Ian Gilfillan: Australian Democrats in the SA Parliament

	Extract from Hansard Legislative Council 5 July 2001

Ian Gilfillan 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
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The Hon. IAN GILFILLAN: I seek leave to make a brief explanation before asking the Treasurer a question about a wind generation farm at Elliston.

The Hon. IAN GILFILLAN: One of the most serious problems facing the world is global warming, caused by the greenhouse effect. There is an acute need to reduce or eliminate where possible our reliance on the burning of fossil fuels for transport and other energy requirements. This is well recognised by the international community through the Kyoto Protocol, and by the commonwealth government through its Greenhouse Gas Abatement Program. Under the Kyoto Protocol, by the year 2010, 2 per cent of all electricity generated in Australia must come from renewable sources.

In South Australia we have been slow to adopt renewable energy use. Indeed, the state government has reneged on its pledge to create a sustainable energy authority after the privatisation of ETSA and Optima. Despite this, there is some `sustainable energy' light on the horizon. There is currently a private proposal to set up an enormous wind farm to generate electricity at Tungketta Hill, 19 kilometres south-east of Elliston on the west coast of Eyre Peninsula. The location, on top of the coastal cliffs, is ideal in terms of capitalising on the high wind energy environment of the district. The proposal involves the erection of 55 giant wind turbines, with fan blades of 52 metres length. Each proposed wind turbine will be as tall as a 20-storey building, and there are 55 of these. Their total generating capacity would be 50 megawatts.

The proposal has been put forward by Ausker Energies Pty Ltd, based in Melbourne. Ausker's proposed development has been assessed and approved by the Development Assessment Commission as an infrastructure development `supported by' and `specifically endorsed' by a `state agency'. The relevant agency is the Department of Industry and Trade.

Last week I held talks with the Chief Executive of Elliston District Council, Mr David Hitchcock, who is understandably keen to see the project proceed. Mr Hitchcock can see not only the benefit in terms of sustainable energy but also local economic and employment benefits rising from the project. However, he informed me that the wind farm proposal has hit a substantial snag.

ElectraNet, the company which has a monopoly on the high-voltage distribution of electricity in South Australia, has increased the price for connecting the proposed Tungketta Hill wind farm to the South Australian grid from the original cost quote of $1 million per year for 20 years to $2.6 million per year for 20 years. It is a 160 per cent increase, made without any warning or explanation. We are advised by Ausker that that is going to put in danger the economic viability of the project.

Eight months ago the state government received $938 million from the 200-year lease of ElectraNet. At that time the Treasurer declared that the `leasing of electricity assets means we have freed ourselves from the debt trap'. Along with a skyrocketing pool price, grid connection fees may be yet another trap we have fallen into, if this is a precedent of what is going to be virtually an insurmountable obstacle to non-fossil fuel generation in South Australia. My questions to the Treasurer are:

1. What community service or environmental obligations, if any, are imposed upon ElectraNet to facilitate the distribution of renewable energy?

2. In the so-called new world of the national electric market where those who pay $1 billion for a distribution asset must seek a return on their investment, how, if at all, is the cost of global warming calculated?

3. Is the government prepared to stand by and let an ideal example of non-fossil fuel generation stall?

4. What options, if any, does Ausker Energies have to get its proposed 50 megawatts of wind generated electricity into the state grid?

The Hon. R.I. LUCAS (Treasurer): It is not correct, as the honourable member has indicated, that the state government is doing precious little in terms of encouraging sustainable energy. My Department of Industry and Trade is working on some 30 to 40 sustainable energy generation proposals at the moment of which-

The Hon. R.I. LUCAS: The one that the honourable member is talking about, together with two or three others I will mention in a moment, are the ones closest to operation. I think the honourable member was good enough in his explanation to at least acknowledge that an agency had given a significant degree of assistance to this particular wind farm proposal, and that is the Department of Industry and Trade. We assisted the fast-tracking of the planning and development process for the agency. Our officers have been working with company management trying to assist them in all their discussions with local councils, government departments and agencies, and also with discussions with industry groups within the electricity market generally.

As well, I have met with the principals of the company involved at the Elliston proposal to provide what assistance I was able to. Let us disabuse the member of the Australian Democrats, the Hon. Mr Gilfillan, when he said that no support is being provided to sustainable energy by this government. Whilst it is true to say that we have not funded a stand-alone sustainable energy authority, the Department of Industry and Trade has been very active, and its advice to me is that it is currently working on up to 30 or 40 sustainable energy generation proposals, a good number of which are wind generation proposals.

There are some on the West Coast, one of which the honourable member has talked about; there is one on the Fleurieu Peninsula, of which the honourable member might also be aware; and there is one the Hon. Terry Roberts has talked about for I think some 12 months now in the South-East. Those three are probably the ones that are furthest advanced in terms of organising their financing and the various other problems they have to get over in terms of trying to get to market.

I will take advice from ElectraNet, but my understanding from ElectraNet is that it would not agree with the assessment that the honourable member has put in terms of the increase in the quoted connection costs to the market.

The Hon. R.I. LUCAS: Well, the honourable member says it is fact. He has been around long enough to know that there are always two sides to a story. It may be that ElectraNet has a slightly different story about what the difference might have been in terms of its quote.

The Hon. R.I. LUCAS: I know there has been an increase, but the numbers the honourable member has mentioned are not the numbers that were provided to me. I will need to check those numbers and take advice. On a number of previous occasions companies have come to me and have said that the price has increased from this to this, that when they went in some cases to ETSA Utilities and in other cases ElectraNet the first that they asked to quote on was this, and then they came back and said will you now quote on this. They did not highlight to me in the first instance that there were differences, and generally the second quote that was asked for was an enlarged project which obviously cost more in terms of connection costs. The transmission and distribution charges are regulated by independent regulators. They are not part of the generation or retail market.

The Hon. R.I. LUCAS: I am saying that the charges that transmission and distribution companies can apply are regulated by independent regulators. In relation to distribution in this state, generally, it is by the independent regulator. In relation to transmission charges, I will check the timing change, but ultimately they will be governed by the ACCC; in the first instance they were governed by the independent regulator. As of today I am not sure. I will have to check which regulator is regulating it. It is not possible for the company to say, `We will charge $50 million or whatever we want for a particular service or charge.' It is governed and ultimately there is oversight by one of the regulators in terms of the charges that can be levied.

As I said when I raised this issue earlier this year, I had originally been a sceptic of the possibility of the financial feasibility of wind farm proposals based on the advice that the department has given me and advice from some companies to which I have spoken. I believe that in the next 12 months or so we will see some of these wind farm proposals get to market. The Elliston proposal is the most advanced. Inevitably, part of the cost will be connection to the network. If you are going to build a generation farm and the nearest part of the electricity market is-I am guessing now-30 kilometres away-

The Hon. R.I. LUCAS: So, it is 30 to 35 kilometres away. Someone has to pay for the high voltage connections to the market. If the company does not pay and makes the money through the contracts, someone else has to pay. If, as the honourable member says, the taxpayer should pay, that can be a policy position, but someone has to pay for a 30 to 35 kilometre high voltage connection to the transmission network. It does not just happen. If you are going to locate a wind farm a long way from an existing grid, then someone has to pay for that connection. They do not come inexpensively. Certainly, with utilities-and I will check with ElectraNet-the cost of the work can be competitively bid with other companies.

The Hon. R.I. LUCAS: As I said, that is why there are 30 or 40 proposals currently being worked on by the Department for Industry and Trade. Someone has to pay for the cost of connection. My understanding with the utilities-and I will check in relation to ElectraNet-is that the cost of construction can be competitively bid by the proponent's taking it to other companies that may be able to build that transmission connection cheaper than the cost that is being cited by ElectraNet. I will take further advice on some of the details of the honourable member's question and, if I can provide further detail than I have provided in my comprehensive reply, I will endeavour to do so.