of limiting criteria on the generators to which the orderly exit management framework will apply. A jurisdiction may also prescribe a regulation that an existing agreement with the generator be a voluntary agreement within the orderly exit management framework. The main reason for doing this would be to engage the provisions of the orderly exit management framework that provide for cost recovery from electricity consumers.

The gateway for the framework will be where a registered generator submits or has submitted an early closure proposal for a scheduled thermal generating unit. This is a prerequisite for the issue of a mandatory operation direction and, in practice, acts as a trigger for subsequent processes under the framework. When a generator submits an early closure proposal it is required to prescribed information intended to help inform assessments by energy market bodies and, if required, support balanced negotiations between the generator and the jurisdiction.

Division 2 describes the mandatory operation direction. In practice, the requirements for the issue of the mandatory operation direction largely establish the sequencing of processes under the framework. These processes establish a solid information base for the minister to make an informed decision on the best way to address a system need arising from the early closure of a generator. The minister is required to obtain advice from the Australian Energy Market Operator on the impact of the proposed closure of the generating unit on the reliability and security of the electricity system before issuing a mandatory operation direction.

The minister is also required to obtain advice from the Australian Energy Market Operator on alternatives and be satisfied that there are no reasonably practicable alternatives before issuing a mandatory operation direction. These measures will help ensure that the minister can only issue a mandatory operation direction as a last resort to support system needs. The bottom line is that the minister will have access to the necessary information to make decisions.

The minister must engage in good faith voluntary negotiations with the generator for its continued operation before issuing a mandatory operation direction. However, the bill is not prescriptive of the terms of a voluntary agreement in order to allow flexibility in the negotiations.

Beyond those described above, division 2 specifies the requirements that must be satisfied before the minister may issue a mandatory operation direction and what this direction must include. Note that, to provide greater certainty to markets, there are limits to the period that a mandatory operation direction can require the continued operation of a generating unit. Division 2 also sets out the processes for amending and terminating a mandatory operation direction.

Division 3 includes provision for the information and reporting requirements. The detail of the prescribed information requirements for generators will be set out in the rules but is anticipated to cover information on the technical condition of the plant and also financial information with respect to the generator, including information on the generator's costs.

Division 4 covers financial matters, including the payments to be made to and from the generator and the structures for determining and making those payments. Note that the payment and cost-recovery structures may be used to make payments to and from a generator that is subject to a mandatory operation direction but also for a voluntary agreement with a generator or, in some cases, an alternative option.

The structures for making payments to the generator and to market bodies for administrative costs include the establishment of a financial vehicle and an orderly exit management fund. The financial vehicle will make payments to the generator and also market bodies, drawing money from the fund. This division also specifies what money must be paid into the fund, including that received by the financial vehicle from distribution network service providers under a contribution order or from a generator under a generator payment instrument.

The costs of the framework will be recovered from the consumers through distribution network service providers. The Australian Energy Regulator will determine the orderly exit management contribution to be paid by a distribution network service provider. The financial vehicle will direct a distribution network service provider to make the payments in accordance with the contribution determination to the orderly exit management fund through a contribution order.

Division 5 covers miscellaneous items, including exemptions from some of the requirements for the issue of a mandatory operation direction, mainly related to situations where there is less than 30 months to the proposed early closure date. The division also protects the minister from any claims relating to actions under the framework and a process for the Australian Energy Market Commission to periodically review whether the policy objective in terms of the orderly exit management framework remains appropriate. I commend this bill to members of the council.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause is formal.

2—Commencement

This clause provides for the measure to commence on the day that it is assented to by, or on behalf of, the Crown.

3—Amendment provisions

This clause is formal.

Part 2—Amendment of National Electricity Law

4—Amendment of section 34—Rule making powers

Section 34 of the National Electricity Law as amended by this clause will authorise the AEMC to make rules for or with respect to any matter or thing related to, or necessary or expedient for, the purposes of orderly exit management under Part 8AA of the Law.

5—Insertion of section 90EG

This clause inserts a new section.

90EG—South Australian Minister to make initial Rules relating to orderly exit management

Proposed section 90EG authorises the South Australian Minister to make Rules for matters or things necessary or expedient for the following:

the making of mandatory operation directions under Part 8AA Division 2 of the Law;

the information that must be given to the AER, or otherwise disclosed, under Part 8AA Division 3 of the Law;

the functions of the financial vehicle under section 118AS of the Law;

the administration of the OEM fund under Part 8AA Division 4 Subdivision 2 of the Law;

payments to and by MOD generators under section 118AY of the Law;

the orderly exit management cost recovery mechanism under Part 8AA Division 4 Subdivision 4 of the Law.

6—Insertion of Part 8AA

The clause proposes the insertion of a new Part.

Part 8AA—Orderly exit management

Division 1—Preliminary

118AA—Definitions

This section provides definitions of terms used in Part 8AA.

118AB—Application of Part to jurisdiction

Under this section, Part 8AA does not apply in a participating jurisdiction unless a regulation made by the Governor of that jurisdiction, on the recommendation of the Minister, is in force specifying—

the date from which the Part applies; and

the extent to which the Part applies; and

the way the financial vehicle is to be established.

The section also provides that an agreement made between the Minister and a Registered participant before Part 8AA applies in the participating jurisdiction may be prescribed by a regulation as a voluntary agreement.

Division 2—Mandatory operation direction

118AC—Generating units that may be subject to mandatory operation direction

This section provides that the Minister may issue a mandatory operation direction for a relevant generating unit if the relevant Registered participant has submitted an early closure proposal for the unit.

118AD—Mandatory operation direction

This section makes provision for the Minister to issue mandatory operation directions requiring a Registered participant to operate 1 or more relevant generating units. Before issuing a direction, the Minister must be satisfied that giving the direction is necessary for the national electricity system or a region within the national electricity system to maintain power system security or system reliability, or for reasons of public safety.

118AE—Registered participant must comply with mandatory operation direction

If a Registered participant receives a mandatory operation direction, they must comply with the direction and also with the Rules obligations. This section also provides—

that a Registered participant does not incur liability for breach of contract, breach of confidence or another civil wrong by complying with a mandatory operation direction, including the Rules obligations; and

for the Rules to prescribe circumstances in which a Registered participant is not required to comply with a mandatory operation direction.

118AF—Minister to make information public

This section requires the Minister, when issuing a mandatory operation direction, to make the following information publicly available in accordance with the Rules:

the reasons the Minister is satisfied that giving the direction is necessary;

a list of the energy projects considered before making the direction.

118AG—AEMO to make information public

Advice given to the Minister by AEMO (as required under section 118AD) on the impact, or likely impact, of the closure of a generating unit must be made publicly available by AEMO within 60 days after the advice is given.

118AH—Voluntary agreement

Under this section, the Minister must, before issuing a mandatory operation direction, negotiate in good faith to seek agreement with the Registered participant for continued operation of the relevant generating units

118AI—Mandatory operation direction applies to affiliates

This section provides that a mandatory operation direction, including the Rules obligations, applies to an affiliate of a Registered participant in the same way as the direction applies to the Registered participant if the affiliate provides services for 1 or more relevant generating units subject to the mandatory operation direction.

118AJ—Amendment of mandatory operation direction

This section authorises the Minister to amend a mandatory operation direction by revoking the direction and issuing a new one under section 118AD.

118AK—Termination of mandatory operation direction

Under this section, the Minister may terminate a mandatory operation direction by giving the Registered participant subject to the direction and the AER written notice specifying that the direction is terminated. The notice must also specify the date, not less than 3 months after the date of the notice, on which the termination takes effect.

The section specifies circumstances in which a mandatory operation direction may be terminated by the Minister.

118AL—Closure of generating unit after mandatory operation period

Immediately after the mandatory operation period applying to a MOD generating unit ends or is terminated under section 118AK, the Registered participant that operates the generating unit must cease operating the generating unit. In addition, the Registered participant's registration under section 12 in relation to the generating unit ends.

118AM—Compliance with obligations after closure of generating unit

This section requires a Registered participant who is or was subject to a mandatory operation direction to keep in place arrangements to ensure the Registered participant can, on the closure of a MOD generating unit, comply with all of the Registered participant's obligations associated with the generating unit and meet all liabilities associated with the generating unit including liabilities arising from closing the unit.

Division 3—Information and reporting

118AN—AEMO and AER may disclose information

This section authorises the Minister to direct AEMO and the AER to provide information to the Minister or to each other.

118AO—Information must be given to AER

Information of a kind prescribed by the Rules must be given by a Registered participant to AER as required by this section.

118AP—AER may request other information

The AER may, under this section, request a Registered participant, in writing, to give the AER information the AER reasonably requires for its functions under Part 8AA or other information of a kind prescribed by the Rules. A Registered participant who receives a request under the section must comply with the request.

118AQ—Information disclosure

This section requires the Minister, if they issue a mandatory operation direction, to publish a notice that includes the following information:

the Registered participant to whom the direction was issued;

the relevant generating units to which the notice applies;

the way the relevant generating units must be operated;

the generating capacity that must be supplied by the relevant generating units;

the period for which the relevant generating units must be operated;

the circumstances in which the Minister must consider amending the direction;

information prescribed by the Rules.

Further, if the Minister enters into a voluntary agreement, they must publish a notice containing information prescribed by the Rules.

118AR—Annual performance report

Under this section, if a Registered participant is subject to a mandatory operation direction, they must, in accordance with the Rules, prepare an annual report setting out the following:

the Registered participant's compliance with the direction;

the technical condition of each relevant generating unit to which the direction applies;

the duration, scope and cost of forecast maintenance for each relevant generating unit to which the direction applies;

financial information prescribed by the Rules;

information, prescribed by the Rules, about the fuel used in each relevant generating unit;

other information prescribed by the Rules.

Division 4—Financial matters

Subdivision 1—Financial vehicle

118AS—Establishment and functions of financial vehicle

Under this section, the Minister must, within a reasonable time after a regulation is made under section 118AB, establish the financial vehicle in the way prescribed by the regulation. The functions of the financial vehicle are the functions set out in Part 8AA Division 4 in addition to the functions prescribed by the Rules. The financial vehicle is required to act in a commercially reasonable and prudent way.

Subdivision 2—Orderly exit management fund

118AT—Establishment of orderly exit management fund

The financial vehicle is required under this section to establish a fund called the orderly exit management fund. Money in the orderly exit management fund must be paid into an account kept with an authorised deposit-taking institution.

118AU—Payments into orderly exit management fund

It is a requirement under this section that the following money be paid into the orderly exit management fund:

all money received by the financial vehicle under a contribution order or a generator payment instrument;

interest paid on money in the fund;

all money appropriated by the Parliament of a participating jurisdiction, or advanced by the Treasurer of a participating jurisdiction, for payment into the fund;

all money borrowed by the financial vehicle;

other money required to be paid into the fund under the Regulations, the Rules or another law of a participating jurisdiction.

118AV—Payments from orderly exit management fund

This section specifies that the following payments may be made from the orderly exit management fund:

money required for the functions and obligations of the financial vehicle under Part 8AA;

money required for the functions and obligations of AEMO and the AER under Part 8AA;

money required to be paid from the fund by the Regulations, the Rules or another law of a participating jurisdiction.

118AW—Payments where mandatory operation direction not made

Under this section, if the Minister is satisfied there is a reasonably practicable alternative to issuing a mandatory operation direction, the Minister may direct the financial vehicle to make payments from the orderly exit management fund to meet reasonable costs associated with the reasonably practicable alternative.

118AX—Payments where voluntary agreement made

This section provides that if the Minister makes a voluntary agreement, the Minister may direct the financial vehicle to make payments from the orderly exit management fund in accordance with the agreement.

Subdivision 3—Payments to and by MOD generators

118AY—Ministerial order

Under this section, the Minister must, following the making of a mandatory operation direction, by 1 or more written orders made in accordance with the Rules, direct that the payments set out in the order be made by the financial vehicle to a MOD generator or be made—

by the financial vehicle to a MOD generator; and

by a MOD generator to the financial vehicle.

A payment order may specify the payments a MOD generator is to receive for the following:

the reasonable costs directly related to operating and maintaining the relevant MOD generating unit and, in accordance with the Rules, a fair margin on those costs;

a risk management margin, including risks associated with the relevant MOD generating unit being inoperable for 1 or more periods of time;

other costs prescribed by the Rules.

A person subject to a payment order is required to comply with the order.

118AZ—Excluded matter

This section provides that a generator payment instrument is declared, under the Corporations Act 2001 of the Commonwealth, to be an excluded matter for Chapter 7 of that Act.

Subdivision 4—Orderly exit management cost recovery mechanism

118AZA—Orderly exit management contributions

This section specifies how the amounts of orderly exit management contributions to be made by a distribution network are to be determined:

amounts determined by the AER for payments under a payment order;

amounts determined by the Minister for payments made—

to a Registered participant under a voluntary agreement; and

under section 118AW;

amounts determined by the Minister to meet—

costs incurred by AEMO and the AER for advice, assessments, determinations, information and reports and other functions under this Part; and

the financial vehicle's reasonable exercise of functions under this Part;

amounts provided for in the Rules.

118AZB—Public notice of orderly exit management contributions

This section requires the AER to determine the orderly exit management contribution to be paid by a distribution network service provider for a financial year and make the determination publicly available in the Gazette and in other ways determined by the AER or the Minister.

118AZC—Orderly exit management payments by distribution network service providers

Under this section, the financial vehicle may, by written order, direct a distribution network service provider to make payments to the orderly exit management fund in accordance with the contribution determination applying to the distribution network service provider.

118AZD—Cost recovery by distribution network service providers

This section provides that the Rules may make provision for a distribution network service provider to recover certain amounts from electricity consumers and refund an amount, or part of an amount, paid by electricity consumers.

Division 5—Miscellaneous

118AZE—Minister not required to take certain actions before making mandatory operation direction

This section provides that the Minister is not required to comply with certain provisions of Part 8AA before issuing a mandatory operation direction for a relevant generating unit if, on the application of the Part in the participating jurisdiction, there are less than 30 months before the expected early closure date of the generating unit.

Further, the Minister is not required to comply with section 118AH before issuing a mandatory operation direction for a relevant generating unit if—

there are less than 30 months before the expected early closure date of the generating unit; and

the Minister is of the opinion that the anticipated closure of the relevant generating unit represents an unacceptable risk to power system security or national electricity system reliability.

118AZF—No liability for enactment or operation of Part

This section provides that no action, claim or demand lies, or may be made or allowed by or in favour of a person, against the Crown, the Minister or another person exercising functions under Part 8AA for or in relation to any damage, loss or injury sustained or alleged to be sustained because of the enactment or operation of Part 8AA or because of anything done, or purporting to be done, or a rule made, under the Part.

118AZG—Review of Part

The AEMC is required under this section to periodically review Part 8AA to determine whether the policy objectives of the Part remain valid and whether the terms of the Part remain appropriate for securing those objectives.

118AZH—Consultation between NSW and ACT

The relevant Minister of New South Wales is required under this section to consult with the relevant Minister of the Australian Capital Territory in certain specified circumstances.

The Hon. H.M. GIROLAMO (20:01): Clearly, this government has become even more arrogant as they rush through yet another important bill. This is not fair on the opposition, but particularly unfair on the crossbench, having to get across multiple bills within a very tight timeframe and we are ramming through this bill at this stage.

This piece of legislation comes at a time when South Australians are facing unprecedented energy costs. While this bill attempts to address the orderly exit of thermal generators from the National Electricity Market, we must recognise that our first goal should be ensuring affordable and reliable energy for all South Australians.

On 24 November 2023, the Australian energy ministers agreed to an opt-in orderly exit management framework for the National Electricity Market. The exposure draft bill and rules were open for consultation until 24 July 2024, and the bill was approved by the energy ministers on 17 September 2024. As with previous amendments to the national energy laws, South Australia is the lead jurisdiction.

For many years now the energy market has been subject to a rapid and unregulated push towards renewable energy, often with little consideration of its practical implications. While the pursuit of a cleaner energy future is important, we cannot ignore the reality that the transition to renewable energy sources, without proper planning and safeguards, has placed our energy security at risk. The closure of base load thermal generation plants, such as coal-fired and gas power plants, has left us vulnerable to power shortages and higher electricity prices.

On paper, the orderly exit management plan seeks to provide governments with the ability to manage the early exit of thermal generators. While the intention is to help ensure a secure and reliable energy supply during this transition, we must question whether this bill goes far enough in addressing the real concerns of South Australians, and that is skyrocketing energy prices and increasing risk of blackouts.

The reality is that for many years the focus of renewable energy has led to a lack of planning and foresight for the future needs of our electricity grid. With the rapid closure of coal-fired power stations, we have been left scrambling to replace their capacity and unreliable sources, such as wind and solar, being our only option. This has resulted in a grid that is no longer as stable or as reliable as it once was and, as a result, South Australian families and businesses are paying the price. Our power bills are now the highest in the nation and there are few signs that this trend will reverse any time soon.

While this bill may provide a mechanism to manage the retirement of thermal generators, we must be cautious about its long-term impacts. If we do not address the fundamental issue of affordable energy, we will continue to see South Australians burdened with high electricity prices and our energy security will remain at risk. While the orderly exit management framework may offer some short-term solutions, it does not solve the larger problem of rising energy costs and unreliable supply. I urge this government to consider the long-term implications of this bill and to strive for energy policies that prioritise affordable and secure energy for the future.

The Hon. S.L. GAME (20:05): I rise to speak on the government's National Electricity (South Australia) (Orderly Exit Management Framework) Amendment Bill. The relentless and rapid push toward the 100 per cent net renewable energy target in South Australia continues to have a negative impact on business and consumers in this state. In May this year, the Australian Energy Market Operator called for urgent investment to cover a forecasted reliability gap between supply and demand, a gap which is destined to widen and peak with the increasing demand for power over the summer months.

The recent closures of two diesel power stations in South Australia within months has only made the situation worse, creating less available electricity and therefore an inevitable increase in price. The high cost of electricity is already crippling both businesses and households, but the march to 100 per cent renewable by 2027 rages on. However, what this bill shows us is that even the government is concerned about the increasing pace of this energy transition.

The government has raised concerns about the exit of coal or gas-fired generation and how the early closure of thermal generators will impact the reliability of system shortfalls. Hence, the government's proposal for an orderly exit management framework, which is designed to address the potential risks associated with the early closure of thermal generators. The proposed framework will firstly identify the level of risk to reliability and security posed by the early retirement of a thermal generator.

Secondly, alternatives to replace outgoing capacity will be negotiated and, lastly, if the previous steps are unsuccessful, the minister will have the power to issue a mandatory operation direction which will require the generator to continue operating in order to maintain the security or reliability of the system. It is clear that the transition to renewables is moving way too fast and that even the government, which has devoted itself to renewables, is so concerned about this that they are seeking to give themselves the power to compel thermal generators to continue operating to maintain the reliability of the system.

The real concern about this proposed framework, however, is that the cost of implementing this framework will be met by consumers. While I extend my gratitude to the minister and his office for being transparent about passing this cost on to consumers, it does not lessen the impact that any increase in cost will have for a business or household already struggling to make ends meet. Effectively, consumers are not only paying for the cost of moving to renewable energy but consumers are also being asked to foot the bill for the additional cost of propping up a collapsing system that continues to buckle under the pressure of meeting the unrealistic target of net zero.

The South Australian community must have reliable electricity, and the purpose of this bill is to achieve that outcome; however, the ongoing and rising cost of electricity is not an issue that can be shelved for another day. While it is possible that the proposed framework might not be adopted by the South Australian government, the potential cost to consumers remains and the drive for renewables continues unabated.

The Hon. R.A. SIMMS (20:08): I rise to speak on the National Electricity (South Australia) (Orderly Exit Management Framework) Amendment Bill on behalf of the Greens. From the outset, I want to join in the sentiments of the Hon. Heidi Girolamo when she remarked on the arrogance of this Labor government in approaching a bill of this magnitude in such a hasty way. I do find it highly frustrating and might I say insulting to the crossbench members in particular, but also to the opposition, that the government would seek to deal with a bill with this level of complexity in the last sitting week before the Christmas break. Not only do they want us to deal with the bill in terms of doing our second reading speeches, they want us to go through every stage of the bill.

When did we get this bill? It was introduced into the other place I think this morning. It has been rammed through there and now it has come through here. This is not a sausage factory. It is meant to be a house of review. Our role is to work through bills and to form a position on bills that are put to us based on engagement with stakeholders, based on consideration of the relevant issues. My office did not have an opportunity to have a briefing on this bill until Thursday of last week. I have not had any time to undertake any consultation.

This is a bill that apparently has national implications. There has not been an opportunity to consider what this might mean for other jurisdictions. I have repeatedly asked the government for more time and I have been told, 'No, it has to be done now.' I think the government really needs to justify to this chamber what the urgency is, when the relevant minister became aware of this proposal and why it has only been brought to the parliament now. I find it very hard to believe that the minister only found out about this last week and that there was no opportunity for members of the parliament in the opposition or indeed the crossbench to be given information and to form a considered position.

It is arrogant, and it is inappropriate. I am all for the government working through their agenda in the parliament, but the role of the crossbench is to look at bills the government puts forward and to work out whether the government has got the balance right. I am not sure how we are meant to do that at literally a minute to midnight under a timeframe that has been imposed on us by the government.

I think they are going to have some explaining to do at the committee stage: who knew what and when, what is the urgency here and what are the potential implications? Simply reading a second reading speech into Hansard and saying, 'Hey, presto. Just back this bill,' I do not think is the appropriate way to be dealing with people in this place.

I will make a few general comments in relation to the bill, and they are of a general nature because I have not had the opportunity to do the deep dive I would like to do into a bill such as this, because we simply have not had the time.

I understand that the purpose of these laws, for which South Australia is the lead legislator, is to ensure the reliability and stability of our electricity grid in circumstances where the operator of a thermal generator indicates that the generator will make an early exit because of its age, unreliability and inability to compete. Under the rules set out in this bill, I understand there will be a three-step process that could lead to a ministerial intervention, which is described as a backup tool for governments to address any reliability or system security shortfalls and, if not, to ensure enough other capacity in renewables has been built in time.

It is essential that we have a stable and reliable electricity grid, but it is concerning to the Greens that under these laws state energy ministers will be given the power to force coal-fired generators and other fossil fuel plants to stay open for up to three years if they believe the capacity is necessary for grid reliability and security and if a negotiated deal with the market operator cannot be reached.

I understand that these powers are only intended to be used as a last resort—that is, when there is a risk to grid stability and when there are no viable alternatives to replace the outgoing capacity. Nevertheless, it opens up the possibility of artificially extending the life of not only coal generators but potentially gas generators too.

I am concerned about the Malinauskas government's reliance on gas. They do seem to like hot air, and I am concerned about the way in which gas is forming part of their hydrogen plan. The Greens warned about this over a year ago. We sought to have a parliamentary inquiry so we could look at the implications of what the government was putting forward then, and again they said, 'No, we can't possibly have that. Let's just invest a huge amount of public money in this project. Let's go down the gas path, and God forbid we have any parliamentary scrutiny of this proposal.'

We are now starting to see, a year on, that the agenda of the Malinauskas government when it comes to hydrogen is fraying at the edges. It is looking more like a mirage for that community. We were told at the time that it was going to be a gold rush for the people of that community. It is looking a lot more like fool's gold now for the people of that community because the government did not allow the parliament to do the due diligence.

When are they going to stop rushing ahead with energy policy like this without giving us an opportunity to actually look into the details? I am concerned about what this might mean for gas. It is concerning that the cost of this framework could be recovered from consumers through distribution network service providers. The last thing South Australian families need now is yet another spike in energy bills.

We have long known that Australia's fleet of fossil fuel generators are aging and increasingly unable to compete with renewable energy sources, just as we have known about the urgent need to transition to renewables to address the climate crisis. It is threatening our planet and we need to take action. Disappointingly, state and federal governments have dragged their heels on investing in large-scale renewable generation and storage, and this is what we need for an orderly transition to renewable energy. Of course, the result is the failures that we are seeing today. These laws must not be misused to prop up the failing coal and gas industry or to further delay the inevitable transition to renewable energy.

Now more than ever we need governments to step up and commit to the large-scale public investment in renewable energy and storage that we need to replace every coal-fired power station in the country, ensuring that we deal with the climate emergency in time. Again, this is a national approach that is being taken here. I would like to really understand what the consequences might be for coal-fired power stations in other jurisdictions. Are we throwing them a lifeline? What are the long-term consequences of what the government is proposing here?

It is going to be very difficult for us to work through that in the timeframe that the government has imposed on us. I really make a plea to them: when you are dealing with energy policy in the future, please give this chamber of parliament the time it needs to do its job. Stop rushing ahead on these complex matters.

The Hon. F. PANGALLO (20:16): I, too, share the frustration, exasperation and annoyance that this bill has been brought to the Legislative Council on the same day as it has come through the House of Assembly. This is a very poor way for the Malinauskas government to conduct its business and its legislation. As the honourable member has pointed out, this is a house of review. Even though we understand and it has happened before that there is some urgent legislation that sometimes we do need to get through, I would not have minded 24 hours even to be able to review this legislation.

Here is the irony: I was told this morning by Labor that they did not have time to consider my terror symbols bill, which I intended to bring to a vote tomorrow and which I introduced a couple of weeks ago. They had no time to consider that but they want us to consider their bill in a matter of hours today and put it through. They are rushing it through. Why are they rushing this bill through? I will tell you why, and this is just going on my brief brief that I received from the government this morning.

Of course, they would not want the publicity at this time, but quite clearly what is going to happen here, if the powers in this bill are actually exercised, is it will lead to an increase in power bills. They made it quite clear to me this morning in relation to getting the power companies to keep their old power stations, whether they be gas or coal-fired, going beyond the life that the companies envisaged, somebody has to pay those operators for that.

When I asked the question, 'Who is going to pay for it?' of course they will be compensated, and of course from that it is going to be passed on to consumers. That is what they said to me today: 'Ultimately, we expect companies like SA Power Networks to pass that on to consumers.' What we are going to get as a result of this legislation, if it is enacted, is higher power bills from Labor. It is not just Labor in South Australia but Labor in New South Wales, Victoria and other states.

My understanding is that essentially this is intended—the fact that we are part of this national structure—to assist New South Wales which, of course, is facing a crisis as a number of their coal-powered power stations are going to be shut down. What this is all about is actually like insurance. It is an insurance policy to get 24/7 dispatchable power to keep the lights on because the government here and in Canberra do not have confidence in the security of their costly push to renewables—wind and solar—which is going to cost taxpayers hundreds of billions of dollars which are going to be spent by a totally deluded federal minister, Chris Bowen, and his leader, the Prime Minister, Anthony Albanese.

This legislation is designed to keep fossil-fuelled power stations operating beyond their use-by dates while transmission lines continue to be connected to what has become an unstable and unreliable grid. As I said, who is going to pay for all this? Well, taxpayers. It is going to come in the form of higher power bills. Remember that Anthony Albanese and his government promised that they were going to reduce power bills by $275 during the term of their government. That has not happened. Power bills have actually gone up.

In South Australia, both Labor and the Liberals have constantly consistently promised to reduce power bills, and South Australia continues to have amongst the highest power bills in the world. Power bills are not coming down. There is no relief for families that are being subjected to enormous cost-of-living pressures and higher power bills. This legislation is being rushed through simply because they want to have their insurance in place in case anything goes wrong, or they need to keep the gas-fired power stations at Torrens Island and elsewhere, and also the coal-fired power stations. They just need to have them there ready in the event that we have another power blackout as we had in 2016 in South Australia, or what happened in New South Wales recently where a city like Broken Hill was left without power for nearly two weeks.

As I was saying before, how ironic that federal Labor—and, to an extent, state Labor, but federal Labor—is against gas and coal. Of course, state Labor wants gas as part of its mix, and it is not just part of its mix; it is also that gas is an important part of the state's economy, with our Moomba gas fields. That is why Labor in South Australia is keen to continue the use of gas in this state. I have no objection to it—I am sorry, Mr Simms. I think gas is a valuable commodity to the state, and will continue to be, and companies like Santos play an important part in the economy of this state. I would always support the use of gas even though we are likely to see higher prices for gas.

As I said, I was told this morning that consumers will ultimately be slugged for any costs incurred if it means that they need to exercise the aspects of this legislation in future. Again, here is a Labor government in this state that is trying to deliver hydrogen energy. I say this to the Premier, who continues to chase that folly of hydrogen. Again this morning, the Premier was noncommittal about when contracts are going to be signed for this. I will call it now this 'unicorn'—or could it be a green elephant?—in Whyalla, because at this point no contracts have been signed for that plant.

Even though the Premier promised it to be delivered, or to start to have it ready, by 2026, it looks like, from his comments today, 'We did put a date on it, but don't worry. It's not important that we did that. It's really about making sure that we can deliver and have the proper contracts in place for when it all starts.'

If you wanted reliability in power supply 24/7, when it is night and day, you would support nuclear energy rather than beat around the bush just to appease the left of the Premier's party. He says, 'Show me the proof that it's viable and we will look at it.' He knows—he knows, because I think he quietly supports it—that nuclear is going to be the way to go. He said on radio this week that there was truckloads of evidence to show why nuclear energy, nuclear reactors, are too costly and not viable.

Yet, I will say this to the Premier: why are more advanced and progressive economies embracing it, and in some countries they are now bringing it back? What does the Premier know that these countries—and as I said, these are bigger economies than ours—do not? We have the world's best reserves of uranium, gas, oil and coal, yet federal Labor wants to forsake all that for Chris Bowen's mad pursuit of solar, wind and whatever else except for those fossil fuels.

We know that, as I said, gas is going to be important to the economic welfare of this state. It looks to me that in some states they are now thinking again about coal. Certainly, Queensland is going to be looking at that again, and that is because governments around the country—quietly—and the leaders of those governments, do not have confidence in the stability and the security of the power grid in this country, because of this incredible pursuit of net zero.

Everything else was set aside to get wind and solar projects off the country and at the same time build this enormous transmission power grid across the country, which again is costing hundreds, maybe even billions, of dollars. It is an enormous cost, an enormous cost that power ideology by political parties, particularly Labor, and the Greens—

The Hon. R.A. Simms: Ah, Frank.

The Hon. F. PANGALLO: Especially the Greens, sorry—especially the Greens—are trying to impose—

The PRESIDENT: Interjections are out of order. Responding to them, the Hon. Mr Pangallo, that is out of order. Just continue on and let's be respectful here.

The Hon. F. PANGALLO: Thank you. I am winding up, Mr President; you do not need to wind me up.

The PRESIDENT: Hear, hear!

The Hon. F. PANGALLO: It is not going to be a long one. All I am saying is that we are getting to a situation here where the power and energy needs of this country are obviously not going to be met by the current policies that are being pushed by federal Labor.

In closing, I will reiterate my disappointment that we have not had an opportunity to really absorb what is in this bill. I am sure there is a lot in there. There is going to be a sting in the tail, there is going to be an unintended consequence. This is all about, firstly, a government in this state that was not organised enough to get this bill prepared and ready before the end of the year, and also the necessity of New South Wales, which actually wants this in place as well, which probably has greater needs than we have. So it is really trying to appease the other states in order to get this going. We set the groundwork and then they will follow.

With that, I will have to support the bill but, as I said, there could be unintended consequences that this legislation could ultimately add to the cost of power bills in this country and in this state.

The Hon. C. BONAROS (20:31): I rise to speak very briefly on this bill. In response to some of the questions that I have had, I have been advised that, as we all know, we are the lead legislator for national energy laws. In its own words, the government is seeking to pass this bill through both houses this week to ensure passage before the end of the year. This, we are told, is to enable the rules package of the orderly exit management framework to be finalised and progressed to energy ministers for approval at the Energy and Climate Change Ministerial Council meeting that is scheduled for 6 December.

The framework we are told, or at least I have been told, has been informed by two rounds of public stakeholder engagement, namely the design of the framework, which was consulted on between December 2023 and February 2024, and an exposure bill and rules package was released for comment between June and July of this year. Following this, I am told that energy ministers approved the bill to establish the framework and that that took place on 2 September.

My questions in response to those particular comments, which I now have some answers to, were, 'What happened between 2 September and now?' and the response to me has been that following the drafting of the bill through parliamentary counsel and cabinet approval, the bill was introduced into the House of Assembly. So from 2 September until we saw the passage of the bill, the package that we are talking about was the subject of those two things: drafting, firstly—very important—and cabinet approval.

None of us really know what priority this took in that cabinet approval process but I agree with the sentiments expressed this evening in relation to bringing this, indeed, briefing most if not all of us and expecting us to pass a bill in one day. There are of course ramifications not just for this jurisdiction but for every jurisdiction if we do not do that because the other jurisdictions will not have the ability to opt in through regulation unless we pass this bill.

So if, as we are told, New South Wales, for instance, and Victoria are waiting eagerly for this bill to pass and we do not get it done this week and there is nothing for the minister to present at the next meeting on 6 December, then they cannot get cracking with their own regulatory framework to complement what we are doing.

We are not the experts in this area. We have not done the leg work. We do not know the details of the stakeholder engagements that I have referred to other than, of course, what the government has told us. All we know at this stage—and I am grateful to the team, who certainly answered a lot of my questions—but all we really do know is that if we were to alter this bill the 6 December timeframe would not be met.

It is very unusual for us to alter a national bill, and I think a national bill where we are the lead legislator at least, and I think therein lies the issue with these bills around this particular issue more generally because we all kind of look at them and think, 'Well, there's not a lot that we can do here,' because it is nationally consistent laws and every other jurisdiction has signed off on them somewhere, and they just land on our tables and we are expected to sign off on them. That is generally the approach that we have taken when it comes to these bills.

Even if we do have questions or do have concerns, the chances of this parliament actually doing anything about them is zero to none because if we do we know that that means effectively going back to the drawing board at a national level with every other jurisdiction to get approval to the changes that South Australia made that every other state would have to agree to before they can even be implemented. So it is problematic, but that does not mean that we should not give this chamber the respect at least that it deserves insofar as allowing us the sufficient time to digest what it is that we are actually doing.

I have digested it in the dummy of dummies dummiest way that I possible can, thanks to the team who have provided me the extraordinarily dumbed down version of what we are doing, so that I can get my head around this in order to be talking on it today. I would not dare try to repeat any of that, other than what I have managed to get my head around, but insofar as process is involved it is terrible, and I agree with all the sentiments to that extent. It is a terrible process, and it is a terrible effort by the government to come in here and expect this bill amongst all the others.

I remind the government, while their spin doctors and media advisers and whoever else are getting pay rises and are being hired by the dozens, we have very small offices and very small teams, and this is an extraordinary workload that is being shoved on us. You might have the numbers downstairs, but you do not have the numbers here to ram things through. I think there are two, in fact at least three priorities that we have managed to put through in the last two sitting weeks in record timeframes, and I do not think any of us were expecting another this week in this form at least. I certainly was not, and so as far as process is concerned, it is a crappy one.

That said, I also acknowledge that if we do not pass this it is going to have ramifications, not just for South Australia but for the entire nation, and that is unacceptable as well. That does not sit with us now. That responsibility is going to sit well and truly with the government. When it comes to the issue of New South Wales and Victoria, I am told they are eagerly awaiting for this to pass. They need this legislation to pass. There are jurisdictions that need this to pass.

If it does not happen by 6 December we are not going to have a chance to do this until February next year, or whenever it is we next sit—I have not looked at the calendar yet. Whenever we next sit, we are going to have to call another ministers' meeting before then or after then to get the approval, and in the meantime we will have nothing, so those jurisdictions cannot move ahead with any plans because we are the lead legislator and we have control of the timing of this legislation in this place. I will not go on about it anymore.

In terms of what the bill actually does, I do not disagree with many of the sentiments that have been expressed. The only thing I would say is I, too, ask the question around the issue of who wears the cost, if there is any, in terms of an agreement being reached with a provider? The understanding I have is twofold: either it is passed on to the consumer or the government absorbs that cost—the government basically foots the bill. I think that in at least one jurisdiction interstate that has been the case, where the government has actually footed the bill for one of these arrangements that has been put in place. That is all we know.

I will wait to see what else is said before we make a final decision, but ultimately I think we are in a bit of a no-win situation in terms of this bill passing this week, and nothing we say or do here will change that in terms of the urgency of this piece of legislation. Certainly, the way the government has conducted itself tonight leaves a lot to be desired. This might be the case because it is a piece of national legislation, but if they think this is going to be the case with every piece of legislation, which sometimes I think they do, then they are sorely mistaken.

The Hon. N.J. CENTOFANTI (Leader of the Opposition) (20:40): I was not going to speak tonight, but I now feel compelled to rise to speak very briefly to this bill because of listening to members in this chamber speak of their disappointment, their disgust, at the hubris of this government in pushing this bill through tonight. The bill was only introduced into the House of Assembly today, then it passed in the House of Assembly and now we see it here in our chamber tonight—when members have not been allowed time to adequately assess and discuss this piece of legislation. I find it incredibly disappointing.

It may be convention for oppositions to support these bills, as we have indicated that we will, but it is also convention for governments to treat this place and members of this place with respect. We have not seen that tonight, with the government pushing ahead with this piece of legislation despite concerns being raised by a number of members in this place. So, because of the arrogance displayed by the government tonight, I stand in this place and seek that this debate be adjourned.

The Hon. D.G.E. HOOD (20:42): I move:

That the debate be adjourned.

The council divided on the motion:

Ayes 11

Noes 8

Majority 3

AYES

Bonaros, C. Centofanti, N.J. Franks, T.A.
Game, S.L. Girolamo, H.M. Henderson, L.A.
Hood, B.R. Hood, D.G.E. (teller) Lee, J.S.
Pangallo, F. Simms, R.A.

NOES

Bourke, E.S. El Dannawi, M. Hanson, J.E.
Hunter, I.K. Maher, K.J. Martin, R.B.
Scriven, C.M. (teller) Wortley, R.P.

PAIRS

Lensink, J.M.A. Ngo, T.T.


Motion thus carried; debate adjourned.

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