16 March 2016

2nd Reading Speech

The Hon. ADAM SEARLE (Leader of the Opposition) [5.54 p.m.]: I lead for the Opposition in debate on the Electricity Supply Amendment (Advanced Meters) Bill 2016. The Opposition has a range of concerns about the bill and what it does and does not contain. We will move some amendments to address those concerns and determine our final position once we have debated the amendments and heard what the Government says in response. The legislation provides for the voluntary rollout of so-called smart meters, termed “advanced meters” in the bill, and for the responsibility for metering generally to be shifted from electricity distributors to retailers and for metering providers registered under the National Electricity Rules and the Australian Energy Market Operator to install meters.

The bill provides that electricity distribution companies will no longer be required to install and maintain electricity meters. The meters will no longer form part of the electricity network assets. The meters will be supplied, installed and maintained by the energy retail companies who will own the assets. That is a fundamental change to the network architecture. NSW Labor supports the concept of smart metering. It will be necessary to make battery storage and peer-to-peer energy trading a reality and to drive increased energy efficiencies. We understand this is the gateway to a decentralised energy future, a smart grid, and we embrace that. We note the voluntary, market-led rollout proposed in this bill is in contrast to the forced rollout undertaken by the Liberal-Nationals Government in Victoria a few years ago. We note also that consumer group the Public Interest Advocacy Centre has made a submission to government in the past about why a market-led rollout is the most appropriate way to proceed.

However, as I indicated, we have some serious concerns about aspects of the bill and further concerns regarding issues that are not dealt with in the bill and on which this Government has remained silent. I will commence with the issue of rooftop solar. Around 140,000 households have installed solar on their rooftops as part of the Solar Bonus Scheme or gross feed-in tariff scheme instituted by the Labor Government and the Hon. John Robertson as the relevant Minister at the time and subsequent Leader of the Opposition. I place on record that as a private citizen, and well before I entered Parliament, I took part in that scheme and I remain a beneficiary. Many more have taken the step to make a contribution to a shared, clean energy future by also installing solar on their rooftop even outside the Solar Bonus Scheme.

The Hon. Dr Peter Phelps: Even dinosaurs like me.

The Hon. ADAM SEARLE: I acknowledge that interjection. While the choice of installing a smart meter will be voluntary, it is being said around the industry that unless houses have smart meters residents will not be able to benefit financially from their rooftop solar after the closure of the Solar Bonus Scheme at the end of this year. It was reported today on the RenewEconomy website that Solar Energy Industry Association spokesman Geoff Bragg says it is pretty clear that the New South Wales Government is opting to bring forward the market-led rollout of smart meters in New South Wales by energy retailers about 12 months earlier than the national plan to make metering an open market in 2017, because:

This approach is intended to solve the problem that about 130,000 of the 160,000 Solar Bonus Scheme customers will want to have their solar system Net metered & billed rather than their current Gross metering, to gain the best advantage from their solar PV system when the scheme ends on December 31.

There is fear that solar households will in effect be forced to adopt smart meters and pay a hefty fee of up to $700 depending on the model adopted by retailers unless they sign on for a long-term contract with a retailer. There is also fear that consumers will have to foot the bill by paying an up-front charge for the metering. Can we assume that energy retailers will compete for customers by offering low or zero cost metering upgrades? This has happened in some other jurisdictions and the larger retailers may well take this step. But how will consumers be protected against rogue operations? And will regional and rural customers get the same offerings, be left waiting or have to pay additional charges?

I note that regional and rural customers account for a significant proportion of the solar installations in New South Wales. Will the offered tariff structures by retailers to consumers discriminate against solar customers with “free” smart meters? I have heard reports that some people who even now have smart meters are being told their meters are not sufficiently smart and need to be upgraded in advance of the closure of the solar bonus scheme to make the best of what the future may have to offer.

The legislation does not make clear how customers will be protected from having to pay for their meters multiple times—for example, when switching from one retailer to another. Will it be like mobile phones where one signs up for two or three years with a retailer, the retailer increases its charge and one wants to gain a better price from a competing retailer? Will one be required to pay out the term of one’s contract in some way and, if one switches to a new retailer, will that new retailer be using the same kind of meter? Will one then have to enter a similar arrangement to have one’s meter switched over? These questions have not been answered. There may be an answer to these questions but they were not outlined in the Parliamentary Secretary’s second reading speech. Having spoken to people in the industry in different locations—different industry players—there does not seem to be a consensus on how these issues are likely to be resolved.

As the retailers will own the meters, will this lead to customers being bound to a single retailer for extended periods to pay off the price of the meter, preventing them from obtaining the best electricity prices? How will the competing interests of the retailer and customer be balanced out? No doubt this will be dealt with as a consumer issue, but the potential for disadvantage to consumers is quite apparent. Retailers already have all the information to “net off” on electricity generation and use by customers in their billing, and customers should not be at risk of being forced to pay for expensive new meters unnecessarily. For example, in my case, I know that the energy company I am with knows how much electricity I generate; it gives me a bill which says so and it pays me for it. But it also knows how much I consume because the meter records that and it is also on my electricity bill. It already has that information so I do not see how smart meters are necessary to ensure that persons with roof-top solar continue to benefit in a financial sense from that, even after the closure of the Solar Bonus Scheme.

I acknowledge that smart meters will be a huge benefit to retailers and to the Australian Energy Market Operator and will have benefits for the network as a whole because it will be able to track, in real time, people’s energy generation and consumption—how much is being paid for that energy in real time and on a day-to-day basis. So I can see the benefits broadly for the network and its operators, and I understand that customers will be able to benefit depending on their pattern of usage and what types of equipment they have in their homes. We understand the benefits that smart meters can have in the development of a smart grid. But, as I have indicated, the retail companies already have the information necessary to transition customers from the Solar Bonus Scheme at the end of the year without smart meters necessarily.

As was also reported in Renew Economy yesterday, it is unclear what the minimum standard for any new metering equipment will be. Will the various smart meters offered by different retailers be required to collect a data stream for gross solar generation and a separate data stream for consumption, netting off the two data streams for billing purposes? Will the New South Wales Government allow energy retailers to just install smart meters that only record the net energy data—effectively blind to solar production and short-changing solar-generating consumers?

In addition, confusion remains in the industry about what solar households on the premium tariffs of 60¢ per kilowatt hour plus a retailer bonus for most will be obliged to do and what they will be paid after the closure of the Solar Bonus Scheme. A proposed letter to solar households is yet to be sent out by the Government. I understand that the New South Wales Department of Trade and Investment, as it was then known, called a workshop meeting for stakeholders on 2 November 2015 to discuss the closure of the Solar Bonus Scheme, stating its intent to send a letter with clear information to all Solar Bonus Scheme customers in December 2015 or January 2016. It is now mid-March and that letter has not appeared—at least not in my letterbox. I understand the draft letter may still be awaiting ministerial approval and there is a rumour it should be arriving in households around New South Wales in a week or so. I ask the Parliamentary Secretary with carriage of this matter, the Hon. Rick Colless, to tell the Chamber exactly where that matter is up to.

When the information comes, like other consumers and other members in this Chamber, I hope that letter is packed with clear and accurate information on what consumers need to do, at what cost and by when. Why has it taken this Government so long to get its act together? The Government has been in office for five years and it does not appear to have an adequate plan for this transition. At last year’s election, the Labor Opposition outlined its plan for what to do on the closure of the Solar Bonus Scheme. We indicated quite clearly that we understand that the retail companies are not legally bound to pay solar-generating households for the electricity they generate.

The Independent Pricing and Regulatory Tribunal [IPART] has made a non-binding recommendation. The Labor Opposition indicated that it would take steps to provide consumer protection for those who put solar on their roofs and ensure a fair tariff for those who sell excess energy back to the grid. We would require that there be a fair minimum payment set by IPART for energy paid back to the grid from households generating solar energy, with a rigorous mandate given by law to ensure that this takes place. We were not elected to government and it is a matter for those opposite to ensure that the transition from the Solar Bonus Scheme to whatever system will be in place thereafter is fair and balanced, gives solar-generating consumers a fair deal and does not create a situation where consumers are ripped off by the retail electricity companies. We do not want the giant energy companies to have a free ride on the backs of households that make a contribution to energy supply in this State. I understand that this issue and other issues will be raised at a meeting of the solar industry this Friday under the auspices of the Solar Energy Industry Association.

The next concern of the Opposition is about who can install the meters in the future and how worker and community safety will be safeguarded. I note that the Parliamentary Secretary with carriage of this matter set out in his second reading speech a fair bit of information in this space. The Government claims the bill will allow a wider pool of qualified electricians to install smart meters—not just the presently accredited service providers [ASPs]—to create a competitive market for meter installation. The changes in the bill are not limited to smart meters but extend to all meters and allow the Government to create exemptions from the ASP framework. I think that is how the Government is going to effect that change.

At present, only level two Accredited Service Providers can do metering work, and I believe there are about 2,500 of them in New South Wales. The bill also removes the requirement for the sealing of customers’ equipment, including the meter, that has been traditionally used in the industry for safety and revenue protection. The Government says it will ensure that those who do this work will have to meet strict minimum conditions, but the legislation, and the Parliamentary Secretary’s second reading speech, does not set out a road map or provide the certainty that is needed to ensure that public safety will be properly safeguarded.

We know that they will have to be properly qualified electricians under the Australian and New Zealand standards, but to what level. The accredited service providers framework is established under the national electricity law and the requirements at present under the national electricity rules provide that persons who install meters have to be accredited service providers and registered, and the standards and skills required are to ensure both quality and safety. If the Government intends to permit those who do not have that demonstrated level of skill and who meet that national schedule to perform this work, that is of grave concern. I have re-read the second reading speech a number of times, and how the Government intends to meet those concerns is not spelt out. I ask, perhaps rhetorically: How can the community be confident that those who will be allowed to do this work will be properly skilled if their accreditation is at a lower standard?

A recent paper by the National Electrical and Communications Association, dated 19 February this year, stated that this work should continue to be restricted to those who are accredited service providers level 2 because of the significant dangers associated with performing metering work, which has the potential to cause serious injury to those performing the work, householders and the wider public. These include arc blast incidents and transpositioning or electrocution shock hazard, and making water outlets and metallic appliances live. One does not have to be a physicist or electrician to know the clear and present dangers that faulty installation could cause. These are very serious matters that are not answered in the bill before the House or the second reading speech from the Parliamentary Secretary. The Opposition will move some amendments during the Committee stage that address these concerns. Schedule 2 to the bill provides for the regulation of electricity meters as electrical installations under the Electricity Consumer Safety Act 2004. I draw the attention of honourable members to schedule 2, item [4], which inserts proposed section 30A, Electricity meters. Subsection (2) states:

The regulations may prescribe a fee for or in connection with the inspection by an authorised officer of an electrical installation that includes the installation of an electricity meter.

I believe the Parliamentary Secretary talked about how responsibility for ensuring the safety and integrity of this work would be transitioned to NSW Fair Trading. This provision will include electricity meters as part of the types of electrical installations to which NSW Fair Trading has responsibility for safety and compliance. The Parliamentary Secretary spent some time in his speech addressing this aspect of the bill, but did not mention the budgetary arrangements that the Government had entered into to ensure that NSW Fair Trading is adequately resourced to undertake this work. I could be wrong about this, but my information is that the Government has provided no additional budget allocation to allow NSW Fair Trading to undertake this important work.

In relation to the provision that enables a fee to be set—which presumably would be charged to householders—the Government will seek to charge householders to do this work, which will potentially place a significant cost burden on the community and act as a disincentive for households to have advanced meters in their property. This will slow the transformation of our electricity network for the benefit of our community and individual households. Solar households are told they need to have smart meters if they are going to make proper use of the solar feed-in tariff arrangements, whatever they may be. There is pressure on households to switch to advanced meters but there is a cost disincentive. Will they have to pay for it? If so, how much? Are they bound to individual retailers? Will they have to pay fees if and when they break the contract to be able to switch to retail companies that provide better prices?

Is there a further disincentive to switch to smart meters than the costs imposed through this regulation-making power? None of this is rocket science. There have to be simple and clear answers to most of these issues, but none is apparent from the legislation or from the Parliamentary Secretary’s second reading speech. Perhaps the debate should be adjourned to enable the Government to consider closely the concerns that the Opposition has raised and to be in a position to respond to them properly. In summary, the Opposition’s concern is about whether or not solar rooftop generator customers are being coerced into getting smart meters unnecessarily. My meter at home is not a smart meter, but it is less than five years old and seems to be working fine.

While I have no objection to switching, do I really need to spend up to $1,000 to switch to a smart meter in circumstances where I think the energy retail company has all the information it needs to transition me off the Solar Bonus Scheme? If I do want to switch, what will be the cost implication and what will be the regulatory implications through NSW Fair Trading? Will I have to pay NSW Fair Trading a fee to have the work done at my home properly certified and supervised or audited by that organisation to ensure that when I turn on my shower in the morning my family and I do not get electrocuted? These are important issues that remain unanswered.

The issue of net billing for customers is not resolved. That is bound up with whether customers need to switch to smart meters, at least at this point in time. I acknowledge that smart meters are the gateway to the smart grid. The real benefit will come when people also have smart appliances, where one can remotely program appliances such as one’s dishwasher, oven, washing machine or heating system to turn on or off at certain times of the day or night in order to chase the best price and to avoid the peak pricing areas. When battery storage becomes common there will be more options. However, a lot of those facilities have not been generated at a customer availability level.

The starting point is the smart meter. The question is: Do people need to transition to those now? There are the issues of net billing; the standards of those who do the meter installation work; consumer protection; and the regulatory approach to be taken by NSW Fair Trading about how much it intends to charge customers to ensure that the installation work is done effectively and safely. About 140,000 people are under the Solar Bonus Scheme, with a large number of them potentially transitioning to smart meters in a short space of time. A small number of persons are qualified to do the work, even with the liberalisation proposed by the Government. One does not have to be a rocket scientist to see the potential for a situation arising similar to the Pink Batts rollout where there was a shortage of qualified installers, particularly in Queensland. No-one wants to see that happen. We must take a sensible and balanced approach to this matter.

The Opposition is taking a sensible and constructive approach to this policy area. We are not anti smart meter. I am personally pro smart meter, but I want it to be a genuine consumer choice at the right price, at the right time and when it will benefit the customers and not just the retailers and the network operators. That is what happened in Victoria. The compulsory rollout in Victoria did not greatly benefit the customers. The customers paid for it, but it mostly benefited the operators and the network. We do not want to replicate that situation. The transition should happen in a graduated way, a way that benefits everybody. The Opposition has some amendments that have been lodged with the Clerks. I ask the Government to have a constructive look at those, to think about the issues I have raised and to consider embracing our amendments, to see whether or not these concerns can be addressed by the Government in reply.