NATIONAL ELECTRICITY (SOUTH AUSTRALIA) (AUSTRALIAN ENERGY REGULATOR - WHOLESALE MARKET MONITORING) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 28 September 2016.)

Ms CHAPMAN ( Bragg—Deputy Leader of the Opposition) (11:32): I rise to speak on the National Electricity (South Australia) (Australian Energy Regulator—Wholesale Market Monitoring) Amendment Bill 2016. The lead for the opposition has indicated that we will be supporting this bill, together with one to follow. In supporting this bill, I do not accept for one moment that it is going to make a scrap of difference to the price vulnerability that South Australians experienced in a most serious way in July this year.

I am not surprised that the Treasurer, as Minister for Energy, attended a COAG meeting in July, riddled with embarrassment, red-faced, over the disgrace that occurred here in South Australia, where there had been a price spike that was unprecedented, and asked what we can do to ensure that we pacify our constituents about this embarrassing situation. He came up with the assertion, which he stated in September this year, that the energy ministers recognised that there was a lack of transparency in the way generators operate in the NEM and that we needed to be able to better monitor market behaviour in the interests of consumers. That was his quote. That was his way of saying to us that he had gone off to this meeting and agreed with the other ministers as to how they were going to placate the outrage of the public over the circumstances that had developed in their own mismanagement of energy wholesale production in the country.

As was published in the local media, he went on to point out the importance of doing this and of being transparent and giving 'the independent regulator the teeth they need to go in and investigate and more importantly make public the findings they have of excessive market power'. That is the position he presented to us, as though this was a reasoned and responsible reaction to what was a mess of his own making.

What was incredible about that was that at the same time, in the same months, the South Australian public had been demanding to see the Alinta documents in respect of the closure of the Port Augusta power station, which the Ombudsman of South Australia had directed the South Australian government to make available publicly so that they could see what was going on, so that they could have some documentary transparency as to what was going on.

What has happened? The government have consistently refused to produce that documentation and have been utterly untransparent and opaque in allowing the public, the consumers, to know what is going on. Why does he keep bleating to the minister about confidentiality, respecting the people with whom we have contracted, yet in the direct opposite, says, 'But the regulators must provide this information under a new regime which is to provide for a report every two years, covering a preceding five-year period, with certain information that is to be published.'

I will refer to the bill because it really, essentially, makes provision for a small amendment by an addition into the National Electricity Law, which is currently a schedule to our national electricity act. That talks about confidential supply information and defines who is to be affected by this. It is to do an analysis of whether there is effective competition in the market. Frankly, I would have seen that as already within the AER's charter. Secondly, it is to monitor and report on the features of the market that may be detrimental to effective competition and the features of the market that may be impacting detrimentally on the efficient functioning of the market. There are two-year and five-year obligations in respect of that.

Then there is provision for the use and disclosure of that information under the new proposed section 18D, which is then highly qualified by subsections (2), (3) and (4), which essentially then give a right to be able to protect the confidential information, so I do not see this as a major leap forward in transparency at all. It does indicate that there has to be a statutory obligation for time- specific reporting, but that is it. How is that going to help us deal with the fact that we have a wholesale market that applies for South Australia that is frankly woefully inadequate for the purposes of having any genuine competition?

The other aspect of this, which I draw the attention of the parliament to, is that the Australian Energy Regulator, which is the body in Australia that regulates the energy markets and networks, including the wholesale markets (which is the specific subject of its annual report), has now been operating for over 10 years. In its 2014-15 annual report, which is its last published report, the AER sets out a number of things it has achieved. It proffers a report from the current chair, Paula Conboy, who I think was appointed in 2014, and she talks about the importance of the work they do. Interestingly, board members Steve Edwell and Mr Andrew Reeves, together with Mr Ed Willett, provide some interesting observations. These are some longstanding members of that board. Mr Edwell tells us, in this annual report:

I see the AER at this time of its 10th birthday as a very credible and best practice regulatory agency. Well-functioning energy markets require vigorous competition; and where regulation applies, the regulatory agency must be independent, transparent and professionally competent. For mine, the AER delivers on these fronts as part of a broad institutional architecture that makes the National Electricity Market one of the world’s most efficient energy markets.

That is his assessment. He goes on to say:

Ten years on, we have completed at least two regulatory cycles, overhauled the regulatory rules and revamped the Tribunal remit. The AER has developed a comprehensive benchmarking framework and guidelines to strengthen efficiency and regulatory certainty. All for the better. The evidence, however, is that business submissions are increasingly voluminous, there has been no reduction in the reset timeline and consumers find it difficult to engage in a reset process that is ever more technically complex. Such is the world of best practice energy regulation.

The contribution from Mr Geoff Swier was:

The AER can be proud of many of its achievements over the past 10 years. It has learned much from its more challenging experiences. Further, Australia’s energy regulatory institutional arrangements are well regarded worldwide.

Mr Ed Willett's comments were:

I believe the National Electricity Market remains, by a clear margin, the best electricity market in the world. But there are clear vulnerabilities. Network prices remain too high, wholesale contract markets are too thin, the spot market’s continued viability as an effective market (rather than a mere dispatch engine) is at risk and demand side participation remains formative.

Mr Andrew Reeves, who is the former chair, makes similar comment, and even Ms Cristina Cifuentes said:

The AER’s independence, purpose and objectives are reflected in legislation. Our challenge has been to give effect to this in our everyday work. We have made it a priority to ensure our decisions are not only evidence based and supported by robust analysis, but are clearly reasoned and communicated.

The contributions in this report outline the legislative framework, governance and management under which they operate. It sets out a report on the performance and strategic priorities, and it identifies the performance of the work program. None of this report suggests, in any recommendation to this parliament, that there needs to be some increase in a reporting process to the parliament or to the minister.

The Hon. A. Koutsantonis interjecting:

Ms CHAPMAN: Sorry? None of this recommends that; in fact, they suggest that they have a website which already has, I think, 4,500 documents which they uploaded in that financial year. So I say to the parliament that I have no confidence that adding to this extra provision of information, which is so heavily cloaked with exemptions under the confidentiality rules, is going to make a scrap of difference to what is a real problem: that is, the competitive lack of contestability within the wholesale market.

The government may have some other programs in which they might invest in a policy or reform area which may or may not work. That is not the ambit of this bill. However, the minister should not come in here and make statements to the public pretending that his position, clothed with the embarrassment of what happened in July, of a general agreement at COAG, is some justification for advancing even a higher level. I would like to have some information from the minister regarding the extra costs that would be involved, whether there has been any consultation with the AER on what their obligations will be in providing this material, what extra costs will be involved in the legal assessment of what is confidential and what is not. There will be some other questions during the committee stage.

In this parliament we rely on organisations, in this case the Australian Energy Regulator. Remember (for most who perhaps were not here in the parliament) that this was established as an entity independent of the ACCC because of the very special nature of the significance of a secure and affordable energy supply being provided to the public, both domestically and for industry. I will be interested in the answers the minister will have in respect of this, but I rely on this.

If the regulator says, 'Look, we are hamstrung in providing certain information, we need some assistance in this regard,' then I would have thought we would have heard from them. They would have identified an area in the report which was inadequate for them to be able to do their duty to be open and transparent and assist the consumer to be informed, to enable them to make submissions to them. All of that is good, but it is unbelievable coming from the lips of the Treasurer, who will not even give us a document about Alinta in this state.