Electricity Trust of South Australia
Encyclopedia
The Electricity Trust of South Australia (ETSA) was the South Australian Government
-owned monopoly vertically integrated electricity provider
. Its controversial privatisation in 1999 was one of the most important political events in recent South Australian history.
(LCL) premier Tom Playford
through the nationalisation of the Adelaide Electric Supply Company (AESC) in 1946. Before, then it was a private company (with headquarters in London), which held a monopoly over electricity supplies in Adelaide
at the time. It was the company's refusal to use brown coal as advocated by Playford, even going to the extent of buying only boilers that used only black coal, that triggered the request from Playford for commonwealth funds to nationalise the company: Labor Prime Minister Ben Chifley
readily agreed. The LCL suffered a split in its ranks with regard to nationalisation, and the state legislation passed only with the support of ALP
and independent members of parliament.
As a vertically integrated generator, distributor and retailer of electricity, ETSA was responsible for the development of new energy sources (brown coal mined at Leigh Creek), two major power stations (Port Augusta and Torrens Island) as well as expanding the electricity distribution network to areas where there was no supply, or low voltage (32 volt) supply generated locally.
outages, monopolized pricing, and electromagnetic radiation
.
collapse in the early 1990s the State was left with a large budget deficit. The incumbent Olsen
Liberal
government pledged not to privatise ETSA. However after being re-elected they began plans to privatise it, citing the dire financial situation of the State, and claiming to be confronted with new information such as a warning from the State Auditor General and the introduction of the Australian National Electricity Market
.
Following the 1997 state election, the Olsen Liberal government required the support of an additional two non-Liberal upper house members in order to pass legislation, with the Australian Democrats
retaining the balance of power
on three seats. However, defectors from Labor
in the upper house, Terry Cameron
and Trevor Crothers
, brought independent member Nick Xenophon
in to play. In 1998, Xenophon voted with Cameron and the government to proceed with the second reading of the ETSA power sale bill. The bill became law when Cameron and Crothers voted with the Liberal government, who subsequently resigned from the Australian Labor Party.
Some of the reasoning behind Xenophon's final decision was revealed in a press release from five local academic economists, some of whom had been advising Mr Xenophon. "Selling ETSA", the economists argued, " ... is not going to save the South Australian economy". Rather, it would be like "selling one's house to pay off the mortgage and living in rented accommodation instead", not an attractive strategy at a time when the "interest rate on new Government debt is at a 40-year low". They advocated instead the abandonment of the proposed Pelican Point power station and better connections to the cheaper electricity available from the national grid.
The privatisation involved the disaggregation of the vertically integrated business, with the generation, transmission, distribution and retail assets taken up by distinct investors.
Also, the South Australian Government retained freehold ownership of the generation, transmission and distribution assets, with the investors acquiring long term leasehold interests in the assets. Also, the Government introduced a regime of industry regulation, calculated to ensure that the public interest was protected and that safety standards are maintained.
The acquiror of the distribution business took the name "ETSA Utilities", while the acquirors of the other parts of the business adopted distinct identities for their businesses.
With privatisation came the establishment of a competitive retail market for electricity. The retailing component of ETSA was acquired by AGL
. With the advent of competition, other electricity retailers entered the marketplace, offering consumers choice- competition focussing on tariffs and discounts for "bundling" of gas and electricity supply from one retailer.
Although the State's fiscal situation was substantially improved with funds derived from the sell-off, debate continued as to whether ETSA's privatisation has been to the benefit of the South Australian community. It was estimated that with higher electricity prices, the net loss from ETSA would total between $2–3 billion over a ten year period.
Following the de-regulation of the State's electricity market from 1 January 2003, AGL's electricity prices increased by an average 23.7%. This has been a political sorepoint for both the Labor and Liberal Parties in South Australia: with the Liberals having enacted privatisation, then the Rann
government approving the price increases.
However in 2006, with a number of competing electricity retailers now in the market, many South Australian households have negotiated electricity contracts delivering reductions in price of up to 15% and substantially larger price reductions negotiated by businesses, however these still well-exceed the pre-sale supply price.
including chronic
insomnia
.
Government of South Australia
The form of the Government of South Australia is prescribed in its constitution, which dates from 1856, although it has been amended many times since then...
-owned monopoly vertically integrated electricity provider
Electrical power industry
The electric power industry provides the production and delivery of electric energy, often known as power, or electricity, in sufficient quantities to areas that need electricity through a grid connection. The grid distributes electrical energy to customers...
. Its controversial privatisation in 1999 was one of the most important political events in recent South Australian history.
Establishment of ETSA
The Electricity Trust of South Australia (ETSA) was created by South Australian Liberal and Country LeagueLiberal and Country League
The Liberal and Country League was a major political party in South Australia throughout its forty year existence. Thirty-four years were spent in government, in part due to the electoral malapportionment known as the Playmander, introduced after coming to power.Created on 9 June 1932 as the...
(LCL) premier Tom Playford
Thomas Playford IV
Sir Thomas Playford, GCMG was a South Australian politician. He served continuously as Premier of South Australia from 5 November 1938 to 10 March 1965, the longest term of any elected government leader in the history of Australia. His tenure as premier was marked by a period of population and...
through the nationalisation of the Adelaide Electric Supply Company (AESC) in 1946. Before, then it was a private company (with headquarters in London), which held a monopoly over electricity supplies in Adelaide
Adelaide
Adelaide is the capital city of South Australia and the fifth-largest city in Australia. Adelaide has an estimated population of more than 1.2 million...
at the time. It was the company's refusal to use brown coal as advocated by Playford, even going to the extent of buying only boilers that used only black coal, that triggered the request from Playford for commonwealth funds to nationalise the company: Labor Prime Minister Ben Chifley
Ben Chifley
Joseph Benedict Chifley , Australian politician, was the 16th Prime Minister of Australia. He took over the Australian Labor Party leadership and Prime Ministership after the death of John Curtin in 1945, and went on to retain government at the 1946 election, before being defeated at the 1949...
readily agreed. The LCL suffered a split in its ranks with regard to nationalisation, and the state legislation passed only with the support of ALP
Australian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...
and independent members of parliament.
Contribution to South Australia's post-war growth
ETSA participated in the post-war growth and industrialisation of the South Australian economy, including providing modern and reliable power for regional areas.As a vertically integrated generator, distributor and retailer of electricity, ETSA was responsible for the development of new energy sources (brown coal mined at Leigh Creek), two major power stations (Port Augusta and Torrens Island) as well as expanding the electricity distribution network to areas where there was no supply, or low voltage (32 volt) supply generated locally.
Controversies
ETSA has been a part of several notable controversies, including powerElectric power
Electric power is the rate at which electric energy is transferred by an electric circuit. The SI unit of power is the watt.-Circuits:Electric power, like mechanical power, is represented by the letter P in electrical equations...
outages, monopolized pricing, and electromagnetic radiation
Electromagnetic radiation
Electromagnetic radiation is a form of energy that exhibits wave-like behavior as it travels through space...
.
Monopolized pricing
After the State BankState Bank of South Australia
The State Bank of South Australia was a bank owned by the Government of South Australia. Its collapse in 1991 was a major political event in South Australia...
collapse in the early 1990s the State was left with a large budget deficit. The incumbent Olsen
John Olsen
John Wayne Olsen, AO was Premier of South Australia between 28 November 1996 and 22 October 2001.-Parliament:Olsen was a member of the Liberal Party and Member of Parliament for more than 20 years...
Liberal
Liberal Party of Australia
The Liberal Party of Australia is an Australian political party.Founded a year after the 1943 federal election to replace the United Australia Party, the centre-right Liberal Party typically competes with the centre-left Australian Labor Party for political office...
government pledged not to privatise ETSA. However after being re-elected they began plans to privatise it, citing the dire financial situation of the State, and claiming to be confronted with new information such as a warning from the State Auditor General and the introduction of the Australian National Electricity Market
National Electricity Market
The National Electricity Market is the name of the Australian wholesale electricity market and the associated synchronous electricity transmission grid....
.
Following the 1997 state election, the Olsen Liberal government required the support of an additional two non-Liberal upper house members in order to pass legislation, with the Australian Democrats
Australian Democrats
The Australian Democrats is an Australian political party espousing a socially liberal ideology. It was formed in 1977, by a merger of the Australia Party and the New LM, after principals of those minor parties secured the commitment of former Liberal minister Don Chipp, as a high profile leader...
retaining the balance of power
Balance of power (parliament)
In parliamentary politics, the term balance of power sometimes describes the pragmatic mechanism exercised by a minor political party or other grouping whose guaranteed support may enable an otherwise minority government to obtain and hold office...
on three seats. However, defectors from Labor
Australian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...
in the upper house, Terry Cameron
Terry Cameron
Terry Gordon Cameron is a former South Australian politician.Cameron entered the South Australian Legislative Council in 1994 to fill an Australian Labor Party vacancy, and then was re-elected as a Labor candidate in 1997. However he resigned from the party in order to support the Olsen Liberal...
and Trevor Crothers
Trevor Crothers
Trevor Crothers was a South Australian politician. Crothers entered the South Australian Legislative Council in 1987 to fill an Australian Labor Party vacancy, and then was re-elected as a Labor candidate in 1993...
, brought independent member Nick Xenophon
Nick Xenophon
Nicholas "Nick" Xenophon is a South Australian barrister, anti-gambling campaigner and politician. He attended Prince Alfred College, and studied law at the University of Adelaide, attaining his Bachelor of Laws in 1981. Xenophon established and became principal of his own law firm, Xenophon & Co....
in to play. In 1998, Xenophon voted with Cameron and the government to proceed with the second reading of the ETSA power sale bill. The bill became law when Cameron and Crothers voted with the Liberal government, who subsequently resigned from the Australian Labor Party.
Some of the reasoning behind Xenophon's final decision was revealed in a press release from five local academic economists, some of whom had been advising Mr Xenophon. "Selling ETSA", the economists argued, " ... is not going to save the South Australian economy". Rather, it would be like "selling one's house to pay off the mortgage and living in rented accommodation instead", not an attractive strategy at a time when the "interest rate on new Government debt is at a 40-year low". They advocated instead the abandonment of the proposed Pelican Point power station and better connections to the cheaper electricity available from the national grid.
The privatisation involved the disaggregation of the vertically integrated business, with the generation, transmission, distribution and retail assets taken up by distinct investors.
Also, the South Australian Government retained freehold ownership of the generation, transmission and distribution assets, with the investors acquiring long term leasehold interests in the assets. Also, the Government introduced a regime of industry regulation, calculated to ensure that the public interest was protected and that safety standards are maintained.
The acquiror of the distribution business took the name "ETSA Utilities", while the acquirors of the other parts of the business adopted distinct identities for their businesses.
With privatisation came the establishment of a competitive retail market for electricity. The retailing component of ETSA was acquired by AGL
Australian Gas Light Company
The Australian Gas Light Company was an Australian gas and electricity retailer. It was formed in Sydney in 1837, and supplied town gas for the first public lighting of a street lamp in Sydney in 1841 AGL was the second company to list on the Australian Stock Exchange. The company gradually...
. With the advent of competition, other electricity retailers entered the marketplace, offering consumers choice- competition focussing on tariffs and discounts for "bundling" of gas and electricity supply from one retailer.
Although the State's fiscal situation was substantially improved with funds derived from the sell-off, debate continued as to whether ETSA's privatisation has been to the benefit of the South Australian community. It was estimated that with higher electricity prices, the net loss from ETSA would total between $2–3 billion over a ten year period.
Following the de-regulation of the State's electricity market from 1 January 2003, AGL's electricity prices increased by an average 23.7%. This has been a political sorepoint for both the Labor and Liberal Parties in South Australia: with the Liberals having enacted privatisation, then the Rann
Mike Rann
Michael David Rann MHA, CNZM , Australian politician, served as the 44th Premier of South Australia. He led the South Australian branch of the Australian Labor Party to minority government at the 2002 election, before attaining a landslide win at the 2006 election...
government approving the price increases.
However in 2006, with a number of competing electricity retailers now in the market, many South Australian households have negotiated electricity contracts delivering reductions in price of up to 15% and substantially larger price reductions negotiated by businesses, however these still well-exceed the pre-sale supply price.
Electromagnetic radiation
ETSA does not turn off power lines when allowing their workers to work in their power stations, by reducing downtime. However, high voltage power lines cause electromagnetic radiation, which can potentially cause terminal illnessTerminal illness
Terminal illness is a medical term popularized in the 20th century to describe a disease that cannot be cured or adequately treated and that is reasonably expected to result in the death of the patient within a short period of time. This term is more commonly used for progressive diseases such as...
including chronic
Chronic (medicine)
A chronic disease is a disease or other human health condition that is persistent or long-lasting in nature. The term chronic is usually applied when the course of the disease lasts for more than three months. Common chronic diseases include asthma, cancer, diabetes and HIV/AIDS.In medicine, the...
insomnia
Insomnia
Insomnia is most often defined by an individual's report of sleeping difficulties. While the term is sometimes used in sleep literature to describe a disorder demonstrated by polysomnographic evidence of disturbed sleep, insomnia is often defined as a positive response to either of two questions:...
.
Related Pages
- ETSA UtilitiesETSA UtilitiesETSA Utilities is the operator of the South Australian electricity distribution network, delivering electricity from the high voltage transmission network connection points through a network of about 85,000 kilometres of powerlines, to over 782,000 residential and business customers throughout most...
- Electricity Supply Industry Planning Council
- Essential Services Commission of South Australia
External links
- ETSA Utilities (operator of the distribution network)
- ElectraNet (operator of the transmission network)
- Power in Private Hands: The Privatisation of the SA Electricity industry John Spoehr, NSW Parliament website