Thursday, May 19, 2011

Solar'd up the River

The people are angry, and they are marching.

The Carbon Tax rallies have been, to say the least, a sight to behold.  After major rallies in the capital cities and Canberra, there was apparently a rally in Rob Oakeshott's electorate in the last week.

Today a very different group gathered in Sydney - thousands, by some reports

A picture for today's rally, from
This group has, whether for environmental or financial reasons, taken a very different position in the environmental debate.

This group has invested in solar panels.

They did so on the basis that, if their solar panels' power production exceeded their use, that they could "feed" the excess power back into the network and receive a rebate of 60c per kilowatt hour.

Many people (like Peter Rejto) ran the sums and decided that the rebate made it financially viable to invest in the panels.

But it all came crashing down last Friday (Friday the 13th, for those of you who, like me, notice and appreciate these things). 

Minister for Energy and Resources Chris Hartcher, who had announced a few weeks before that no new applications would be considered, announced last Friday that present participants who were receiving 60c per kilowatt hour would have their rate reduced to 40c per kilowatt hour.

Some of the home owners on the scheme were at the 60c rate, whilst others had signed up after the rate was reduced to 20c.  When the rate was reduced to 20c, those who had signed up at 60c got to keep that price.

Those on 20c will be unaffected by this change, but those on 60c are to have their rate reduced.

The wailing and gnashing of teeth has been deafening.

That said, the move would not have come as a shock to many people.

When the fee payable to new applicants was reduced to 20c Labor was still in power.  There was a small hoo-ha whether Keneally had advance knowledge of the change and managed to get her panels before it all took effect, but none of the participants could complain too much - those who got in early would still get the higher rate. 

The problem was that the scheme was massively popular - it seems that the government under-estimated the enthusiasm (or ability) of the public to invest now to save costs later.

It had been introduced by John Robertson (as the then Energy Minister). The budget for the scheme was $355 million, but the cost quickly sky-rocketed as people clambered aboard.  

The scheme's potential cost was quickly far too much for the government, and Labor has admitted (at least according to this Liberal Press release) that the scheme needed to be closed off.

From a policy perspective, however, the 60c rate was too high.  Way too high. The difficulty was that the 60c rate is enshrined in legislation.

I had no idea that there was actual legislation on this until I noticed a quote from today's rally,

John Kaye MLC said that the move was "semi-illegal".

I had a look around and discovered that we are blessed with the Electricity Supply (General) Regulation 2001.  If I have understood it correctly, regulation 104L does in fact prescribe the rate of 60c per kilowatt hour for those persons who connected before 28 October 2010.

Apparently Hartcher conceded that to make the change will require retrospective legislation (see here) although to me, based on a quick glance around the act it simply seems that they need to amend the legislation to reduce the rate.

It is strange that they would concede that the legislation is "retrospective", because whilst the intricacies of legislation are a mystery to most people, the words "retrospective legislation" are not.

One might have expected, when questioned on how the changes would be made, that Hartcher would give a long-winded, legal jargon heavy answer that provided nothing any journalist could understand, much less quote.

Having said that, whether the change is identified as "retrospective" is probably not going to matter to Joe Citizen who invested in solar panels intending to recoup his spending from feed-in tariffs.

There has also been a lot of talk about the Libs reneging on "contracts".  I don't have solar panels so I have no idea what kind of documentation you have to execute, but I suspect that whatever paper work was entered provides the government with an out.  

But in the political arena, again, a small print escape is not going to get anyone off your back in this kind of situation.

The letters page of the Herald has been pretty busy.  

Norman Arnott of Forestville said "If Mr O'Farrell and his team bring this change to law, they will, in my view destroy any credibility and trust I had in them when I voted for them on March 26 in both houses."

Landon Mangan of Umina Beach said "Unfashionable it may be to find shortcomings of the O'Farrell government, but proposed retrospective legislation on solar panel payments is breaking a contract, breaking faith, betraying a trust and costing me about $5000."

A few more creative letter writers suggests that the voters unilaterally reduce all fees payable to the State Government by 33% and see how that goes.

The real kicker, however, is that the NSW Liberals said they would not do this before the election.

I've had a pretty thorough Google at the issue, and I've been unable to find any sort of formal election policy announcement on the topic.  I can't find any record of O'Farrell, for example, promising not to reduce the rate.

What I have found, however, is this speech from Pru Goward, Liberal member for Goulburn.

Pru Goward.  Picture from the ABC
The speech is in reply to the second reading of the Electricity Supply Amendment (Solar Bonus Scheme) Bill 2010, which was the piece of legislation  that reduced the rate for new signups from 60c to 20c.

She goes on for a while (quite a while, in fact) about the inability of the Labor government to properly budget for the scheme, and then says this:

"We also understand that all existing participants must have their existing agreements honoured."

As if that wasn't enough, she really nails her colours to the mast in the next 2 sentences:

"This side of politics particularly understands the importance of retrospectivity. I want to be very clear on this point: A future O'Farrell-Stoner Government, a Liberal-Nationals Government, will also honour those agreements."

How stupid can you get?  

How stupid to make that promise then (given, and let's be honest, how many people would have known she had made that promise if the government hadn't broken it?).

How stupid to, after it has been said, come back round and change the price, and not think this line would be thrown back in your face by anyone with a vested interest.

How stupid not to simply keep paying the exorbitant rate, trumpet the amount to the media as a sign of your commitment to the environment, look good for honouring a bad deal you didn't strike, and simply blame Labor for the financial damage it is doing.

No wonder the people are marching.

1 comment:

  1. You made an error in your analysis... the solar panel rate is on gross energy produced, not net. This means I produce 10KWH=$6, I use 20KWH=-$6... therefore I take 10KWH off the grid and pay zero. Someone else pays for it instead.

    Alternative solutions:
    * Keep the Gross feed in tarrif but force the people using it to buy at least 25% or 50% green energy.
    * Make the gross feed in tarrif net.
    * Make the gross feed in tarrif net, but increase the rate paid.

    The main problem is that the Coalition voted for too many stupid schemes in opposition (another case in point is mandating E10 petrol so people who don't like ethanol in their car need to buy premium unessessarily), in the most part trying to suck up to green stupidity.