South Australia state energy control is being considered as the government looks for ways to shield homes and businesses from the huge energy prices forecast in the Federal Budget.
South Australia’s state government has indicated that it is seriously considering reverting the energy system to include some state-owned generation assets.
In the wake of the Federal Government Treasurer’s nightmare outlook of a 56 per cent increase in energy prices over the next two years in the budget projection, Premier Peter Malinauskas said urgent action was needed to protect businesses and households.
South Australia’s state energy control is not a new thing. However, 24 years after the Electricity Trust of South Australia was privatised, the state government is considering direct market intervention and bringing some generation assets into state hands.
“As far as we’re concerned all options are on the table, and we’re considering them,” he said.
But the situation is complicated.
The ETSA was privatised in the late 1990s when it was bought by Asian giant Cheung Kong Infrastructure and renamed SA Power Networks.
SA Power Networks has a 200-year lease to run the poles and wires transmission infrastructure in the state.
“There are grave consequences to tearing up a contract of that nature,” Mr Malinauskas said.
Mr Malinauskas aired his views after Victorian Premier Daniel Andrews announced that he would nationalise the state energy generation sector by reviving the State Electricity Commission if reelected in November 2022.
The Victorian Labor government said it would spend $1 billion to develop its own renewable energy assets and set a 95 percent renewable energy target by 2035.
SA looks to be spared the worst of electricity price shock
Mr Malinauskas said SA was not likely to be slugged to the same level as the Eastern States because it had invested heavily in renewable energy.
Households and businesses are still expected to face heavy price spikes.
“The preliminary advice we have received is we won’t have the same gravity of price shocks that we’re seeing in the eastern states,” Mr Malinauskas said.
Mr Malinauskas said the SA government would use “every tool” available to try to bring about a change in the energy market in the state to blunt looming price increases.
Energy privatisation ‘never works’
The SA Premier said this would not be the first time a Labor government intervened in the state’s energy market.
He pointed to when former Labor premier Jay Weatherill in 2017 announced a $550 million “energy plan” to shore up the state’s fragile electricity grid.
The plan included the Hornsdale Reserve big battery – known as the Tesla Big Battery – which included nine state-owned fast-start diesel generators.
These were sold off under the previous Liberal Premier Steven Marshal’s government.
Mr Malinauskas won the state election by a landslide margin in March 2022.
Mr Malinauskas said privatising electricity assets did not bring about the desired outcome for users in households and businesses. “It never works,” he said.
He said Western Australia hadn’t privatised its electricity assets and was reaping the rewards.
“Guess what they didn’t do in Western Australia, privatise the electricity market,” he said.
Mr Malinauskas already has plans for a $600 million-plus hydrogen plant near Whyalla, north-west of Adelaide. His government wants a 200-megawatt power plant, an electrolyser and a 3600-tonne storage facility built by early 2026.
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Leading Edge Energy is an energy brokerage firm in Australia specialising in energy cost reduction, solar and storage procurement, electricity and natural gas-use monitoring and reporting for commercial and industrial clients. Follow us on LinkedIn, Facebook or Instagram.
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