Extract from Hansard Legislative Council 7 July 1999
Sandra Kanck Deputy Leader Australian Democrats Member of the Legislative Council		Parliament Index 1999 Budget Session Index Browse by Subject About the SA Parliament Hansard on line

Adjourned debate on motion of Hon. Nick Xenophon:

1. (a) That in the opinion of this Council a joint committee be appointed to inquire into and report upon the South Australian electricity market arrangements and the impact these arrangements have had and are likely to have on electricity prices and security of supply for South Australian consumers, and in particular, to inquire into—

(i) local generation options;

(ii) regulated interconnectors; and

(iii) unregulated interconnectors.

(b)And that this committee assess these arrangements as to their ability to achieve the most economically efficient outcome for South Australia.

2.That in the event of a committee being appointed, the Legislative Council be represented thereon by three members, of whom two shall form a quorum of Council members necessary to be present at all sittings of the committee.

3.That joint Standing Order No. 6 be so far suspended as to entitle the Chairperson to vote on every question, but when the votes are equal, the Chairperson shall have also a casting vote.

4.That the joint committee be authorised to disclose or publish, as it thinks fit, any evidence and documents presented to the joint committee prior to such evidence and documents being reported to the Parliament.

5.That a message be sent to the House of Assembly requesting its concurrence thereto.

The Hon. SANDRA KANCK: I move:

Paragraph 1—Leave out all words after `the South Australian Electricity Market arrangements' and insert—

, their relationship to the National Electricity Market and the impact these arrangements have had and are likely to have on electricity prices and security of supply for South Australian consumers and, in particular, to inquire into—

(i)local generation options including the appropriateness of the disaggregation arrangements made in South Australia and the potential for the use of ecologically sustainable energy and demand management;

(ii)regulated interconnectors;

(iii)unregulated interconnectors;

(iv)the need for a State energy policy;

(v)the need for a Standing Committee of the Parliament to monitor South Australian involvement in the Electricity Market and;

(vi)any other related matter.

(b)And that this committee assess these arrangements as to their ability to achieve the most economically efficient and ecologically desirable outcomes for South Australia.

At the time that the Hon. Mr Xenophon introduced his motion on 2 June my position was that, whether or not our electricity assets remain in public hands, it is important to have a committee such as this set up. Now that we know that privatisation is to occur and that the day-to-day running will most likely be in the hands of large multinationals, with all the experience they have of running rings around the jurisdictions in which they operate, the setting up of this committee has become more urgent. Because of the potential value of this committee I consider that the terms of reference should be enlarged, so I put on file a few weeks back the amendment which I am now moving.

It is difficult to examine the arrangements of the South Australian electricity market unless they are looked at in the context of the national electricity market, so my amendment addresses this. Regarding the reference of local generation options, I have specifically referred to the appropriateness of the disaggregation arrangements made in South Australia. This is because I have grave concerns that the disaggregation of our generation assets into base, intermediate and peak load facilities was not designed to create competition but was instead done in a way to reduce the value of the generation assets and make it easier for National Power to enter the local market. Indeed, at one of the two Power and Gas Conferences that I attended in March, Government representatives actually admitted to giving away value to ensure that Pelican Point would be able to get off and running.

I have also included specific reference to the potential for the use of ecologically sustainable energy and demand management. It is one of the sad facts of the way this Government has overseen South Australia's electricity needs in the past five years that these two aspects have largely been ignored. If the Government had kept to its 1993 State election policy about the use of renewables we would be much further ahead than we are now.

The issue of regulated and unregulated interconnectors has occupied the mover of the motion for some time, particularly in regard to SANI, which was previously known as Riverlink, and he spent some time addressing this matter when he spoke to his motion. I have gradually been coming to the view that all interconnects should be unregulated. To all intents and purposes they act as generators, so they should be treated as if they were generators. Regulated interconnects have a guaranteed rate of return, while generators have to face any risks that being in the market might entail. The Hayward interconnect effectively operates as a base load generator in South Australia, and electricity from Victoria is almost always travelling across the border into South Australia. Why should the owners of that interconnect have a guaranteed rate of return, thus always giving an advantage over the local generators?

I am sure the mover of the motion will be keen to pursue the value of the SANI option for this State, but I wonder whether interconnects are already passé. When transmission use of system (TUOS) charges are properly applied and when (not if) a carbon tax is applied in this country, the power supplied by interconnects will become very expensive, and when that happens the critical factor will be how close a power station is to the end users. It will also be a boon for ecologically sustainable energy sources, which will be able to be set up much closer to the consumers of the power.

The Government has persisted in telling us about the risks of the market and, if things are as risky as it tells us, particularly in regard to the generation assets, one wonders why the generation assets will be the last to be privatised. Business and industry have long been supporters of the concept of the national electricity market because they believed it would deliver cheaper prices: now they are finding that the promise is unlikely to be delivered. I am aware that the Employers' Chamber is not happy with the operation of the electricity market and a week or so ago it was to meet with the Premier to discuss the issue.

The Democrats are not surprised that the promised low prices are not eventuating and we can understand why industry is annoyed with what is happening. If Parliament gives approval for this joint committee to be established it will, at the very least, help throw some light on why the market is operating in the way that it is. I believe that the committee has the potential to provide some very useful recommendations back to the Parliament and the Government. The electricity market is a very volatile beast and one that may eventually self-immolate. It is important that Parliament therefore keeps a watching brief on it and this motion, with the Democrat amendments, I believe has the potential to cause that to happen.

This motion was debated further and put to a vote on 4 August 1999

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