Excerpt from Question Time transcript 14 February 2017
Mr MARSHALL ( Dunstan—Leader of the Opposition) (14:12:11): My question is to the Minister for Mineral Resources and Energy. What contingencies are in place to protect South Australian power consumers from the imminent closure of the Hazelwood power station, and the subsequent loss of supply through the interconnector, following AEMO’s warning that last week’s situation could have been much worse if Hazelwood had not been supplying the National Electricity Market?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:12:38): The first point to make about the event last Wednesday is that it was completely avoidable. It was completely unnecessary, it didn’t need to occur and, as far as the government is concerned— and indeed as I think a large part of the country is becoming aware, AEMO dropped the ball. They dropped the ball and they admitted as much in the Senate inquiry, when Mr David Swift said to the Senate inquiry that they got the demand forecast wrong. When you get your demand— When you get your demand forecast wrong, it is very hard to then have generators turn on to meet that demand, given the notice they’ve been given. The Australian Energy Market Operator is tasked with dispatching available demand to meet our needs. That’s their job, that’s their charter, that’s their constitution, and it is framed under, quite frankly, the privatisation of ETSA. They are the ones who now manage our electricity market. When the national operator gets its demand forecast wrong and finds it easier to load shed South Australians rather than direct, in advance, another generator on, we are right to lose faith in that market operator. We are right to put our own measures in place. As the Premier announced last Thursday, no more would this state allow itself to be at the mercy of the market operator and the market forces members opposite have subjected the people of South Australia to.
As the Premier announced last Thursday, given the market operator can’t seem to ensure supply to South Australians and that private operators are finding it more convenient to leave generation idle rather than to serve South Australians, regardless of the price signals being sent into the market by the private operator—that is, even though they’ve set the highest possible price in the market, they don’t turn on—that’s market failure. It’s market failure because it wasn’t what people expected from their energy markets.
Energy, electricity, is a public good. South Australians demand and expect it to be there when they need it, and that’s why that premier, in a previous time, made sure it was in public hands. What we are trying to do, is of course—we need to intervene into this market now to make sure that what happened to South Australia last Wednesday never happens again. When we announce our plans to dramatically intervene into this market and unpick the damage done by members opposite through the privatisation, it will be dramatic.
Given the announced closure of the Hazelwood coal-fired power station, which is now, I think, the ninth in a long list of disorderly exits from the Australian energy market because the commonwealth government refused to place a price on carbon or refused to put a market mechanism in place to have an orderly transition to meet the Paris agreement—wait for it—that they signed, not us, we have always supported a price on carbon, as did Malcolm Turnbull. I have to say that when Hazelwood exits the market, South Australia, as the Premier announced, must put measures in place to ensure that we have supply for our citizens. We will be making an announcement very soon about our dramatic intervention into the market to unpick the privatisation of members opposite.
Mr MARSHALL ( Dunstan—Leader of the Opposition) (14:18:08): What are the implications on electricity prices and grid stability for South Australians when the Hazelwood plant closes?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:18:20): The best forecast we have, of course, is from the ASX forward prices and the OTC prices. The over‑the‑counter markets, which is a majority of the contracts written in the market, I am advised, support contracts between counterparts. We don’t get much of an idea of what those contracts are, other than when businesses actually show us what those contracts are. The exchange-traded markets, which are an electricity futures product, are traded on the Australian Securities Exchange. Participants, including generators, retailers, speculators, banks and other financial intermediaries, buy and sell future contracts. Terms and conditions of the OTC contracts are confidential.
The terms and conditions of the over-the-counter contracts are confidential, so it’s hard to know what prices they are being traded at, so it is hard to get a measure of the impact of the removal of such a large amount of generation. Remember that the Northern power station made up roughly 8 per cent of the competitive market in South Australia, whereas Hazelwood makes up 20 per cent of the Victorian market in terms of competition. The futures market allows parties to lock in a fixed price to buy and sell, given the quantity of electricity over a specified time. Each contract relates to a nominated time or day, and it is a very complex and difficult matter to explain. In particular, the important part about this trading is that it gives an idea of what these prices will be.
In regard to the recent electricity base load futures prices, I can advise that in the first quarter of 2017—of course the futures market factors in the withdrawal of supply going forward—you can see that in South Australia they were traded at $121.25 a megawatt hour. That is unacceptable; that is a high rate. Let’s compare that with some other jurisdictions. In comparison to the same quarter, electricity based on futures in New South Wales, Victoria and Queensland last traded at $135 a megawatt hour, $81.13 a megawatt hour and $210 a megawatt hour respectively. In the futures market, Queensland has overtaken South Australia.
On a further note, the futures market often factors in that the actual prices paid are much lower. In terms of the impact of the instability of the national grid and the absence of policy certainty, meaning that people are not prepared to invest, it’s creating a risk in the market. Quite frankly, despite the Prime Minister telling us that clean coal is the solution (much like his safe cigarettes policy), what we are going to see is no investment in the electricity market and futures prices getting worse and worse.
Interestingly, it is not renewable-rich South Australia that is bearing the brunt of this; it is coal-rich New South Wales and Queensland, which destroys the argument that renewable energy is more expensive than coal. Don’t believe me, believe the market. Don’t believe me, believe the ASX. The Prime Minister said we need some socialist paradise; this is a privatised market that operates entirely at market forces. How socialist is that?
Mr MARSHALL ( Dunstan—Leader of the Opposition) (14:24:56): He took a seat off Labor, sir. He’s an exemplar! My question is to the Minister for Mineral Resources and Energy. How long does it take for ENGIE to turn its second 250-megawatt generator on at Pelican Point?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:25:13): I’ll get back to the house with an answer. I will ask ENGIE— It is important to note that 25 per cent of the time when gas-fired generators attempt to start they fail, because, again, this is not like flicking the switch on your gas heater at home, despite what members opposite might think. Most gas-fired generators have to start with another form of fuel to heat up, of course, which is the part that concerns me the most about AEMO’s forecasting.
The people in New South Wales were given up to 36 hours of potential load shedding when they eventually load shed the second largest smelter in the country because their base load coal couldn’t meet their demands. It is important to note that they had a lot of time to give notice to allow that demand to be managed. We had no notice.
Now, given that most gas-fired generators that are brought in to a quick start 25 per cent of the time, I am advised, fail to start, an hour’s notice, 10 minutes notice, is not enough. But, I have to say that everyone thinks, except the Leader of the Opposition, that the Energy Market Operator did a bad job on Wednesday. The opposition thought that it did good job when it load shed South Australians.
Mr MARSHALL ( Dunstan—Leader of the Opposition) (14:26:34): Well, we don’t know the answer to that one. My question is to the Minister for Mineral Recourses and Energy. At what time did the minister contact AEMO to request ENGIE to bring its second generator online?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:26:48): I’ll go back and check, but I understand my first conversations with ENGIE were in the afternoon, well before the load shedding, given that we were thinking that demand was going to be very tight. My agency was in contact with AEMO, but I will get a detailed report for the house so that members can see exactly what we did.
I would also add that my conversations with the chairman, Mr Markson, about the load shedding, when I was informed officially by AEMO that it was load shedding, were after they had begun. Now, I have to say that, if that were to occur in the North Shore of Sydney, there would be outrage. I think that the market operator has treated us very badly, and I think that they have let South Australians down.
Now, I know a lot of the people who are involved in the AEMO organisation, and I had a great deal of time for Mr Matt Zema who passed away last year. We were in constant contact about the management of AEMO. I am concerned about—with respect to the intervening period between Mr Zema’s untimely death and the appointment of a new chief executive—the operations of AEMO, as I think a lot of people are, especially given what occurred in New South Wales.
Now, I think that when you contrast the two methods of operation—New South Wales and South Australia—and the amount of time and effort that went into making sure that residents weren’t load shedded in New South Wales, you had the ACT minister and the New South Wales minister out giving plenty of advanced warning, asking the people of New South Wales and the ACT not to turn on certain types of power in their home if they didn’t need to and trying to rush around to meet with industry that could voluntarily come off supply. They had time to try to manage the loads.
We were given none of that warning, yet we see from the reports that the relationship between AEMO and the Bureau of Meteorology needs to be improved, I would have thought, since the September blackout. There would have been a lot more of that. And I have to say the idea that we were given almost no notice of load shedding and the first contact I had with the chairman, I have to say is unacceptable. If the opposition wants us to run our electricity system why did they sell it?
Mr MARSHALL ( Dunstan—Leader of the Opposition) (14:29:33): I have a question of clarification. The minister in his answer said that he would come back to the house and advise how long it takes to turn on the 250 megawatt generator at Pelican Point. On 9 February, he told a broadcaster that it takes an hour. Does he stand by that statement made then?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:29:56): Again, I will get more advice from ENGIE but, like I said on radio, it all comes down to demand management. If you are the market operator, you plan for demand. You look at supply and you look at demand. People involved in the industry know that ENGIE owned Pelican Point and they owned Hazelwood, so they have positions in the market that they need to protect.
It is prudent that they will be planning to turn on that second unit at Pelican Point to protect their position once Hazelwood closes. Of course—surprise, surprise—they were. How do we know that? Because on Thursday, when the market operator directed a second unit on, like they should have on Wednesday, they were ready to go. Why? They had been prepared to de-mothball that plant. The question is: why didn’t AEMO forecast better on Wednesday the lack of available supply and direct that second unit on? Why didn’t they do it? We want to know. If the market operator can’t guarantee supply under a privatised system, we are going to intervene and unpick the mess they created.
Mr VAN HOLST PELLEKAAN ( Stuart ) ( 14:31 :19 ): My question is again to the Minister for Mineral Resources and Energy. Why did the minister claim that ENGIE had offered extra generation to avoid last Wednesday’s power rationing, given it has said it has no gas contracts in place for the second generator, meaning it was unable to make the plant available through the bidding system under market rules agreed by the owners of AEMO ,which include the South Australian government, and also given that AEMO said to a Senate estimates committee that it did not happen?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:31:52): The question makes no sense, but I will try to answer it. You can buy gas on the spot market, and if you read AEMO’s public pronouncements they also said that ENGIE could have put gas on the spot market. The public statement that ENGIE put out said that they have no contracts but were in negotiations and hadn’t finalised contracts and that was why they were bidding in. That just shows you the confusion of the National Electricity Market when you have a generator and a market operator arguing about when they should turn on.
Meanwhile, 90,000 South Australians were without power and members opposite are arguing about who said what to whom. Really! Who said what to whom—that is their major concern rather than people being left without power. The fact is that the market they designed is broken, it doesn’t work. Privatised power works in the interests of the people who own the privatised assets, not in our interests, and that is why we need to reintervene in this market. We are not going to sit by and watch private operators make more money when people are load shed than turning new generation on. It is unacceptable behaviour. Why members opposite are trying to blame us, rather than the generators and the market operator and the system that they have foisted on the people of South Australia, is beyond me.
Mr VAN HOLST PELLEKAAN ( Stuart ) ( 14:37 :53 ): My question is again to the Minister for Mineral Resources and Energy, particularly in light of his previous answers about the AEMO. Does he stand by his statement made in this parliament on 29 September 2016? With your leave, sir, and that of the house, I will explain.
We are the lead legislator for the National Electricity Market . We have a lot of in-depth , in situ advice given to us constantly by world experts based here in South Australia —p eople whose lives have been dedicated to the management of the N ational E lectricity M arket and its establishment … We have designed it , we have built it .. .
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:38:31): Of course, the context is ‘we’ because every single piece of legislation— We are the lead jurisdiction, and when I say ‘we’ I mean members of the opposition, the government, the government of Victoria, the opposition of Victoria, the government of New South Wales, the opposition of New South Wales and the same in Queensland. This is a collective operation, and every single time we have moved legislation members opposite have voted for it. Not once have they opposed national reforms through the COAG process, yet here we are today and they are trying to say that they are not responsible in any way for the National Electricity Market.
The reason we have this NEM, the reason we have to have a collective operation of regulation, is that we don’t own our assets anymore and we participate in a national market. Why is that? Why do we do that? What’s the answer? Because they sold our assets, and then they have the audacity to complain about us being involved in national processes. We are compelled to be, but those national processes aren’t working for us anymore; in fact, they have let us down terribly.
In fact, the operation of AEMO has let us down terribly. Ever since Matt Zema passed, we have seen AEMO make mistakes that are, quite frankly, inexcusable. We need to rectify that, and the way we are going to rectify it is through dramatic interventions in the National Electricity Market in the interests of South Australians, much like former premier Tom Playford did when he realised that the privately-run electricity operators weren’t serving the interests of regional South Australians. That’s what we are going to do as well. We have made a decision that the private operators of our electricity market do not serve the interests of the people of South Australia and we are going to intervene.
Mr VAN HOLST PELLEKAAN ( Stuart ) ( 14:40 :45 ): Again, to the Minister for Mineral Resources and Energy: why did the minister say on ABC radio on 9 February that the South Australian government is not responsible for the list of customers to be cut off when electricity is rationed under load shedding, when it is actually done based on advice from the Office of the Technical Regulator?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:41:04): When I say ‘government’, I am talking about ministers. I have to say that it is much better that this is done independently of me to make sure that there is no political opportunism. Imagine the outrage from members opposite if the load-shedding list had a list of Liberal-held electorates. What would the cries be then?
Of course they are done independently of me. I don’t direct where they should load shed. I leave that to the experts to make sure that they can design the list. We don’t do this on a political level, and members opposite should know that but, of course, if they want me to, I will. Quite frankly, I would have thought, after his demotion, he would have known better than to check.
Excerpt from Question Time transcript 16 February 2017
Mr MARSHALL ( Dunstan—Leader of the Opposition) (14:08:55): My question is to the Minister for Mineral Resources and Energy. Given the Premier’s repeated claims that South Australia must, and I quote, ‘go it alone on electricity’, why did the minister specifically state that South Australia could not go it alone in the electricity market?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:09:10): The Premier, at the first press conference the day after the load shedding event, said those very words, that it would be very difficult for us to go it alone.
The Premier said in his press conference, and publicly in other media, that we are bolted on to the national electricity system. It is very difficult to leave. What the Premier means by ‘going it alone’ is retaking our sovereignty in terms of the way the National Electricity Market works, which is a lot like what Sir Thomas Playford attempted to do when the Adelaide Electric Company refused to roll out electricity to regional areas of South Australia. Regional areas were not being connected to the grid because it was uneconomic. Sir Thomas decided that there would be an inquiry into the way they conducted themselves, and he retook South Australia’s sovereignty about its power.
That sovereignty was lost with the privatisation of ETSA. The Premier is saying that we want our electricity system to work in the interest of all South Australians, not those who have purchased our assets in a privatisation deal that, of course, is used now to benefit their shareholders or the governments that own them. Electricity fundamentally is a public good. It belongs to the people of this state to go about their day-to-day business, whether it’s enjoying their family homes, whether it’s in trade or commerce or whether it’s in education.
Every aspect of our lives is touched by this very important machine. It is a machine. It is the largest machine in Australia, yet some people think of it as a market or a commodity to be traded for profit by shareholders who own these assets. Our view is very different. Our view is that this commodity belongs to the people of South Australia, and what we’re going to do is use every inch of our authority, everything we can, to retake our sovereignty, to make sure that we will decide the future of South Australia, not foreign-owned interests—
Mr MARSHALL ( Dunstan—Leader of the Opposition) (14:12:14): Supplementary: can the minister provide some clarity to the house about what he means when he says ‘retake control of the power network in South Australia’? What elements of the energy system in South Australia will he choose to take control of again?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:12:31): The government will make an announcement in the coming weeks about what our intervention is. That intervention will be considered. It will be well researched. It will be well debated, unlike ‘Glob Link’.
Unlike ‘Glob Link’, we will be speaking to stakeholders. Most importantly, we will be using every piece of our armoury to make sure that South Australians aren’t put at a disadvantage because of a failed process. It is my very strong opinion that the privatisation of ETSA is the worst policy decision ever taken in this parliament’s history.
Mr MARSHALL ( Dunstan—Leader of the Opposition) (14:13:28): My question is to the Minister for Mineral Resources and Energy. Does the minister support the Premier’s proposal to go it alone in implementing a state-based emissions intensity scheme or carbon tax?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:13:40): An emissions intensity scheme is not a carbon tax, but why let the details get in the way of the story? The emissions intensity scheme developed by the then leader of the opposition, Malcolm Turnbull, who is now our Prime Minister, is a very good scheme. We certainly support there being an energy intensity scheme in terms of a national process.
An energy intensity scheme on the national electricity network would mean a great deal of benefit for the people of South Australia, despite opposition from members opposite. We would be a net importer of credits because, of course, we don’t have coal-fired generation. It would incentivise our gas-fired generation here in South Australia. It would, of course, mean that those gas-fired generators would operate more often, and that means operating more often. They would offer more contracts into the market and, of course, you would see almost immediately, with an energy intensity scheme, the flows of the interconnectors reversed to the eastern seaboard.
Of course, we can’t have a pro South Australia policy because members opposite serve the eastern seaboard, not us, and they oppose an energy intensity scheme. I am disappointed that they do, for there is broad support for the energy intensity scheme. I will give you some of the names: the Chief Scientist, the CSIRO, the Australian Energy Market Commission. The current Prime Minister, Malcolm Turnbull, used to support one. Josh Frydenberg for a moment supported one, for a brief shining moment. For a brief shining moment, he supported an energy intensity scheme.
Yes, of course we support a price on carbon. We’ve always supported a price on carbon. We are the Labor Party. The market has factored in a price on carbon. The only people with their heads buried in the sand on carbon are members opposite.
The two propositions that the Leader of the Opposition has made, we support on a national basis absolutely. We absolutely support there being a price on carbon, or an energy intensity scheme. We also support a renewable energy target because we believe, like the Prime Minister does, that when you sign the Paris agreement, which means you must decarbonise your electricity grid, you need mechanisms to do that.
We have not introduced a state-based mechanism for our renewable energy target. Other jurisdictions are thinking about mechanisms for their renewable energy target. The mechanism that we use is the commonwealth one. They are the ones who incentivise our renewable energy target. I think that investment is good for South Australia. I think it creates jobs, it creates wealth and it creates activity and, most importantly, it creates competition—competition that was taken away from us during the privatisation of ETSA by members opposite. That competition is the most important thing.
Mr MARSHALL ( Dunstan—Leader of the Opposition) (14:18:19): My question is to the Minister for Mineral Resources and Energy. Can the minister explain how the government proposes South Australia go it alone when the wind isn’t blowing and we can’t rely on thermal generation from other states?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:18:33): If you read the AEMO report, we had record demand last Wednesday and had enough thermal generation within the state to service our needs.
Mr van Holst Pellekaan: It wasn’t running.
The Hon. A. KOUTSANTONIS: It wasn’t running—failure of the National— A very good point made in interjection, but the National Electricity Market was unable, despite setting an extremely high price in the market, to incentivise all of our generation based here in South Australia to come on. That is fundamentally a failure of the National Electricity Market. Why is it that a generator, why is it that a privately owned generator in a private market, run by a private company decides that when prices are set at a maximum of $14,000, where any generator in this country can make a profit regardless of the import costs, decides not to turn on? Why is that?
What is going on in the system that allows that type of behaviour? We need to know. What is it about our privatised market? What is in those contracts that allows that type of behaviour? We want answers to that, and we will find out what those answers are. When we find out what those answers are, we are going to make sure that we take control of our own future to ensure that it doesn’t happen again.
Mr MARSHALL ( Dunstan—Leader of the Opposition) (14:20:19): A supplementary, sir: can the minister provide any plausible explanation to this parliament as to why he told the national broadcaster that Pelican Point second generation was ‘ready to go’ when the AEMO report released yesterday, which he was just quoting from, stated, ‘165 MW of Pelican Point capacity had been notified as unavailable’?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:20:46): In that same report, what the member doesn’t quote— In that same report, the operators of Pelican Point inform AEMO they can be ready to go in an hour. If you believe the Leader of the Opposition, they just weren’t available at all, but in that same report they say they could be available within an hour. What kind of person asks that question unless (1) they haven’t read the report, or (2) they are deliberately being tricky? Which one is it? I will let members choose.
Mr MARSHALL ( Dunstan—Leader of the Opposition) (14:21:22): A further supplementary: why did the minister claim that the Pelican Point generator had gas for the second generator and was ready to go when AEMO’s report specifically says, and again I quote, ‘Engie advises AEMO that they don’t have the gas to run the unit and if gas was available it would be a four hour minimum run up time’?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:21:52): In the same report, on the next page, ENGIE informed the operator that they can operate for four to eight hours (from memory) within an hour start-up time. So again the member either has not read the report or he is deliberately being tricky.
Those conversations are recorded. The trading room conversations are recorded, so there is a record. AEMO have detailed in that report that ENGIE contacted the operator so that they could be ready to go in an hour and operate for four to eight hours. So how do you make sense of the questions the leader is asking unless (1) he is deliberately being tricky, or (2) he hasn’t read the report?
Mr MARSHALL ( Dunstan—Leader of the Opposition) (14:23:12): My question is to the Minister for Mineral Resources and Energy. Can the minister confirm which parliament sets the legislation that establishes the national energy rules, rules which he describes as being broken?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:23:28): I will give a brief lesson to the Leader of the Opposition on the intergovernmental arrangements for the COAG process. The COAG Energy Council is made up of all jurisdictions, and those jurisdictions that are members— He knows full well that all national reforms have a lead legislating jurisdiction. Sometimes it is the commonwealth, sometimes it is Victoria, sometimes it is Queensland, sometimes it is South Australia or other jurisdictions. We are the lead legislator in this state. All legislation is agreed by the COAG. We don’t make the decisions here in our cabinet on our own; they are made— Members laugh. They are laughing at the bills they voted for. This is the process of thought that they have. They have been in opposition for 15 years. They have been briefed on— They get briefed on the COAG processes. They get briefed on the COAG reports. Indeed, the deputy leader has turned up to COAG meetings. I remember when I was transport minister, she came to a COAG meeting ready for the induction into the COAG. It was the inauguration of the deputy leader. Of course, she wasn’t banking on the leader telling everyone to vote Labor but, apart from that, she attended, so she knows the way that this is structured. Of course, importantly, members opposite are briefed on all of this.
When we come together as a country and set the rules for the National Electricity Market, we do so by consensus. Those rules are no longer working for us. Is the leader really saying that we should be saying that because we are lead legislator, we can’t exercise our sovereignty; because we are lead legislator, we can’t criticise the National Electricity Market; because we are lead legislator, we can’t attract privatisation; because we are lead legislator, we can’t say privatisation isn’t working; because we are lead legislator, we can’t say AEMO dropped the ball; because we are lead legislator, we can’t say that the market isn’t working for Australians anymore? Why is that? Why can’t we say that? We are a sovereign state and we will exercise our sovereignty.
Mr VAN HOLST PELLEKAAN ( Stuart ) ( 14:26 :20 ): A supplementary question: given the minister’s answer about how COAG works and how the national legislation works across all states, if he is unsuccessful tomorrow in his phone hook-up in convincing the COAG Energy Council to allow South Australia—
The SPEAKER: It’s expressed in a hypothetical way.
Mr VAN HOLST PELLEKAAN: —to retake control of our power network, will he introduce legislation into this parliament to do it anyway?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:26:45): First and foremost, I will be outlining to the COAG my concerns about the operation of AEMO. I will be outlining my concerns about the operations of the South Australian Power Networks. I will be outlining my concerns about the event that occurred in New South Wales, as I am sure the New South Wales minister will be, when AEMO gave the New South Wales government a lot more notice than they gave us.
I would like to know some answers, as I think most of my COAG colleagues want to know, as to why the price signals, which are the armoury, the tools, that AEMO have to incentivise new generation on to meet demand, didn’t work. What was it about that Wednesday when prices were at the highest possible cost to the market? Why is it that that second unit didn’t turn on? Why is it that, in a jurisdiction like New South Wales, which has one of the highest penetrations of coal-fired generation in the world, they couldn’t meet their demands with their so-called beautiful, base load coal?
Mr Marshall: They are completely different reasons.
The Hon. A. KOUTSANTONIS: Completely different reasons! It wasn’t hot in New South Wales? It was hot here. What were the differences? The differences were this: demand management by AEMO. They can’t let the North Shore go out. We can’t help the North Shore with our power, so they are all over it, but in South Australia, ‘We just dropped the ball. We got our demand management wrong.’ It’s not good enough. We want to know exactly why it occurred and what we can do to make sure we fix it.
About the operations of AEMO, I have had a conversation today with the federal minister, minister Frydenberg, and we have agreed to work together to understand exactly what AEMO did wrong, what we can do to repair it, and what the COAG can do to get through this energy situation together and to work cooperatively together. We are going to have our disagreements. We are going to disagree on renewable energy. We believe renewable energy is the path to the future; members opposite think that coal is. If coal is the solution for South Australia, why did the coal-fired power station close?
The SPEAKER: Point of order.
Mr VAN HOLST PELLEKAAN: I ask you to direct the minister to answer the question: will he introduce legislation to the parliament if COAG disagrees that South Australia take over its own control again?
The SPEAKER: I think the Treasurer has escaped the hawser of relevance, so if he could come back to the substance of the question, that would be good.
The Hon. A. KOUTSANTONIS: Thank you again for your guidance, sir—always valuable information to the house. The government reserves its rights on all matters when it comes to retaking control of our system, whether it be expenditure, whether it be intervention, whether it be rule changes, whether it be legislation. We reserve our rights on everything. I tell you what we won’t do. We won’t be making contradictory statements like ‘We support a nuclear power station but not a dump,’ ‘We support gas-fired power stations but not gas mining,’ ‘We don’t support renewable energy but want intermittent energy in Port Augusta.’ It has to be consistent, thought out— policy that will actually make an impact on the National Electricity Market and make power work for South Australians again.
Mr VAN HOLST PELLEKAAN ( Stuart ) ( 14:35 :11 ): My question is again to the Minister for Mineral Resources and Energy. Will the minister now answer the question he was asked on Tuesday and tell the house what contingencies are in place to prevent further major blackouts following the closure of the Hazelwood power station in six weeks?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:35:30): I’m not so much concerned about the next six weeks as I am about next summer.
Mr van Holst Pellekaan: But that was the question.
The Hon. A. KOUTSANTONIS: Well, that’s not what you said. I am concerned. That’s why the state government will be making interventions. I do point out that, if we had a national coherent policy of an energy intensity scheme, there would be no concerns because we would have our gas-fired generators incentivised to be on more often and we would more than adequately meet our demands. They would be writing more contracts into the market and of course we would have a much more fluid electricity market.
In the absence of that national leadership, in the absence of a price on carbon and in the absence of an energy intensity scheme, we will have to take matters into our own hands and do something that we think will alleviate that risk. Once that plan is finalised, we will be in the parliament letting members know. Members will debate it, no doubt. They will talk about it. No doubt the Leader of the Opposition has already made up his mind to oppose whatever it is. Whatever we announce, he will oppose. He will ring up the Prime Minister and ask permission to either support or oppose, because the Prime Minister was the one who decided that he would oppose—
I’m very keen to meet those contingencies. I think those contingencies will be met with of course a great deal of renewable energy. Renewable energy is a great way of meeting a lot of those demands and I point members to a very interesting article that was in The Advertiser about investment and innovation in renewable energy. It was called ‘Board blue-blood to build policy changes’, and it was about a young enthusiastic member for Norwood who was going to change the world about innovation.
He talks about all his business experience. He doesn’t mention Wokinabox once. It’s all about everything else but Wokinabox, but he talks about innovation and he talks about the great shame of the Premier’s cut in the innovation package for renewable energy. Renewable energy, he thought, could meet those challenges.
Mr Marshall: In six weeks’ time, when it closes, what contingencies has the government put in place?
The SPEAKER: Let me listen to the minister.
The Hon. A. KOUTSANTONIS: We believe that renewable energy mixed with gas can meet these demands, and in fact from AEMO’s own report, in a day of record demand, we could have met all our own needs. We had sufficient energy in the state to meet those needs, had it not been for the market failing and not turning on that second unit at Pelican Point. What I expect the market to do under normal circumstances is, when ENGIE close their position in Victoria, they will have to somehow enter the market with their two units here to protect their positions and of course offer contracts because it makes sense the way they are structured to be out there offering retail markets.
Of course, we found that the market failed for us on Wednesday, and it failed because the national bodies that run our electricity market proved that they were unable to predict demand and they didn’t act early enough. Why wait till 3 o’clock? What were they doing at 10 o’clock and 11 o’clock? What were they doing the day before? It’s not as if we didn’t know it was going to be hot. It’s not as if we didn’t know it was going to be tight. It’s not as if we didn’t know that there was a heatwave across the country.
Mr Knoll: What they didn’t know was how much wind was going to be blowing. That’s what they didn’t know.
The Hon. A. KOUTSANTONIS: Well, again, it’s the ideological attacks rather than this technology-neutral attitude that the Prime Minister has called on. We need to have a technology-neutral response to this, taking into account emissions. That’s how you get the market to reform. Members opposite are ideologues; they just want coal. The private sector can’t run the coal industry. The private sector can’t run a coal-fired power station; they failed. They want to socialise it. They want the government to run it.
The SPEAKER: The minister has escaped any relevance. He is now debating the matter. The member for Stuart.
Mr VAN HOLST PELLEKAAN ( Stuart ) ( 14:40 :05 ): Given that the minister in his answer said that he strongly supports a national emissions intensity scheme, does he support a single national renewable energy target?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:40:20): I support the national renewable energy target and the state-based renewable energy target. Honestly, if we didn’t have him, we would have to invent him. If we didn’t have Steven Marshall, you would have to make him up. So apparently a renewable energy target that we have taken advantage of for $6 billion worth of investment and a thousand jobs is okay but, whatever you do, don’t set your own aspiration. As we have seen in reports today, had it not been for the states doing the heavy lifting, they would be almost nowhere near their renewable energy target, and the Prime Minister is the one who signed the Paris agreement.
None of us in this place criticised the Prime Minister for signing the Paris agreement. None of us criticised the Prime Minister for bringing the energy minister— It is remarkable the length, depth and breadth of the Leader of the Opposition’s lack of knowledge about energy, and no amount of fake laughter, no amount of shouting and no amount of telling people that they are wrong and he is right will change the facts. And shouting at me won’t change that they have no policy on energy. They have no policy on energy, none whatsoever.
Mr VAN HOLST PELLEKAAN ( Stuart ) ( 14:46 :40 ): A question again for the Minister for Mineral Resources and Energy: can the minister confirm that in the last quarter of 2016, 61 per cent of South Australia’s total electricity supply, or 1,488 gigawatt hours, was delivered by renewable generation and, if so, has the government failed to disclose that its own target has been exceeded because this extreme penetration of intermittent energy sources exposes the South Australian network to much greater risk of blackout than anywhere else in Australia?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:47:12): And yet the shadow minister writes to me asking for more intermittent renewable energy in Port Augusta.
Mr van Holst Pellekaan: In storage.
The Hon. A. KOUTSANTONIS: So intermittency is okay if it’s got storage. So are the issues of intermittency the problem of our frequency control or about demand management, or is it all too much for you to understand—not you, Mr Speaker, but members opposite? How can the member hold in his mind the two opposing thoughts, when he is saying that there is far too much renewable energy in the system, yet write to me and put on Twitter that he has written to me wanting more renewable energy? Which one is it?
We have an aspiration of obviously a 50 per cent target because we think it brings investment and it brings jobs and creates wealth in the state. Of course we are trying to meet our Paris commitments as a nation.
An honourable member: It’s unaffordable.
The Hon. A. KOUTSANTONIS: Well, if it’s unaffordable to meet the Paris commitments, why did the Prime Minister sign that agreement as members interject? So if members are going to attack the Prime Minister, at least have the courage to do so publicly rather than by sneaky little interjections.
I have to say that the truth about renewable energy is not the boogieman that the opposition makes it out to be. Renewable energy is good for our country. Renewable energy creates jobs and wealth and provides us with competition. It is affordable. It helps meet demand. The mythmaking by the coal lobby and the conservative end of the political spectrum, quite frankly, is misguided. If the last quarter was 61 per cent, 80 per cent, 40 per cent, 43½ per cent, either way we are treating the NEM as one market—one market. If it’s one market—
Yeah, yeah! So it’s not now one market. So the members who sold the asset into a market now say it is not one market; it’s a series of small little markets. If that’s the case, it’s broken because it is meant to be one big market. That is what members opposite don’t understand about renewable energy. Quite frankly, renewable energy is good for our economy. It’s good for the state. If it was doing harm to our economy, we would say so.
Mr MARSHALL ( Dunstan—Leader of the Opposition) (14:49:56): Supplementary to the minister: what was the penetration of renewable energy in the December quarter last year?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:50:05): I will get a detailed update for the house.
Mr VAN HOLST PELLEKAAN ( Stuart ) ( 14:50 :28 ): Supplementary question: given the minister’s answer to my question, can he advise the house how many blackouts South Australia experienced in the last quarter of last year?
The Hon. A. KOUTSANTONIS ( West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:50:37): There was a statewide blackout because of a storm that members want to blame on renewable energy. Which blackout in this state has been caused but wasn’t impacted by weather? Which one wasn’t impacted by weather? Which blackout wasn’t impacted by weather? Even the Prime Minister, after having received a briefing from his own agency— was forced to admit—
Mr Marshall: Everything is weather for him.
The Hon. A. KOUTSANTONIS: That’s what the Prime Minister says. Well, again, the perfect gift that keeps on coming. The Prime Minister gets up in the parliament and says it’s the weather that caused the blackouts, not renewable energy, yet members opposite want to believe it was renewable energy. The Prime Minister, through investigations by Fairfax, found that he actually got briefed by AEMO, that it was the storm that caused the blackouts. Now members opposite are saying it’s renewable energy. Get a briefing!