South Australian Energy Plan | MOTION


Mr VAN HOLST PELLEKAAN (Stuart) (16:02): The opposition takes the energy crisis in South Australia extremely seriously, but we do not take this motion seriously. It is just a political stunt by the government. The opposition wants to deal productively with this issue, but this motion is just a stunt by the government and a way of delaying debate on the Budget Measures Bill, which includes the bank tax. Deputy Speaker, as you would know, this is the last day of parliament for quite a while, and the government is doing everything possible to avoid time spent on that issue and is running this stunt instead.

We have just heard the Premier’s version of events, but let me tell you the public’s version of events—real, on the ground South Australian people’s version of events. They have seen extraordinary price rises. They have suffered through blackouts. They have had job losses. There is extremely high unemployment across the state—embarrassingly high unemployment across the state, you would think, for this government. Perhaps worst of all, we have the highest level per capita of all states of outstanding electricity debt, payment plans for people in hardship situations and electricity disconnections.

That is the reality that South Australians are facing at the moment, so how did we get here? To evaluate the government’s plan, we need to clearly understand why the government needs to put forward a plan. How did we get here? Sixteen years of Labor government—that is the first point to make. For nearly six years, the energy minister has had responsibility. The energy minister has had responsibility for exactly this for six years, and the government has actually been in place for 16 years, so it is very hard for them to turn and try to point the finger at other people.

Premier Rann was an active pursuer of popularity with the Green voters and he pursued wind farms for political purposes. There is nothing wrong with wind farms. There is no doubt whatsoever that we must make a transition away from fossil fuels towards renewables, but premier Rann started the current government, followed by Premier Weatherill, down this path of trying to jump overnight to an excessive level of renewable energy within our energy mix. He pursued wind farms which did not have storage, which meant that South Australia was awash with cheap electricity when it is windy but, of course, when it is not windy we do not have nearly enough electricity and it is very expensive.

This wholesale price volatility has been incredibly damaging to our nation. This wholesale price volatility has driven out base load generation because the base loaders cannot respond in a timely fashion to the ups and downs of the weather. Of course, this has resulted in very, very steep retail price increases. This has been going on for many years but, Deputy Speaker, you would be familiar that in July last year we had an average of a 12 per cent increase in retail prices and in July this year another 18 per cent on top of that.

That is the real-world outcome of the impact of the state Labor government’s energy policy over the last 16 years. It flows through from policy, to generation, to markets, to retail prices, to customers, and they are the ones who are suffering and being punished by this government’s policies. The Minister for Energy wants to blame everyone else for these problems. Last July, when the retail market announced their 12 per cent increases, his answer to everybody was to shop around. He said, ‘Just shop around; that will be okay. Just go and find a cheaper supplier.’ That was his answer. Then he blamed the retailers. He said he wanted to get a study done and asked ESCOSA to get a study done to look into the veracity of the retailers’ increases in prices.

To his shock and horror, ESCOSA came back and actually said that, from a market perspective, the price rises were quite justified because they were all linked to an increase in wholesale prices. The government’s policy had increased the wholesale market and that was flowing through. That is a great shame. I am not supporting the fact that the retail price has increased, but I am saying that the government was very quick to blame the retailers. However, ESCOSA said, ‘Actually, no. It comes back to government policy and into the wholesale market.’

Of course, the energy minister then tried to blame AEMO and the National Electricity Market. He said it was their fault, that they were not looking after South Australia nearly well enough and that it was everybody’s fault except the South Australian government’s. While the minister tried to blame the national market, back on 29 September 2016 the minister said:

We are the lead legislator for the National Electricity Market. We have a lot of in-depth, in-situ advice given to us constantly by world experts based here in South Australia—people whose lives have been dedicated to the management of the National Electricity Market and its establishment…We have designed it, we have built it…

At one point in time the energy minister wants to claim credit for the national market when it is going well, but at another time when it is not going well he wants to blame them for being the cause of all the problems.

The minister then moved on to call the major retailers—with an ‘s’ on the end of that word—’monopolies’. The minister has said many times that the retailers selling electricity into the South Australian market are monopolies. He said, ‘They are using their monopoly power.’ Nothing could be further from the truth with regard to the definition of the word ‘monopoly’. Clearly, by definition, if there is more than one of them in the market then none of them are monopolies. That goes directly to the energy minister’s understanding of markets and of how things really work.

However, the biggest mistake of all was the government forcing the closure of the Port Augusta power station. When he spoke just a little while ago, the Premier said that of course he was never going to go back to coal and that of course he did not want to do that. I can understand that. I said earlier that we do need to transition away from fossil fuels, but the opportunity the government deliberately threw away to contribute $8 million of South Australian taxpayers’ money per year to keep the Port Augusta power station open for three more years—just temporarily—was one that should definitely have been taken.

That would not have plunged us headlong into a world of forever burning coal, but it would have allowed us to avoid many of the penalties that South Australians have suffered. The moment the closure of the Port Augusta power station was announced, forward contract markets rose. The moment the Port Augusta power station actually closed, spot wholesale prices rose significantly. That certainly could have been avoided on a temporary basis while the government worked their way through this problem sensibly. However, they decided, for purely political reasons, that they did not want to do that.

The Treasurer has made much of the fact that there was no guarantee that Alinta would keep the power station open. However, in their offer was a guarantee that, if they did not stay open, the government would not have to spend a cent towards that claim. It was an opportunity that needed to be considered, and should have been considered, and we know now the ramifications of not taking up that opportunity, that temporary opportunity to keep the Port Augusta power station open for up to three years as part of a sensible transition to where we need to be.

This government has punished South Australians with high prices, blackouts, job losses and unacceptably high unemployment in our state, and they say it is because they want to reduce emissions. They say that South Australia need to suffer at their hand so that they can reduce the emissions created in South Australia from the generation of electricity. However, buried deep in the budget, announced about six weeks ago, we see that the government is actually forecasting to increase emissions from the generation of electricity in South Australia.

Their own target for the 2016-17 year just ended was 55 per cent, and their own target for the 2017-18 year that we are in at the moment is 43.5 per cent. So they have caused all this harm for no reason whatsoever. For purely ideological purposes, they have punished all South Australians with high prices, job losses and blackouts, yet they, by their own budget, are going to increase emissions in South Australia.

After 16 years in government and trying to blame everyone else for the problem that they created, and after forcing the closure of the Port Augusta power station for purely political reasons, the government has finally accepted that they must address this issue. But very unfortunately for many people, it is too late. Deputy Speaker, I bring you back to the disconnection of houses. Thousands and thousands of houses across South Australia are without electricity, forcibly disconnected because they could not pay their bills.

There have been job losses, and employers are out of business because they are no longer able to offer employment to other people. I will give you an example of a jurisdiction that has taken on this issue. The province of Quebec in Canada in 2005 legislated that wind farms must provide appropriate levels of inertia into their electricity grid. It did that in 2005, but only now, in 2017, do we find our government trying to take responsibility for the problems that it has actually created.

Let us look at this plan. The first component of the plan is 200 megawatts of gas generation. We were told it would be in place by this coming summer. Just for the record, on 15 March this year on ABC 891, David Bevan asked the Premier very clearly, ‘When will it be up and running?’ The Premier said, ‘By next summer.’ When in March someone talks about next summer, they are talking about the very next summer to come.

Then we found out that, when it was not going to be ready by this summer, their plan was to burn diesel in generators instead. We have found out through the Budget and Finance Committee that they wanted to run diesel generators instead of gas. We also found out that it is going to cost, at that point in time, $110 million of taxpayers’ money. We are told that all of this, for several years, is going to be in the cause of trying to reduce emissions, but part of the government’s solution is to burn diesel in their generators, which, of course, is going to increase emissions.

Then we found out that these diesel generators are not as good as the government initially said they would be. When they explained their plan to use the same generators, initially running on diesel and then running on gas, they told us that they would be 276-megawatt capacity, but we found out afterwards—the government did not disclose this information, of course—that in high temperatures, which is exactly when we need them, they will only provide 205 or 206 megawatts of capacity.

The government was caught out. It would have been better if they had just said at the time, ‘When we need these generators at times of very high temperature, this is what they will deliver.’ It would have been much better for the government to say that. They have told us that these will be up and running for two years, but we now know that they have entered into a three-year lease for these generators, so there is the capacity, if the government chooses, to run the diesel generators for up to three years. We will just have to wait and see how that turns out.

In regard to the 100-megawatt battery, the opposition leader has called many times over the last two years for something like this to be done in principle, but we wonder why only minimal details are being released publicly by the government. Why will the government not explain exactly who is involved, exactly how it works, exactly what the costs are, exactly what the capacity is and exactly what the connection needs are, etc.? They just will not do that.

The third component is the energy security target. We know that many organisations which the government have, on other occasions, said that they respect and whose advice is important have now said publicly that the government’s plan for an energy security target will not reduce the price of electricity. We also know, through an FOI from my office, that three other submissions were made on the energy security target that the government has not yet made public.

I would not mind betting that they are the three that say that the price of electricity will be forced up because of an energy security target. We will wait to see if they release those. One of the organisations that says that the government’s energy security target will not decrease electricity costs, as the government says it will, is Tesla. Another one is Nyrstar. They are two very important players in South Australia now with regard to energy.

The fourth component is the minister’s new ministerial powers. The minister said very clearly that he does not expect ever to use them; he just thinks that they need to be there as a backup. I support him having that backup if he thinks he needs it, but one of the key components of this much lauded by the government energy policy is the powers that the government says they will not use.

The fifth component is the $24 million PACE grants, an additional $24 million. I support the PACE program very strongly, and I support the government’s plan to provide $24 million for the exploration of gas, but let me tell you that there is nothing new in this. Here we have another component of the energy plan from the government. It is something that already existed and, yes, they put some more money towards it, but it is just an extension of the plan that was already in place. They had already offered $24 million, and this is an additional $24 million, but it is certainly nothing new.

The last component is the government’s own-use contract. Again, this was something that was out well before the government announced their plan back on 14 March. The government’s own-use contract for energy is again something I support, but I am not sure why it gets special attention in the government’s energy program, given that it was already in place and given that it was going to be announced and made public by the end of the financial year just finished, yet none of that information has been forthcoming. All of this for $550 million—$550 million of taxpayers’ money. That is what the government wants South Australians to pay for this plan.

Unfortunately, South Australians have not shown a great deal of confidence in this plan. Why? Because it keeps changing. They have changed components of the plan, or delayed components of the plan, several times. Another reason is that there is no longer any commitment that it will reduce electricity prices. Back in the middle of March, when they announced their plan, the Premier and the energy minister tried to lead everyone to believe that it would reduce electricity prices. You cannot find them saying that now.

In fact, when he has his opportunity to speak shortly, I challenge the Minister for Energy to say, if he would, that this plan will reduce electricity prices and, if so, tell us when it will happen. I think everyone in South Australia wants to know when they will see cheaper electricity prices in this state. Another reason people do not have confidence in this plan is that Alan Finkel, who did the report for the federal government, makes it very clear that going it alone is not the answer for South Australia or for any other state. He says that going it alone is not the answer.

Another reason why people are not comfortable that this plan will do what the government said it will do is that ASX forward contract prices still show South Australia significantly above the rest of the nation. ASX forward contract prices for electricity show that, as far down the track as March 2022, South Australia will be 18 per cent above the national average. When I raised this issue in question time recently, the energy minister’s answer was, ‘Well, they will be going down. They will be going down,’ as if somehow it is acceptable to stay 18 per cent above the national average.

Deputy Speaker, let me share with you another quote from the energy minister. On 14 February 2017, the energy minister said, ‘The best forecast we have, of course, is from the ASX forward prices.’ The energy minister says that is the best indication of forward prices we have. I am sure that is right: that is what the market says. A week after the government made the announcement of their energy plan on 14 March, forward contract prices for electricity increased for South Australia compared with what they were immediately before the government made their announcement.

Even now, months down the track, they are still predicting that years down the track South Australia will be 18 per cent above the national average. So all this for $550 million of taxpayers’ money to fix the problem the government actually created themselves. Plus, there was $5 million last year and this year, and more to come, for the cost of the implementation team, and that is on top of the $550 million, and $2.6 million for the advertising campaign. With all the changes and concerns, it is not surprising that people are not comfortable that it will come in within the $550 million that the government has set for its price tag.

Deputy Speaker, let me just wind up by asking you the rhetorical question I posed in this place a few days ago. If I crashed your car and then told you not to worry about it because I was going to spend a lot of your money getting your car fixed, and then changed my plan about how I was going to get your car fixed, and then said to you, ‘Look, don’t worry. It will all be okay because it will come in within the high budget of your money that I plan to spend to fix your car,’ I do not think you would be very satisfied with that.

I do not think that you would think that was a very good deal at all, but that is what the government is trying to do to the people of South Australia: spend $550 million of their money, and possibly more, to fix the problem the government created. They could easily have given themselves some breathing room if they had allowed the Port Augusta power station to stay open for three more years as part of a sensible transition plan.

Let me be very clear about this. The government tries very regularly to goad me, goad the Leader of the Opposition and goad the public on this topic. The Liberal Party will announce an outstanding energy policy. It will be far more considered than the government’s, it will be far more responsible with taxpayers’ money and it will achieve a far better result for South Australians. Our plan will deliver affordable, reliable electricity for South Australians, which is what they deserve, and our plan will be announced well in advance of the election.


The Premier’s motion:

That this house—

1. Recognises South Australia is taking charge of its own energy future under the South Australian energy plan;

2. Recognises South Australia is leading the world with the next generation of renewable energy generation and storage opportunities;

3. Recognises that South Australian power for South Australians in the only plan that will embed renewable base load energy to the electricity sector that—

(a) puts downward pressure on power prices for households across the South Australian community;

(b) provides system security by sourcing, generating and controlling more of our electricity network; and

(c) moves to a lower emission electricity profile to help meet our COP21 Paris commitments.