So the O'Farrell Government wants to abandon the principles of contractual law in relation to the Solar Bonus Scheme and introduce retrospective legislation to make its clawback superficially legal – all on the basis that it drastically needs to rein in the state's budget outlays due to massive black holes.
However, all is not as Premier O'Farrell would have us believe.
Besides ignoring the fact that the Solar Bonus Scheme take-up rate indicates that NSW was well on its way to meeting its obligations in relation to a particular national climate change target, it is closing-off the scheme in preference to making the energy industry adequately pay for renewable energy they receive from this source and, are misrepresenting the state of the economy to achieve its aims.
Firstly, NSW Government finances and the lies told.
Analysis and Advice on the Details of the "Report on Variance between Mid Year(December 2010) and March 2011 Update" prepared for the NSW Premier and Treasurer by the acting Secretary to the NSW Treasury, Michael Lambert, and Analysis and Advice on Claims in the Associated Media Release of 27 April 2011,"Black Hole Blows Out Further" by the NSW Premier, The Hon Barry O'Farrell states:
Moreover, the size of the accumulated budget deficit from 2010‐11 to 2014‐15, $4,384 million, even if it were to eventuate, would not itself imperil the state's finances or its AAA credit rating. That accumulated deficit estimate is less than 75 basis points of the revenues and expenses for the five years. And the government should be aware that, even if it took no remedial action, further parameter changes which will inevitably arise in the coming months and years will as likely improve the budget outlook as weaken it. Moreover, the general government's current net debt and unfunded superannuation level is about $8 billion below the level which might lead to a review of the AAA credit rating and there are few sub‐sovereign entities outside of Australia which enjoy a AAA credit rating……
A claim is also made that the "failure to take the additional budget impact of the Solar Bonus Scheme into account could only have occurred if Treasury advice on the scheme's impact was not sought or simply ignored". This is a speculative conclusion and the alternatives offered are not the only feasible options……
During the preparation of this briefing, the Energy Minister, the Hon Chris Hartcher, announced that the Solar Bonus Scheme had been placed on hold pending legislation to close the Scheme to new applicants……
The media release offers other claims of "gross economic incompetence". Insofar as fiscal policy is concerned, the state's AAA status does not support this claim. A fear that the budget deficit "could grow even further" is merely an assertion made without evidence. A claim that "Labor had 'cooked the books' to distort the true state of NSW's finances" is not supported either by the report issued by Mr Lambert or by this Office's examination of available data.
Secondly, the NSW Coalition's history of supporting a residential solar power scheme.
This is Google's cache of http://www.barryofarrell.com.au/protect-our-local-environment/the-nsw-liberals-nationals-will-introduce-a-renewable-energy-buy-back-scheme.html. It is a snapshot of the page as it appeared on 10 May 2011 04:35:50 GMT. This page no longer appears directly on the O'Farrell website.The following clearly shows that the NSW Liberal Party and O'Farrell supported a solar bonus scheme.
Effective action on environmental issues requires sensible policies that deliver practical and real improvements.
The NSW Liberals & Nationals will introduce market mechanisms that will encourage people to use renewable energy.
We will introduce a renewable energy buy-back scheme – sometimes known as a feed-in tariff.
The scheme will:
be a credit or payment to households, institutions or businesses for the renewable power they produce. This will include small-scale solar power from household rooftops; and
encourage households to make decisions that save energy bills over the medium term.
The NSW Liberals & Nationals policy for a gross feed-in tariff was first announced in October 2008. The Labor Government mimicked the policy when it adopted a Solar Bonus Scheme in November 2009 for small solar photovoltaic installations.
Despite this, the government has excluded many renewable and innovative energy sources, as well as involvement from many commercial energy users who are best positioned to take up decentralised generation.
It is estimated that if 5,000 households take advantage of the scheme, the reduction in greenhouse gas emissions is the equivalent of taking 16,250 cars off the road.
Decentralised generation can reduce demand for costly generation and transmission infrastructure, and can reduce the peak price of electricity.
The NSW Liberal & Nationals policy will ensure that NSW leads Australia in establishing a decentralised energy sector, by honouring the State Government's current commitments and improving the scheme to make it more effective. A comprehensive scheme could cut NSW's emissions by around 1 per cent per annum.
Thirdly, IPART's position on the existing Solar Bonus Scheme and electricity retailers.
From the Independent Pricing and Regulatory Tribunal Electricity Draft Report April 2011:
The current gross rate of 20 c/kWh is lower than the price that some customers are paying for electricity....
The Solar Bonus Scheme is currently structured so that retailers receive a financial benefit. This is because although they earn revenue from customers for gross consumption, they pay the market operator, AEMO, on a net consumption basis (that is after netting off energy supplied by the solar panels). The NSW Government’s proposed Solar Summit aims to identify opportunities for reducing the costs of the Solar Bonus Scheme. One option for achieving this aim is for Government to require retailers to transfer some of the financial benefit they receive under the scheme to distributors (who pay the feed in tariff to the customer).
This would reduce the amount of funds required to be recovered from customers, or foregone by taxpayers, to pay for the scheme.
We note that the other gross feed in tariff scheme in Australia, the ACT Scheme, requires retailers to contribute 6c/kWh towards the cost of the scheme.
We recommend that the NSW Government, as part of its Solar Summit, consider requiring retailers to contribute to the cost of the gross feed in tariff, whether or not it terminates the current scheme......
Finally, this.
This is Google's cache of http://www.nsw.liberal.org.au/policies/cost-of-living/plan-for-an-affordable-and-sustainable-energy-industry.html. It is a snapshot of the page as it appeared on 16 May 2011 02:01:02 GMT. In which O'Farrell seems to admit that he intends not only dipping into the pockets of residential suppliers of renewable energy and but into state funds as well.
"We will also ensure that households do not have to pay for Labor's failed solar scheme by redirecting uncommitted funds from the NSW Climate Change Fund to cover the cost of the Labor's failed NSW Solar Bonus Scheme," Mr O'Farrell said.
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