Electricity Generation/Prices | QUESTION TIME


Excerpt from Question Time transcript 1 March 2017

Mr MARSHALL ( DunstanLeader of the Opposition) (14:13:35): My question is to the Premier. Can the Premier inform the parliament and, more importantly, can he inform the people of South Australia, precisely when he will detail his plan for resolving the state’s energy crisis?

The Hon. J.W. WEATHERILL ( CheltenhamPremier) (14:13:52): When it’s ready and when it’s— Our policy can be described— Our policy can be described in one simple— For those opposite to understand our policy, it can be described in one simple phrase—

Mr Gardner: Have you finished writing it?

The Hon. J.W. WEATHERILL: —we are taking control of our own—

The SPEAKER: The member for Morialta will depart for the next hour for flagrant breaches of the standing order. He will depart for an hour under the sessional order.

The Hon. J.W. WEATHERILL: Our policy can simply be described in one simple way: self‑sufficiency, taking control over our own energy future, standing up for South Australia. These are the principles that will guide our policy formulation. There will be a clear choice. There will be a choice between coal and renewable energy. There will be a choice between clean, affordable and reliable power and the policy chaos of those opposite. There will be a choice between the future and the past.

Mr MARSHALL ( DunstanLeader of the Opposition) (14:15:15): Supplementary, sir: can the Premier guarantee to this house that this policy, when it’s implemented, will ensure there will be no more blackouts in South Australia?

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:15:28): Any politician who promises the people of this state or any jurisdiction anywhere in the world that there will never be a blackout because they can stop every tree limb from falling on a powerline, that they can stop weather—if the Leader of the Opposition is so adamant that he can stop all blackouts under any circumstances, he should say so. Make it up, make the commitment. Make the commitment right now. If he thinks he can ensure that the lights will never go out in any suburb in any jurisdiction anywhere in South Australia, he should say so.

The Hon. A. KOUTSANTONIS: As I said to the house yesterday, the majority of blackouts that occur in any jurisdiction—and South Australia is no different—is because of weather. It is an inconvenient truth. Members opposite don’t like the answer. They think that when there’s a hurricane in Queensland, there are no blackouts. That’s not true. They think that when there’s a heatwave in New South Wales, there is no load shedding. That’s not true. They have load shedding. Of course, Victoria was nearly half out. They think that those things don’t occur. What we have here is fake news—fake news.

Mr MARSHALL ( DunstanLeader of the Opposition) (14:18:18): Can the Premier guarantee that his plan will lower electricity prices in South Australia?

The Hon. J.W. WEATHERILL ( CheltenhamPremier) (14:18:28): What I can guarantee the people of South Australia is that we will stand up and fight for them. I think there is—  I think this is an extraordinary display by those opposite of an unwillingness to stand up for South Australia and a willingness to join the chorus of people interstate that is simply trying to blackguard and damage South Australia’s reputation. It is a disgrace. It is a disgrace, the commentary that is being led by our Prime Minister and joined in by members of the Liberal Party in the national parliament and indeed given aid and comfort by those opposite.

It is a disgrace that our international and national reputation is being traduced in this way by people who have a sworn responsibility to stand up and represent the people of South Australia. So, rather than actually come in this place and add to that chorus of naysayers who are talking South Australia down, why don’t you stand up for once in your life for the people of South Australia?

Mr MARSHALL ( DunstanLeader of the Opposition) (14:19:25): Supplementary: given that South Australia is currently utilising the full 800-megawatt capacity coming across the border from Victoria, what is the Premier’s alternative when Hazelwood closes at the end of this month?

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:19:44): First, the interconnector between Victoria and South Australia does not have 800 megawatts, but why let the facts get in the way of the story?

If Hazelwood closes, the biggest impact will be on the Victorian market. The Victorian market will be the one that is impacted the most.

When Hazelwood closes and they take their megawatts out of the Victorian system, there are a number of responses that will occur in the market. The first one is that the opposition are claiming there will be no generational response in Victoria; that is, the other gas-fired generation in Victoria will not come on. They are also saying there will be no renewable energy in Victoria either.

They are also hoping against hope that the second unit at Pelican Point won’t come on because they prefer interstate coal to South Australian gas. When Hazelwood closes, it is going to be a very difficult situation for the Victorian market to face, but we have surplus generation capability in this state.

The idea that every single Victorian generator is operating at capacity 365 days a year, and when Hazelwood comes out there is no spare capacity to be traded across the interconnector, is false. If you had a small amount of literacy in this area you would know that. But we are not hearing that from members of the opposition. They assume—

The SPEAKER: The minister has not been asked to run a commentary on the opposition. He has been asked about what are the scenarios after a certain power station in Victoria closes.

The Hon. A. KOUTSANTONIS: The idea that Victoria is running all its generation at 100 per cent capacity all the time is wrong, so the idea that when Hazelwood leaves there is no surplus capacity in Victoria is wrong. It is also wrong to say that all 3,000 megawatts of our thermal generation is on all the time: it is not.

Our average demand in this state is 1,200 megawatts, and we have over 2,900 megawatts of installed thermal capacity. We have 1,700 megawatts of wind and about 700 megawatts of sun. So the problem we have in the market is an oversupply of generation and its dispatch order.

An honourable member interjecting:

The Hon. A. KOUTSANTONIS: Fake laughing won’t change that, and not understanding the way the dispatch system works is ridiculous. The idea that somehow when Hazelwood closes the world will stop spinning on its axis is ridiculous.

When Hazelwood closes, the shocks to that system will be in the Victorian system. We have surplus capacity here owned by the same company that owns Hazelwood. If I were a betting man—and I am not—I would have to say that I reckon that second unit is going to come on about the same time they close the Hazelwood generation. It makes complete sense.

Mr MARSHALL ( DunstanLeader of the Opposition) (14:24:05): My question is to the Minister for Mineral Resources and Energy. Can the minister outline to the house what is the full capacity of the interconnection with Victoria and what the current utilisation of the interconnection is today?

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:24:19): The Heywood interconnector is 600 megawatts, and the Murraylink direct current interconnector fluctuates between 80 up to 200.

There is a difference between DC interconnection and AC interconnection.

The direction of the flow of DC connection is done by design. The AC interconnection obeys the laws of physics, so the idea that the Leader of the Opposition is saying somehow that we are always reliant on Victoria for interconnection is wrong. It is wrong. It is not accurate and it fundamentally misunderstands the nature of the interconnection. The AC interconnection between South Australia and Victoria was expanded by this government. We’re the ones who argued for it, and it is up to 600 megawatts. That doesn’t mean that we are entirely reliant on that 600 megawatts.

We are today, are we? Our demand today is above 3,600 megawatts, is it? No, it’s not. Again, it is fundamentally wrong, just like yesterday when he said, ‘What was the cost to the state’s economy from intermittent energy supply?’ Again, it is misunderstanding the language, not understanding the system, making announcements that he doesn’t understand and quite frankly the Leader of the Opposition has no policy position other than fake laughter and removing the renewable energy targets.

The SPEAKER: The Treasurer is warned because he continues to debate the question rather than supply the house with information.

Mr BELL: The member clearly asked both the capacity, which he has answered, but the second part of the question was how much we are currently using. I would ask you to direct the Treasurer to the amount we are currently using, and if he wants to get on his app he can find out that we are using 743 megawatts.

The SPEAKER: Alas, that’s very interesting information and the member for Mount Gambier may now depart for the rest of question time for using a point of order to make an impromptu speech which, if permitted, would have us end up like the Australian Union of Students’ conferences in the 1970s—God forbid!

The Hon. A. KOUTSANTONIS: Dry Creek has three units that are not on today, since we are using the app. As we speak, Osborne is running at 165 megawatts; it has further capacity to go as well. There is one unit on at Pelican Point, which is not operating at capacity. I understand there is a second unit that can come on that has more capacity. Of course, Quarantine power station is not on and not all the units at Torrens are on. We have spare capacity in the system.

The market is choosing to use the interconnector. That is different from, ‘We are entirely reliant on the interconnector,’ which is our point: the market is broken. Checking your NEM app won’t change it. Quite frankly, members opposite don’t understand that the market is incentivising Victorian coal at the expense of South Australian gas. Members opposite think that’s okay. We don’t. We want to have South Australian gas on, South Australian generation on at the expense of Victorian coal, not the other way round. I don’t know why it’s so hard for members opposite to understand this.

Mr MARSHALL ( DunstanLeader of the Opposition) (14:28:48): Supplementary, sir: will prices go up when Hazelwood closes?

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:28:53): They certainly will in Victoria and they are going up in New South Wales and they are going up in Queensland. That is entirely the problem. In the absence of a national policy on carbon, you are having the disorderly exit of coal-fired generation. What they are doing is pushing up prices—  They are pushing up prices with a disorderly exit of generation because there is no signal for reinvestment in the market. If there was a signal for reinvestment in the market, like an energy intensity scheme or a carbon price or emissions trading scheme, you would have an orderly exit of generation replaced by new generation that could benefit from the scheme, but currently the commonwealth government is burying its head in the sand, saying, ‘No, no, no, coal is good.’

Coal generation is closing. They know there is no imperative on them to close other generation, so they are making money while they can. They are pushing prices up in New South Wales, Queensland and Victoria, and that’s why we need there to be national intervention. That’s why we need there to be a policy in place that gives us the opportunity to use South Australian gas, not Victorian coal.

Mr VAN HOLST PELLEKAAN ( Stuart ) ( 14:30 :25 ): My question is for the Minister for Mineral Resources and Energy. Has the minister been advised by Arrium, Nyrstar, BHP or Adelaide Brighton Cement that they intend to purchase on-site electricity generators to protect their operations and employees from further devastating blackouts?

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:30:41): I have met with all those companies. I meet with them regularly and a number of others that are talking about a whole series of measures they want to put in place to lower prices. A lot of them are very concerned about the continuation of supply, which is why the government will be intervening. They all recognise the failure of the national market and they all recognise the failure of the way the market is operating. They all recognise that it’s not giving them what they wanted.

This all comes back to the experiment that we’re in here, which isn’t about renewable energy, but about the privatisation of an essential service that’s been a failure. What we need to do is to come up with mechanisms that retake our sovereignty in this issue so we can actually insert ourselves into this market to protect South Australians.

There is a reason that these companies are going to the spot market. There is a reason that these companies are investing in gas exploration to try to get gas out of the ground to try to link that to generation to hedge for higher power prices. When these companies that the opposition asks me questions about read about policies to ban the exploration of gas in certain areas of South Australia, they are horrified. I don’t know how anyone opposite can ask me a question about this without cringing, given what they are doing to our energy policy by trying to ban the exploration of gas in gas-rich regions alongside infrastructure like pipelines. I don’t know how anyone can have any credibility asking me questions like that.

I don’t blame any of these companies for doing that. Tomago in New South Wales, which is in a jurisdiction that is heavily reliant on coal-fired generation, was let down terribly by coal-fired generation last week when they were forced to close some lines, and when they close those lines that costs production. Coal-fired generation wasn’t able to meet demand, but of course, in the absence of a national policy, there is no price signal to reinvest in new generation, so coal-fired generation crowds out the market. It doesn’t let anyone new come in because there is no price signal, but when demand is really high we just turn industry off. Their coal just sits there. They continue to make their tidy profits, polluting and making donations to the Liberal Party and it’s all okay.

The AI Group, an industry group that is no ally of the Labor Party, put out a report on Monday talking about a 47 per cent increase in prices in New South Wales that’s overwhelmingly reliant on coal. Nearly 87 per cent of all of their generation comes from coal. If coal is so good and it’s so cheap, why are the people of New South Wales getting a 50 per cent increase in their power prices? I will tell you why—because the market is broken. The market doesn’t serve the people: it serves the interests of the owners of the generators, the poles and the wires—the people members opposite did a dirty deal with to sell our generators to and that’s why we have to unpick it. This addiction to privatisation, this addition to the market—

Mr VAN HOLST PELLEKAAN: Standing order 127: imputing improper motive.

The SPEAKER: Yes, I uphold the point of order.

The Hon. A. KOUTSANTONIS: In the absence of price signals, there are going to be price increases across the NEM, and companies all across the National Electricity Market will be looking at putting in solar panels, batteries and their own generation to try to minimise costs because the real issue here is not availability of supply; it’s cost. Cost is what is hurting this nation because coal is failing to give us cheap power.

You have seen the reports, Mr Speaker, that Queensland has had higher price spikes than South Australia since the start of the year—and of course those prices are unacceptable and there needs to be an intervention because the market clearly has failed.

Mr VAN HOLST PELLEKAAN ( Stuart ) ( 14:34 :55 ): Supplementary: given that the minister said in his answer that he had met with all these companies, can he advise the house what this investment in new generators will cost and, also, did any of these companies express their concerns with him about government’s policy and the amount of installed wind energy that’s unreliable in our state?

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:35:18): I think a lot of them are very concerned about the heavy subsidies the commonwealth government is giving to renewable energy in South Australia.

Mr van Holst Pellekaan: You give all the permissions.

The Hon. A. KOUTSANTONIS: Isn’t it amazing? The people who pay the wind generators to operate, they are clean, but the Development Act is guilty. So, paying them to operate when it— When Malcolm Turnbull pays wind generators to operate through Renewable Energy Certificates, which they voted for—

The SPEAKER: The interjections will cease. The interjectors are mostly on two warnings already. I don’t want a procession out of the chamber. The Treasurer is uncharacteristically not provoking the opposition just at this moment.

The Hon. A. KOUTSANTONIS: I will get there, sir, eventually. I think these companies are very concerned about a lack of national policy at a national level and they are very concerned about the vacuum created by the commonwealth government signing the Paris agreement, committing us to decarbonise and putting no mechanism in place to meet that decarbonisation. So, what is the use of signing the Paris agreement? Why commit to it?

At the very least, Tony Abbott was consistent in his ideology: he does not believe climate change is real. He is intellectually consistent. And he doesn’t believe there should be a price on carbon. That is consistent. That is an honest argument. But when you sign the Paris agreement and you say that climate change is real and you need to decarbonise and then do nothing about it, you get perverse outcomes in the National Electricity Market.

While the commonwealth government is subsidising renewable energy and that renewable energy is doing what it does best—going to where the conditions are best, which is South Australia because we have very good wind resources and very good sun resources to capture that commonwealth subsidy—they then attack the development assessment process rather than the subsidy.

The real argument here is: what is causing renewable energy to be built in South Australia? Is it the commonwealth subsidy that pays them to operate every single day that they are there or is it a development assessment approval? That is the inconvenient truth for members opposite. Are we to forgo the thousand jobs created in renewable energy? Are we to forgo the billions of dollars invested in South Australia? Are we to forgo all of that?

Where is the criticism of the subsidy paid to renewable energy? At least Abbott is consistent. Members opposite say they support the RET but oppose the Development Act. They support the commonwealth Renewable Energy Target but not the state-based one. They support nuclear power but not a dump.

Mr VAN HOLST PELLEKAAN: Point of order: standing order 98.

The SPEAKER: Debate?

Mr VAN HOLST PELLEKAAN: Debate, yes, sir.

The SPEAKER: I am afraid I would have to uphold that point of order.

The Hon. A. KOUTSANTONIS: That’s disappointing, sir. Ultimately, what these companies all need, what they are all crying out for, what they have all said through their various organisations, whether it’s the Business Council of Australia or the AI Group, and even the worker organisations like the ACTU, is national leadership, in a rare bipartisan display of crying out for national leadership.

The Chief Scientist, the Australian Energy Market Commission, the CSIRO and even Malcolm Turnbull all agreed at one stage or another that an energy intensity scheme would help us transition and maintain reliable, affordable electricity, but some members are addicted to coal, and that coal is driving prices up in New South Wales, in Queensland and now in Victoria.