Beware: your electricity company may be ripping you off!
The Greens have been campaigning for a fairer return for households who export solar power to the grid since the State Government introduced a solar feed-in bonus scheme in 2008.
Electricity companies in SA have used the introduction of the solar feed-in premium laws to make a windfall profit at taxpayers’ expense, at the same time as ripping off households who produce power from the solar panels on their roof.
Solar panel owners should be receiving 2 payments:
1. A payment for the electricity the households export to the grid (paid for by the energy retailer)
2. A 44c/kilo watt hour premium (paid for by all domestic electricity consumers)
Instead, some retailers stopped paying the first amount when the feed-in scheme commenced on July 1 2008.
Since then AGL, Origin and TRU have all been forced to pay between 6 and 8c/kilo watt hour (on top of the 44c/kWh) - well short of a 'fair price' for the electricity they receive from households.
The Government’s Bill to change the solar feed-in scheme passed the Upper House on Thursday 23rd June 2011.
In the end it was a mixed result.
First the good news: The Greens were instrumental in achieving a 2 year extension to the scheme for new entrants. This will mean thousands more South Australians will now be able to afford to install solar panels on their roof, and hundreds of jobs in the solar industry have been protected.
Also, after a three year Greens campaign, electricity retailers are now required, by law, to pay a ‘fair and reasonable’ price for the electricity they receive from you.
Disappointingly, the Government and the Opposition played politics with the cost of the scheme, and as a result we were unable to deliver the increase in the price paid for your electricity from 44c/kWh to 54/kWh.
For those of you who were hoping to get an increase in the public subsidy, I am happy to explain why I felt the Greens had no choice but to vote against it. It’s a complicated story, so I would like to offer you a detailed explanation.
Before I start, though, I would like to remind you that if it wasn’t for the Greens, your 44c/kWh bonus would be ending in 2013 as the Government originally intended, rather than continuing out to 2028. This will deliver thousands of dollars extra into your pocket over the life of the scheme.
How the solar feed-in Bill ended up in the Upper House:
The price paid to households that are in the system before the 1st October 2011 will receive, until 2028, 44c/kWh plus the ‘fair and reasonable’ cost paid for by retailers (likely to be around 6-8c/kWh). Any household that installs panels between 1st October 2011 and 1st October 2013 will receive, until 2016, 16c/kWh plus the ‘fair and reasonable’ cost paid for by retailers.
However, Greens amendments to deliver the increase to 54c/kWh at a far cheaper cost, to fund a more generous 4 year transition scheme, to exempt low income households from the cost of the scheme, and to allow residents in retirement villages to benefit from the scheme were all rejected by the Government and the Opposition.
A ‘blow by blow’ description of the debate on the Bill:
The Greens are acutely aware the Government has designed the scheme so that the cost is not paid by the Government, but added on to the electricity bills of all South Australians, including many who are genuinely struggling with the cost of living. So, right from the beginning we worked closely with social welfare agencies like SACOSS and Uniting Care Wesley. Their very clear message was that the cost of the scheme was already starting to bite and a rise to 54c/kWh would make things even harder for struggling families.
So, after many weeks of detailed modelling and consultation, the Greens were very excited about developing a comprehensive package that would still enable the price you receive for your electricity to increase to 54c/kWh, and fund an extension to the scheme for new entrants, all for around $50 million less than the cost of the Government’s option. On top that, we had an amendment to shield the cost of the scheme from 200,000 vulnerable and low income households.
The modelling of our option by the Essential Services Commission (ESCoSA) was so positive that the Government had no choice but to accept that it was possible to responsibly fund a small extension to the scheme. The problem was the Government decided to add the cost of their new transition scheme on top of the increase in electricity costs they were already proposing, rather than accept the Greens alternative which was to pay for the transition scheme from savings.
On Thursday last week, the debate in Parliament came to a head. First up we helped ensure a ‘transition’ scheme for new solar entrants got supported.
Then we had a couple of setbacks. The Government and Opposition combined to defeat the low income exemption. The Government and Opposition also then combined to defeat a Greens amendment that would have increased the amount that electricity retailers are required to pay you for the electricity that you sell to them.
Then the game playing by the Government and Opposition really began. The Liberal Opposition moved an amendment to keep the price at 44c/kWh. I put forward the Greens model that delivered the increase in the price to 54c/kWh but for a cheaper cost.
The Government and Opposition stated their opposition to the Greens amendment and, unfortunately, our better option became collateral damage to a point-scoring stand-off between Labor and Liberal. We ended up having to choose between the most expensive of all the schemes proposed (Govt) – one that social welfare groups said was unsustainable - or to keep the price at 44c/kWh (Lib).
I am happy (as I have done frequently in the past) to argue for a public cross subsidy for household solar if it delivers wider social benefits (such as support for an important growth industry and a reduction in carbon pollution), but this wasn’t the case with last week’s debate in Parliament.
As the Labor and Liberal parties had already rejected the Greens’ amendment to exempt the cost of the solar feed-in scheme from low income households, the Greens had no choice to vote against a significant increase in the cost of the scheme that would have not have delivered one extra solar panel.
I can assure you the Greens would have voted for the Government’s increase to 54c/kWh if low income households had been spared the cost.
One of the most frustrating parts of this whole episode is that the Government knew all along that its option was too expensive. They were desperately hoping the Upper House would amend the scheme to reduce the cost. This we have done.
In fact, the Government’s proposal was so unfair to low income households that, if it had indeed passed the Upper House this time, I have no doubt that within 5 years a future Government would have moved to retrospectively reduce the benefit.
It is such a pity that politics got in the way of a superior, economically responsible Greens option that would have still delivered the increase to 54c/kWh to solar households, whilst keeping the cost of the scheme in check, ensuring more solar panels were installed on SA roofs, and protecting low income families.
Greens plan to improve the SA solar feed-in scheme
The Government has introduced a Bill to amend the SA Solar Feed-in Scheme (the Electricity (Miscellaneous) Amendment Bill 2011).
The main features include:
· An increase in the price paid to solar households from 44c/kWh to 54c/kWh
· An obligation on retailers to pay a guaranteed contribution (rate to be set by ESCOSA but expectations are that it could be as low as 6c/kWh)
· An axing of the scheme for any new entrants after October 1st 2011
· A clause that cuts a solar household off from the scheme if they are ‘disconnected for any period’, or increase their ‘capacity to generate electricity’
Click here to read the Greens' response
Click here for a briefing paper on the Greens' proposed changes.
Concerns about the Bill
Mike Smithson has written an astute column in the Sunday Mail about what is wrong with the Government's plan to change the SA solar feed in scheme.
The solar industry, and of course the Greens, are very concerned about the proposed cut-off for new entrants.
The Clean Energy Council has proposed an alternative option that would extend the scheme for new entrants beyond October 1 this year: http://www.cleanenergycouncil.org.au/cec/policyadvocacy/saveSAsolar.html
However, funding this alternative would require current solar feed-in households (which may well include you) to forego the increase to 54c/kWh, and remain on 44c/kWh for the rest of the scheme (until 2028).
We’ve done some modelling of this option and it would extend the payback period on panels for someone who has bought an average system since August last year (when Premier Rann announced a plan to increase the scheme to 54c/kWh) from around 5 years to around 6 years.
Alternatively, the Clean Energy Council proposes a reduction in the scheme from 20 to 10 years. This means that you would receive an increase to 54c/kWh, but the scheme would end in 2018, rather than 2028.
The other factor to take into consideration is that the SA solar feed-in scheme is paid for by an increase on all SA electricity bills. As the feed-in scheme has been so popular, the cost has increased to around $30/year for the average South Australian household.
Add on top of that the approximately $30 that the Federal renewable energy target scheme adds on to the average yearly electricity bill, and it means that the average South Australian without solar panels is subsidising households with panels around about $60 per year.
For this reason, SACOSS (SA Council of Social Service) and other welfare groups have been advocating for political parties in the Upper House to reject the increase in the price of the feed-in scheme from 44c/kWh to 54c/kWh.
SACOSS also want exemptions from the cost of the scheme for people on low income. The Greens tried to insert this into legislation in 2008 when the scheme was set up, but the old parties opposed it. We are keen to try again.
What the Greens want
We want to find an alternative to the Government’s plan that will:
1. Still deliver a good payback for those who have chosen to invest in solar power
2. Allow the scheme to continue (ie more people get the chance to own PV solar, and the solar industry is able to survive until solar power more equally competes with brown coal)
3. Be economically responsible and won’t unfairly increase the cost impost on SA households who don’t own solar PV
In addition, we are drafting amendments to:
1. Increase the rate that electricity companies will be obliged to pay for the solar power you export (and they then on-sell to your neighbour)
2. Allow solar households to put on more panels (up to the size of their inverter) without risking being cut off from the feed-in scheme, and
3. Ensure households aren’t unfairly penalised if they are disconnected from the grid.
So, we have some difficult choices to make.
Of course, if the Greens were designing a feed-in scheme from scratch we would increase the amount paid to solar households without hurting those who can least afford it, by shifting the cost burden to those who contribute most to the cost of electricity (through for example, a levy on the installation of large air conditioning systems).
However, from all our modelling and detailed discussions with industry, social welfare groups and other political parties, there appears to be only one option to fund the continuation of the SA solar feed-in scheme (albeit at a less generous rate, and for a shorter period) that might get enough votes to pass Parliament next month. That is: to keep the feed-in rate for current customers at 44c/kWh, and re-direct the available funds to extend the life of the scheme for others.
To use a ‘pie’ analogy: instead of giving a larger slice of the pie to a small number of people, it would mean dividing up the pie into smaller slices to give to a larger number of people. It would also mean more solar panels in South Australia with all the flow on environmental and renewable energy industry benefits.
What do you think? Email us here
State Government finally introduces a Bill to fix up the SA Solar Feed-in Scheme
Of most concern is a plan to end the solar feed-in scheme for all new entrants from 1 October 2011.
The Greens are now considering our response, including what changes we intend to try and make when the Bill is debated in the Upper House.
Watch this space!
Solar delay continues
Yet further delays! Despite an announcement in August 2010 that changes would be made to their scheme, the Government did not introduce the necessary change into Parliament.
Because of this delay, it is unlikely households will see any increase until mid 2011.
Click here to read more.
Greens force Government to announce changes
After another long delay, the Greens made another push for change.
Click here to read Mark's media release: Enough's Enough!
In a response the following day, the Government announced they will:
force (for the first time) retailers to pay a minimum amount for the power they receive;
cut the maximum size of eligible systems; and,
scrap the shceme entirely when the number of installations reaches 60MW (this is expected to be sometime late 2011).
While the Greens welcome the increase in return for households, the decision to scrap the scheme in 2011/12 is an appalling one that once again shows the Rann Government does not take solar energy seriously.
Click here to read Mark's reaction.
Greens push for 'gross' feed-in scheme
The Greens are sick and tired of waiting for the Rann Government to ensure householders are paid a fair price for the solar power they produce from their roof.
The Government has been sitting on a Consultants’ Review into their solar feed-in scheme since before Christmas – meanwhile other states are powering ahead with more generous schemes.
So, the Greens are going to take the next step and have introduced a Bill into State Parliament to create a new, more generous solar feed-in credit scheme.
For more information, you can view Mark's
on the issue, his Second Reading Speech which explains the Bill, or the ABC News Coverage of the Greens' Bill.
Mark discussing the Bill on Channel 7 News
Background to campaign:
Before July 1 2008, when the scheme commenced, companies such as Origin and AGL paid you between 16-24c/ kilo watt hour (kWh) - depending on your contract - for the electricity you produced.
Since July 1 2008, some retailers chose to replace what they were already paying to you with the $0.44c premium, rather than making the new premium additional.
You have to remember that this premium is paid for by a small extra charge on all SA electricity consumers which is then passed on to you by the retailer. It does not come out of the pockets of the retailers!
So instead of earning 20c/kWh (approx.) from the retailer plus 44c/kWh from the solar premium = 64c/kWh, many people were only getting the 44c/kWh passed on by their energy company. This makes a huge difference to the payback period for solar panels.
Companies like Origin, AGL and TRU are collecting windfall profits while expecting the rest of the community to pick up the tab for climate change action.
The Greens campaign (2008):
The Greens started a campaign to ensure households with PV cells get paid what they deserve.
Mark Parnell wrote to the ESCOSA (Essential Services Commission) asking them to investigate, and met with them directly to discuss the issue further.
Mark also began raising this issue in the media. Click here and here to find out what he said.
He also started an online petition: http://www.gopetition.com/petitions/stop-the-solar-rip-off.html
Greens Private Members Bill passes in the Legislative Council
On the 29th of October 2008, Mark introduced a Greens Private Members Bill, the Electricity (Feed-In Rates) Amendment Bill 2008, into the Legislative Council. This Bill would have closed the loophole and required electricity companies to do the right thing by their customers and pay them a fair price for the electricity they put back into the grid.
Click here to see a copy of the Bill and to read Mark's speech introducing the Bill.
You can also read his media release about the Bill.
Click here to read Minister's Conlon response to Mark's Bill.
The Greens Private Members Bill was passed by the Legislative Council on 8th April 2009, despite opposition from the Rann Labor Government.
Unfortunately, the Government rejected the Bill in the Lower House.
Greens again raise issue in Parliament
After getting frustrated at the lack of Government action, Mark Parnell again raised the issue in Parliament.
Click here to read his question to the Premier.
Government to (finally) Review their scheme (Nov 2009)
After a 5 month delay, the SA Government finally released the Terms of Reference for its Review into the SA Solar Feed-in Scheme.
The Review was supposed to commence in May 2009. In June the Government voted down the Greens Bill to fix-up the loop-hole. At the time they said they would have an alternative response in Parliament by September 2009.
Yet the Review only began in November 2009. The delay means there is now virtually no chance to change the law before the middle of 2010 (due to the March state election).
We are still no closer to knowing how the Government intends to fix their scheme up. Meanwhile, Origin, AGL (and since August, TRU Energy) continue to rip households off.
This is extremely frustrating!
Even worse news is that the Government has indicated it intends to slash the maximum size of solar systems that qualify under the feed-in scheme from 30KW down to 10KW. This will affect many who have chosen to invest in larger systems in order to generate an exciting source of income by harnessing the sun.
Here's how you can help:
1. Write to your local Member of Parliament and push for an urgent change in the law. Click here for contact details for all local MPs.
2. Write to the Minister for Energy, Hon Tom Koutsantonis MP. Email the Minister at email@example.com.
3. Check your electricity bill and see if you are being paid fairly. If not, contact your energy retailer and demand they do more than pay a 'token' amount for the electricity they receive.
4. Spread the word: encourage everyone you know with PV panels on their roof, or interested in going solar, to get active.
We strongly encourage you and everyone else with an interest in solar electricity to urgently contact the Premier and let him know you are unhappy with the delay in fixing this problem.
5. Join the Greens!
We are confident with your help we can eventually force the Rann Labor Government and energy retailers to do the right thing.
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