Energy generation/Alinta/Hazelwood | QUESTION TIME

28Mar

Excerpt from Question Time transcript 28 March 2017

Mr MARSHALL ( DunstanLeader of the Opposition) (14:33:37): My question is to the Premier. Did the government undertake any modelling to determine whether 250 megawatts of reserve generation could be contracted from existing providers at a lower price and sooner than the government’s proposed $360 million gas generator?

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:33:57): It’s an important question because it has to clear up a lot of confusion from the opposition on this issue. Contracting with existing generation is not extra generation—

Mr Marshall: We’re aware of that.

The Hon. A. KOUTSANTONIS: —you would hope so—because currently those generators are already in the market and available. They have visibility through the market, and it still means we are going to have shortfalls. The only way we can get through without load shedding is to have additional generation. Contracting with existing generators doesn’t give us extra capacity. I thought it would have been self-evident.

Mr MARSHALL ( DunstanLeader of the Opposition) (14:34:33): Nevertheless, can the Treasurer answer the question: did the government do any modelling?

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:34:38): Again, I find that a stunning line of questioning. If we are going to be short with the generation we have in place already, what benefit does it do us to model getting that generation in—

Members interjecting:

The Hon. A. KOUTSANTONIS: The question contemplates—

Members interjecting:

The Hon. A. KOUTSANTONIS: —contracting with generation that is already available to meet a shortfall it can’t meet. It is a ridiculous proposition.

Mr MARSHALL ( DunstanLeader of the Opposition) (14:35:12): Supplementary: what will be the expected annual cost of operating this new piece of plant?

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:35:20): We’re out to the market, and the market will tell us the cost of the operation. I understand the Australian Energy Market Commission is establishing a new ancillary market for inertia. They have put out their release and their papers contemplating that. This government is contemplating an inertia market. The problem with inertia markets is that some states have an overabundance of inertia, so why would you have a market in those states, when other states require inertia.

As we transition to renewable energies, this market will become more and more lucrative, so what we are attempting to do is offer those stabilisation services through our new generator and, of course, funding from that will be provided through this ancillary market. We won’t know what the benefits of that are until the market is established, and we won’t know the operational costs of the generator until the tender process is completed.

Mr MARSHALL ( DunstanLeader of the Opposition) (14:36:36): Supplementary to that earlier answer provided by the minister: given that we are spending $360 million of capital, what is the likely income and expenditure cost to the state in terms of interest on the $360 million expenditure, the depreciation charge on that $360 million worth of expenditure and the ongoing annual operating costs for the new plant?

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:37:02): As we said on the day we launched this, the Premier and I announced that we will be making public all those costs that are available to us on budget day, as we would with all other expenditure. I also point out that Business SA put out its own work saying that the statewide blackout cost South Australian industry $360 million or so for that four-hour blackout. If we avoid one system black through our generator, it has paid for itself.

Mr MARSHALL ( DunstanLeader of the Opposition) (14:40:36): My question is to the Premier. Did Alinta’s offer to the government, to keep the Northern power station open in 2015, provide sufficient synchronous generation capacity to maintain grid stability in the event of the Heywood interconnector becoming disconnected?

The Hon. J.W. WEATHERILL ( CheltenhamPremier) (14:40:55): I thank the honourable member for his question. Of course, the Northern power station is in private hands. It would still be in public hands if it had not been sold under the privatisation in 2000 under the Electricity Corporations (Restructuring and Disposal Act) 1999. This particular asset is being spoken about by those opposite, and I think those opposite were citing with approval some proposal that was floating around that we pick it up for a dollar.

Ms CHAPMAN: Point of order: the question was in respect of the events of an offer in 2015, not 1991.

The SPEAKER: I uphold the point of order.

The Hon. J.W. WEATHERILL: So, we wouldn’t be having this discussion but for that, but we are, sadly. The reality is that Alinta was never making an offer that would meet either our long‑term needs or our short-term needs. We had specific requirements about South Australia’s energy future and Alinta was unable to meet them and so there was never any offer that met South Australia’s needs.

Mr MARSHALL ( DunstanLeader of the Opposition) (14:46:42): Supplementary: what was the capacity of the Northern power station when the government refused Alinta’s solution?

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:46:49): First of all, they weren’t offering a solution: they were losing money and wanted us to subsidise them. The question then is: if you subsidise one power station, in effect offering them a capacity payment, what do you do when a larger generator turns up and says, ‘If you’re offering capacity to the Port Augusta power station, why don’t you offer it to Torrens Island? Why don’t you offer it to Pelican Point? Why don’t you offer it to Origin?’ and then you are paying a capacity payment to everyone.

Mr GARDNER: Point of order: standing order 98. The question was very simple and direct and the Treasurer is refusing to answer; instead, he is debating.

The SPEAKER: Treasurer.

The Hon. A. KOUTSANTONIS: The Northern power station could not offer us the services we needed and, indeed, what Northern was seeking to do was to see the taxpayer socialise their losses. If the Northern power station was so critical to the function of this state, why did members opposite sell it? If it was so critical that the taxpayers pay to run it, why did they sell it? If it was so important to be in state hands and state-run and to be funded by the taxpayer, why did they sell it?

The SPEAKER: The Treasurer is now debating the matter. Does he care to address the question of capacity?

The Hon. A. KOUTSANTONIS: I did, sir, thoroughly.

Mr VAN HOLST PELLEKAAN ( Stuart ) ( 14:58 :36 ): My question is to the Minister for Mineral Resources and Energy. Does the minister stand by his advice to the house that the closure of the Hazelwood power station in Victoria will be ‘good for South Australia’ and, if so, will he advise the house of the source of the advice he has received?

The Hon. A. KOUTSANTONIS ( West TorrensTreasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:58:54): I can advise the house that, as of today, a great thing has occurred. The second unit at Pelican Point is for the first time, other than being directed, dispatching voluntarily into the South Australian market. When I suggested that, with the planned closure of the Hazelwood power station, this would occur, with more generation in South Australia, members opposite ridiculed us, but here we are today with proof in the pudding.

There are now more electrons being made in South Australia, more electrons being produced in South Australia. More South Australian gas is being burnt to make South Australian power in South Australia, rather than being reliant on interconnection from across the border. The more we produce in South Australia is absolutely a good thing.