National Electricity Market

Extract from Hansard

Legislative Council
11 April 2001

Sandra Kanck
Deputy Leader Australian Democrats
Member of the Legislative Council

Parliament Index
2001 Autumn Sitting Index
Browse by Subject
Search all Democrats material
About the SA Parliament
Hansard on line

The Hon. SANDRA KANCK: I seek leave to make an explanation before asking the Treasurer a question concerning the pool price of electricity in the national electricity market.

The Hon. SANDRA KANCK: The Treasurer has repeatedly claimed that the privatisation of our electricity utilities has nothing to do with the exorbitant pool prices in South Australia and that New South Wales and Victoria face the same problems. This view is belied by figures published in the 6 March edition of Electricity Weekly .

It shows that, for the summer just passed, South Australia averaged $81.38 per megawatt hour; Victoria, $56. 27; Queensland, $49.28; and New South Wales $42.50. Hence, prices bid by South Australian and Victorian generators-which have been privatised-dwarf the average pool price of the publicly owned New South Wales and Queensland generators. The bidding behaviour of generators is crucial to understanding the variation of costs between regions. During the summer just passed, Flinders Power indicated that it had withdrawn capacity from the market for (and I quote from the reasons they gave) `financial optimisation'.

The Hon. M.J. Elliott: Turn the generator down, the price goes up and you turn it back on again.

1. Did the Treasurer allow Flinders Power to withdraw generation capacity for financial optimisation when it was in public ownership?

3. Will the Treasurer commission an analysis of the impact of electricity prices upon investment and employment in South Australia? If not, why not?

The Hon. R.I. LUCAS (Treasurer): I am happy to provide some information to the honourable member on this question. I forget the name of the publicly owned generator in New South Wales that did exactly the same thing. So, the notion that this sort of action is undertaken in the national market only by privately owned generators is a furphy.

The Hon. R.I. LUCAS: Generators are allowed to operate under the national market in relation to their bidding operations, as are publicly owned generators in New South Wales. The Hon. Sandra Kanck's argument is that this is not being done by publicly owned generators.

The Hon. R.I. LUCAS: Yes, it was. The argument was that this is all about privatisation.

The Hon. R.I. LUCAS: But in South Australia we have no control over Flinders Power.

The Hon. R.I. LUCAS: But in New South Wales how were they allowed to engage in exactly the same practice? The Hon. L.H. Davis: What's happened in New South Wales?

The Hon. R.I. LUCAS: What's happened in New South Wales? Bingo! Snap! They have done exactly the same thing in New South Wales. So, the Leader of the Australian Democrats-

The Hon. R.I. LUCAS: The practices of what is known as `rebidding' have been investigated by not only NECA but also the ACCC. The task force in South Australia and the national regulatory authorities are looking at this issue, and the ACCC continues to look at it in relation to the procedures. As I understand it, the ACCC has confirmed that the national rules allow rebidding, whether by government owned generator as in New South Wales or privately owned generators in Victoria and South Australia. I will have this checked, but I understand that in its report the ACCC confirmed that it had some concerns, should it be shown that in some way this was `market abuse'-as I think the phrase was-and that it would monitor the situation in relation to the use of rebidding techniques and their impact if they could be shown to be market abuse. Contrary to the honourable member's explanation, rebidding is allowed in the current market. Not only do privately owned generators do it but a publicly owned generator in New South Wales has also been doing it.

The Hon. Sandra Kanck: You can't stop it in South Australia; I've said that.

The Hon. R.I. LUCAS: They might not be able to do that, either; you would have to discuss that with the New South Wales government. If the national market allows it, that will be an issue that they will have to discuss in relation to the market rules in New South Wales. The task force in South Australia is already having discussions about the rebidding issue, and NECA and the ACCC have also been looking at it at the national level. Contrary to the honourable member's suggestion, the issue is not solely related to private generators: it also relates to public generators.

The Hon. M.J. ELLIOTT: I ask a supplementary question: does the Treasurer call it rebidding when a company is withdrawing capacity, driving up the price and then making the capacity available again?

The Hon. R.I. LUCAS: That is what the market, NECA and the ACCC call rebidding.