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2019 Government Businesses Scrutiny Committee - Aurora
Parliamentary Activity - Tuesday, 3 December 2019
CHAIR (Mrs Petrusma) - Members, the time scheduled for the scrutiny is until 1 p.m. I welcome the minister, chair and CEO to the committee. Minister, please introduce the people at the table for the purposes of Hansard.
Mr BARNETT - Madam Chair, it is a pleasure to be here. I am joined by Mary O'Kane, the Chair of Aurora Energy; Rebecca Kardos, the CEO; Grant Russell, the Chief Operating Officer; and Kane Ingham, the General Manager, People and Commercial Services.
CHAIR - Minister, would you like to make a brief statement, keeping in mind that we only have a short period of time.
Mr BARNETT - It is a pleasure to be at the Aurora Energy GBE. As the Energy minister, I am excited to be working with Aurora Energy to implement the Tasmanian Government's Tasmania First energy policy. You have heard me speak about it and you know how excited I am. It is all about driving lower energy electricity prices, wherever possible, and empowering people and businesses in Tasmania with the information and tools they need to manage their energy costs, focusing on the customer. You will hear about that from Aurora Energy during the course of this inquiry.
Our Government has capped electricity prices, which has been in effect for a number of years, at no more than CPI, with cost of living and cost of doing business being a top priority of our Government. There has been a solid performance in the 12 months, with a $44.5 million underlying profit and the $14.8 million in returns to the Tasmanian Government. The Energy Ombudsman's report has been delivered in recent days showing a reduction in complaints. That is encouraging. The highlight of the year was the Energy Charter being signed. It is the only Tasmanian organisation to have committed to that.
The YES program, Your Energy Support program, is very supportive of our vulnerable customers and it is working very effectively. I won't go into the TEELS program or the NILS program but we are reaching out to ensure energy efficiency, supporting those doing it tough in Tasmania with funding support. Our on-farm energy policy is supporting agriculture, which is a key part of our economy in Tasmania. Aurora Energy is reaching out to not-for-profit organisations providing wonderful support for community groups around Tasmania; 80 different organisations. If there was an opportunity for the Chair and/or the CEO to provide an opening remark, it would be appreciated from Aurora Energy's point of view.
CHAIR - I remind members about the practice of seeking additional information of GBEs. The question must be agreed to be taken by the minister or the chair of the board, and the question must be handed in writing to this committee's secretary.
Mr BARNETT - Chair, could the Chair share some opening remarks on behalf of Aurora Energy?
CHAIR - Only very brief, keeping in mind that it is already 11.08 a.m.
Prof O'KANE - I am pleased to appear before the committee as Chair of Aurora Energy. I have been in that role for just over a year. We are proud of our achievements in 2018-19, set against ongoing developments and the challenges both locally and nationally in the external environment.
As is well known, the National Electricity Market, the NEM, is in a period of disruption and rapid change as new renewal energy generation enters the system. Operating within this environment, Aurora Energy remains focused on creating and delivering value for our customers. That is why we are proud to become a founding signatory of the Energy Charter the minister mentioned and the only Tasmanian organisation to sign up so far. The charter is focused on delivering energy in line with community expectations and the board is committed to the principles of the charter, designed to put the customer at the centre of our business, which we hope we do.
The roll out of Aurora Pay As You Go + also demonstrated this commitment by delivering an innovative way for Tasmanians to manage their energy. The development of Aurora PAYG+ was recognised both locally and nationally, with the new digital product claiming a Tasmanian iAward as well as being named the top 10 in its category in the 2019 Australian Financial Review BOSS Most Innovative Companies.
In the community, where everyone in Aurora lives and works, we continue to support Tasmanians via a range of investments and partnerships. Our backing of the nation's transition to renewable energy hit a milestone with the first of the 48 wind turbines being erected at Capital Hill Wind Farm located in the Central Highlands coming online. Aurora is the only Tasmanian energy retailer investing in large-scale renewable energy projects in the state. Through it, we are supporting economic growth together with the Tasmanian Government's goal of being 100 per cent renewable by 2022.
Through our community program we delivered our second round of community grants designed to assist to deliver projects or programs that make a difference in the lives of Tasmanians. We also launched new partnerships with organisations such as the Council on the Ageing Tasmania in a bid to empower older Tasmanians with digital knowledge and skills to more confidently engage in the computer world. In the next phase of Aurora Energy, we will build on all these wonderful initiatives as the business embarks on a customer-led journey guided by its new strategy, which we developed this year. I look forward to embracing the next phase to further enhance both the work Aurora Energy is doing and the value for customers as we 'reimagine Tasmania's energy experience', to use our tagline. Thank you.
Mr O'BYRNE - Minister, your rhetoric about Tasmanian energy prices has been very clear over the last few years. You have said that we'll have 'the lowest' energy prices in Tasmania. You've recently changed that to 'one of the lowest' in the state. Why did you change that language?
Mr BARNETT - Thank you for the question. It is excellent to have the opportunity to speak about our energy policy, which is to focus on costs of living and doing business as a top priority. As we have been saying for a number of years, and it has been entirely consistent, by 2022 our target is to have the lowest regulated electricity prices in Australia for both residential customers and business customers. That remains our objective - by 2022. It is now 2019. We are delighted to advise that we are among the lowest in Australia for both regulated residential customers and regulated business customers. Energy Consumers Australia, in their report based on 30 June 2019, said that for business customers, medium-sized business customers, we are the lowest in Australia.
Mr O'BYRNE - Are you preparing the ground to walk away from the commitment of the lowest energy prices, because your language has changed in the last six months?
Mr BARNETT - The language hasn't changed in the last six months. Our language is entirely consistent. Our target has always been to have the lowest regulated electricity prices for residential customers and for regulated business customers in Australia by 2022. We are tracking very well. We are amongst the lowest. There is more work to do.
Mr O'BYRNE - The Chair referred to the disruption occurring in the National Electricity Market. Could you update the committee on the process you are undertaking to delink from the wholesale electricity prices in Victoria and the steps you are taking?
Mr BARNETT - Yes, we have a process in place, which is open to the public. The public has had an opportunity to have their say and that process, that investigation, is ongoing. It's being led by Treasury and we are very pleased with the work taking place.
We've had submissions and reports, including from EMPCA, a consultancy expert adviser, in terms of the wholesale pricing framework. That report was made available earlier this year, with an options paper put up on the Treasury website on 12 March 2019. Submissions were received from a range of stakeholders and that work is ongoing.
Mr O'BYRNE - Where are you at? Are you still committing to that policy, to get a link, by the date you have outlined?
Mr BARNETT - Yes, 2022.
Mr O'BYRNE - When will we see legislation in the parliament?
Mr BARNETT - There is a lot of work to do. The Treasury is leading that work and that investigation. As I say, it has been open to the public with a consultancy made available in March this year for feedback on the options, looking through the options. We will consider those options. We will consider the report from Treasury and have a whole-of-government approach to ensure downward pressure on electricity prices, wherever possible. That's our objective, that's our target. It is a key hallmark of our Tasmania First energy policy. We are proud of it and we are delivering.
Dr WOODRUFF - Power costs, power bills, for many Tasmanians are still the most expensive part of the household bill, particularly over winter. I understand that Aurora provides different options for people, customers, who are struggling to pay their bills. Could you please tell me how many requests for payment extensions have been made this year to date, and last year? How many of those were rejected, if any?
Mr BARNETT - Thank you for the question. I note and acknowledge your views with respect to and on behalf of vulnerable Tasmanians, in fact all Tasmanians. Electricity costs in terms of cost of living is a really important issue. That is why, as a government, we have every policy lever possible to keep the cost of living down, and electricity prices are part of that. That is why we put in those cappings, CPI as a maximum. We have been achieving that and will continue to do so in the lead up to 2022.
Your question about vulnerable Tasmanians doing it tough, particularly in winter time, is a really good point. We have amongst the most generous concessions in all of Australia for those who are doing it tough. In fact, we have more than 90 000 Tasmanians who receive concessions of some sort with an estimated $45 million of government assistance to support those vulnerable Tasmanians.
With respect to your specific question, I will pass to the CEO to respond. I indicate that we have a YES program which is a very effective program, specifically supporting vulnerable Tasmanians. I have been to Aurora Energy. I have met with the YES program coordinators. They do a great job reaching out and helping Tasmanians manage their electricity bills in the best way possible.
Regarding the specifics and the operational matter, through you Chair, I will pass to the CEO.
Mrs KARDOS - Thank you, minister. Payment arrangements is one of many ways that we support Tasmanians with their energy bills. I will get Grant Russell, our Chief Operating Officer, because he will have the actual specific numbers that you have requested.
Mr RUSSELL - The total number of payment plans put in place in 2018-19 was 106 000. That was an increase of 3.2 per cent on the prior year.
Dr WOODRUFF - A 3.2 per cent increase? Thank you.
Mr RUSSELL - Increase, yes. Also the number of customers paying via Centrelink directly increased by 6.7 per cent to 9198.
Dr WOODRUFF - Through you, minister, that is in addition to the 1060 who asked for an extension of payment? There were the Centrelink ones -
Mr RUSSELL - Centrelink payments themselves were 9198.
Dr WOODRUFF - They are an extension, or they are just through Centrelink?
Mr RUSSELL - They will actually make an arrangement direct from Centrelink. It will come out via Centrelink, direct from their payment to us. The number of payment arrangements created was 106 191.
Dr WOODRUFF - Through you, minister, the second part of that questions was, are extension requests ever rejected? Do people request long-term payment plans?
Mr BARNETT - Thanks very much for the question. I will pass to the CEO, or to Grant.
Mr RUSSELL - Payment extensions are available to all, so there are a long-term payment extensions and short-term, it varies. Those are available to all; they are not rejected in the first instance. Standard process is to work with the customer to make an arrangement which works for them. At times those arrangements will fail. If those arrangements fail, then we will look at other options, including moving the customer into the YES program and actually helping them that way.
Mr BARNETT - Chair, to assist the member, if you could provide a brief summary of the YES program so the committee is aware of how effective that is?
Mrs KARDOS - The YES program was established in 2014 recognising the specific circumstances given our cool climate, our reliance on energy, that not all of our building stock is necessarily well designed for our cool climate. Also, for the majority of our customers, electricity is their sole source of being able to heat their homes. We designed the YES program taking into account the specific circumstances of Tasmania. We have supported more than 9600 customers since the inception of that program. I will get Grant to go through the specifics of the program and why it has been so successful to date.
Mr RUSSELL - It is worth stating that last financial year, 52.8 per cent of participants successfully completed the program. That means they exited the program. They were no longer being case managed because they had got on top of their arrears and on top of their consumption. We work with customers to bring down the consumption and therefore make energy more affordable, as much as we can, through energy audits, practical steps that they can take around the premises. So 4333 have completed the program since we initiated the program.
Mrs RYLAH - Minister, you mentioned that there are 90 000 vulnerable Tasmanians in our state. My interest in this one is, how does Aurora Energy ensure the transition of the Aurora Pay As You Go customers to new products to make it as smooth as possible?
Mr BARNETT - Thanks for the question. The PAYG move has been really important, that transition process, and I am happy to pass to the CEO shortly, but the customer service team is very proactive. They are out there making a difference and transferring one of the many other energy products on offer and getting it to the customers to make sure that it best suits their needs. It is a choice for the customer at the end of the day.
I can advise that there has been a gradual approach that has been undertaken to that transition to PAYG. As at 13 November, 19 432 have completed those meter exchanges as part of the Aurora PAYG transition. Close to half of the customers selected Aurora PAYG+ which is a particular program. It is a very innovative way. It is putting customers at the centre of how they use their energy, when they get their electricity, how they use it and the best way to use it so that they can be very energy efficient in the way they use their electricity. It is a terrific program and I have seen it firsthand and I'm looking forward to becoming more appraised of it in the months and years ahead.
Aurora Energy is listening to the customers and responding to the customers. They are making those options available. In addition, the Chair indicated in her opening remarks they have received a national award for that, the iAward. That is fantastic. They are in the top 10 in this category in the 2019 Australian Financial Review BOSS most innovative companies award. It is a great credit to Aurora Energy for the work that they have done.
They collaborate with organisations like the Council on the Ageing, 26TEN, Anglicare, those sorts of organisations, to provide that support to those vulnerable Tasmanians. We are pleased and proud of Aurora Energy's efforts in this regard. It is a particular program and they are very proactive in that space. We have come a long way and there is still more work to do, but it is one of the successes of Aurora Energy.
Ms OGILVIE - Welcome everyone. Thank you for coming along -
Mr O'BYRNE - Chair, just as a point of clarification, I am not wanting to speak over the top of Madeleine, and I apologise. Just to clarify with the rotation of questions. It is two for the Opposition, one for the Greens, one for the Government. So, with the extra question, because this is the first time that we have come across this circumstance, does that mean that the Greens do not get a question and the Government does not get a question? It is just an extra question on top.
CHAIR - No, it is on top but then it would go up to you. In accordance with the resolution agreed to by the House members who have been appointed as members of the committee, procedures of the questions, but not more than two in succession.
Mr O'BYRNE - So the rotation reduces for the Opposition? Thank you. I just wanted to clarify the rotation.
Ms OGILVIE - It is a pleasure to be here today as the first Independent in the House in 21 years. I am very grateful to be able to ask some questions of our good friends from Aurora.
I am very pleased to be asking, on behalf of local businesses, questions around consultancies. If I could refer you to page 31 of the annual report, I am particularly interested to know, because I am not clear, whether the Buy Local policy of the Government sits across GBEs as well or not. In particular, if you look at the six major consultancies that are specified in the table headed 'Consultancies valued at more than $50 000' we see there was $1 261 461 allocated and only one of those was to a Hobart-based business.
Mr BARNETT - It's on page 31?
Ms OGILVIE - Yes, in the hard copy. It is obviously spelt out in quite some detail. I am interested to know what is causing procurement to go interstate. Is there a lack of services, competencies or capability in our business sector in those areas that we could be filling, or is there something else we could be doing to address that concern?
Mr BARNETT - That is an excellent question. You have a history of supporting small business -
Ms OGILVIE - I do.
Mr BARNETT - and obviously your local community. As a Government we have a history of supporting small business. There are now more small businesses in Tasmania, more than 37 000 since we were first elected, employing more than 100 000 Tasmanians. Our Tasmania First energy policy is consistent with our local jobs policy wherever possible. The Treasurer, who has recently been at the table, has promulgated that. We support that as a government across government and it applies to Aurora Energy, so thank you for asking that question.
With regard to the specifics I will see if the CEO can answer that particular question on page 31 of the annual report. Thank you for drawing that to my attention.
Mrs KARDOS - Thank you for the question. Aurora Energy has a procurement policy which is published on our website. We support Buy Local. It is one of the key criteria we use whenever we are engaging. You will also note, I think it is on the same page, that 95.6 per cent of the services we procured in 2018-19 were from Tasmanian businesses.
Ms OGILVIE - Is that the $50 000 or less category?
Mrs KARDOS - That would have been, but they could be services. Consultancies are quite distinct from services. The large bulk of our services are sourced from local companies, hence the more than 95 per cent. As to the specifics, if they were looking for a specific consultancy which may not necessarily be available here, we would have opened it up in most cases to local companies, but if that specific advice or knowledge isn't available locally we will source it from other areas of Australia.
Mr O'BYRNE - There are plenty of IT companies in Tassie.
Ms OGILVIE - A supplementary, if I may?
CHAIR - No, you actually asked two questions as part of that.
Mr O'BYRNE - I was going to touch on that but I might go back to it later. In terms of the Pay As You Go + rollout, 19 December has been given as the drop-dead date for people to transfer across. How many people are still outstanding? We know that the vast majority of people on PAYG are very low-income Tasmanians and it has been a method of payment that has been managed -
CHAIR - Sorry, we are having microphone issues again.
Mr O'BYRNE - No dramas. PAYG is a method of payment that low-income Tasmanians use regularly and rely on very heavily. How many people are yet to transfer across from PAYG to PAYG+ and what is the plan for those low-income Tasmanians come 20 December?
Mr BARNETT - Let me just give you a bit of summary. I have obviously answered the question from Mrs Rylah, a very good question, regarding Aurora Pay As You Go and the success we have had through that. Approximately 20 000 Tasmanians with existing prepayment meters will have their meters replaced by December 2019. This is because the existing prepayment meter infrastructure is reaching end of life and that has been part of the plan. As of 15 November, 9342 customers had chosen the PAYG+ product and it is anticipated that a switch to PAYG+, including the daily fee, will be a more affordable option for the majority of customers with the old prepayment meters. That is certainly supported by the recent analysis by the Tasmanian Economic Regulator in August standing offer price comparison report, which indicated PAYG+ customers would have cheaper electricity bills than customers on the traditional prepayment meter product. Regarding other operational matters, I will pass to the CEO.
Mrs KARDOS - Grant will probably be able to give the latest numbers because he is closest to the project, but in terms of the product transition, I think we have just over 900 customers left to transition. We have made over 130 000 direct contacts over the year to engage with customers to discuss with them their options, because they do not have to go onto PAYG+. There is a range of options available to those customers, so we have been actively working with them, assisting them in making the decisions around what those options are. I will hand over to Grant to provide an update on what the most recent numbers are, but I think it is close to 900. Is that correct?
Mr RUSSELL - By the end of this week we should be down to around 400 meters still to be exchanged.
Mr O'BYRNE - Down to 400 - that is a good turnaround in a couple of days.
Mr RUSSELL - We are doing roughly 500 meters a week, so we can actually do the schedule for this week. Some of them will have return visits. The key part we are doing is maintaining supply. The whole focus coming up to Christmas is maintaining supply for customers, so where there is a vacant premises and we can't get access, we have a whole range of workarounds in place so that if somebody moves in on Christmas Eve we can ensure we get supply to that premises. That has been the focus: ensuring nobody goes without power, and we have put a heck of a lot of activity into ensuring that, to the extent that we doorknock premises when we can't get a contact or find somebody. We have used the list, we have gone to rental agencies, we have worked with Housing Tasmania, so we think we have as good data as possible. At this time point in time there are possibly 75 premises where we are unsure of the actual status of the occupancy so we are doorknocking those premises to try to find the householder and work with them to ensure there are no issues.
Mr O'BYRNE - For those who don't fill out the paperwork and transfer across, what happens to them on 24 December?
Mr BARNETT - Thank you for the question, Mr O'Byrne, and through you, Chair, I will pass to Grant.
Mr RUSSELL - For those customers we can't contact we have an emergency protocol in place whereby an after-hours service effectively is established, so their PAYG unit will still work for them. We put a workaround in place that enables them to obtain supply, so if you move into a premises on 24 December, for example, you will be able to contact us, say there is no power and then you go to TasNetworks after our service. There is an emergency number for them to contact one of our field crew to refer back to that premises, so they will have same-day service.
Mr O'BYRNE - Minister, what is the cost of PAYG+ to the resident?
Mr BARNETT - It is 11 cents per day - $40 a year.
Mr O'BYRNE - What is the cost of the install?
Mr BARNETT - To Aurora Energy?
Mr O'BYRNE - No, to the customer.
Mr BARNETT - I think you are talking about the meter rather than PAYG+.
Mr O'BYRNE - Sorry, the meter. PAYG+ needs technology at the house. In the changeover of technology, what is the cost to the resident or owner?
Mrs KARDOS - If it is the new advanced meter that is required, there is no cost for the replacement of the existing PAYG meter, and for the installation of the new advanced meter -
Mr O'BYRNE - So there is no cost at all?
Mr BARNETT - There is no establishment cost. There is an 11 cents per day cost for PAYG+, which is about $40 a year.
Dr WOODRUFF - Minister, following up on PAYG+ and that 11 cents a day cost, and looking at the alternative options that people are offered, in light of what Grant said earlier that there has been an increase across people on Centrelink who get their electricity bills paid - it's gone up 6 per cent and there's been an increase in people who have payment extensions, and more people are struggling to pay power bills - is it the case that the people are paying $40 a year to Aurora just to get the app for the Pay As You Go +? Is that what it's for?
Mr BARNETT - The Aurora Pay As You Go + provides them practical and easy ways to manage their electricity to try to be very energy efficient. I think it's a very good scheme. It gives them the tools that they can use to use electricity at a certain time of day and in a certain part of the home to keep their costs as low as possible and also be energy efficient. Yes, there is a cost for the 11 cents a day, which provides an opportunity to use the app accordingly. It empowers the consumer, and this is one thing I've shared with Aurora Energy: there is a focus for the Government and for me as minister on consumer empowerment wherever possible to give consumers the tools they need.
As to more specific parts of that question, I will see if the CEO can add to that answer.
Mrs KARDOS - It's really important to know that we provide our customers with a range of product choices depending on their specific needs. For some customers, Pay As You Go + may not be the choice. We have close to 10 000 customers who have chosen the Pay As You Go + product and the feedback we have from customers is that they really value the empowerment and the information that product gives them. The information that it gives them allows them the visibility of when they're using energy, and the opportunity to move that energy into peak or off-peak periods. As a result, for 11 cents a day they can probably find far greater savings. That's that product for that group of customers. We have a number of other products which may suit other customers better. Hence, if a customer doesn't want to pay that 11 cents a day, we have alternatives for them to choose from.
Dr WOODRUFF - Thank you, Mrs Kardos. I am confused. I have had apps from other banking companies, other electricity companies, when I've lived interstate, but I've never been charged a continuing amount. I am just wondering, Pay As You Go + is for the poorest people; this is who needs to take advantage of this service. Is there another way for people to recharge under Pay As You Go + so that they don't have to spend $40 a year? It sounds inconsequential to those of us at this table, but for some people on Newstart, that is basically a week's amount of income. It is a very high cost. Is there an option to do that online?
Mr BARNETT - There's two parts to my answer to your question. It is a good point to make. Every dollar counts, particularly for vulnerable Tasmanians and $40 a year is important, so we don't discount that in any way, shape or form.
Based on the independent advice, the feedback, which I provided earlier, is that it is a very cost effective way to manage one's electricity. The Tasmanian Economic Regulator in the August report said that Pay As You Go + customers would have lower electricity bills than customers on the traditional prepayment metered products. The point the CEO has made, and that I made earlier, is that it is still a matter of choice. They can use other traditional forms of paying for their electricity so they don't have to use the app if they don't wish to.
The second part of my answer -
Dr WOODRUFF - That was my question, I suppose: can they do it online instead of using the app and still use Pay as You Go + without having to pay for the app?
Mr BARNETT - I will pass to the CEO to answer that part of the question. The second part of my answer is, I think you indicated earlier a large increase in vulnerable customers. We have an estimated 90 000 who benefit from our concessions of $45 million per year from the Tasmanian budget. The taxpayers are supporting those vulnerable Tasmanians. As a Government we are going beyond the call wherever possible to support our vulnerable Tasmanians. It is recognised across Australia as one of the most generous concession schemes. We work with TasCOSS and others to ensure that we are as proactive as possible to support vulnerable Tasmanians. I will pass to the CEO for the other part of the answer.
Mrs KARDOS - Just a point of clarification, Pay As You Go and Pay As You Go + customers aren't necessarily vulnerable customers. Pay As You Go customers, based on our research, cover the entire spectrum of the Tasmanian customer base. It is important not to assume that if you are on Pay As You Go, you are a vulnerable customer. That is a key point of clarification.
Dr WOODRUFF - A person on a concession would be able to be absent from having to pay that cost then? I recognise the point you are trying to make and you are obviously trying to recoup costs, but we are talking about the prospect that it is a bit miserly to be taking $40 per year for an app. If people are really struggling, is that something that would be waived?
Mr BARNETT - I will answer that question and then I will pass to the CEO. It is really a point of cost-benefit to the customer. Wherever possible, we want the benefits to outweigh the costs. There is very strong evidence to say that the benefits outweigh the costs when it comes to an app but at the end of the day it is a choice for the customer. The CEO might wish to add to that answer.
Dr WOODRUFF - Only if there is an alternative online.
Mrs KARDOS - The underpinning tariff for Pay As You Go + is tariff 93, which is the time of use tariff. A customer can choose to be tariff 93 and use Aurora Online, which has no product service fee associated with it. There are viable alternatives available to customers who have affordability concerns around paying that 11 cents per day.
Mr TUCKER - What is Aurora Energy doing to support the National Electricity Market's transition to renewable energy?
Mr BARNETT - Thank you for the question. They are doing a lot. They are a key part of the Tasmania First energy plan, which we are so proud of having the low-cost reliable clean energy in Tasmania that the rest of the nation wants and the rest of the world wants. In terms of being part of that future, Aurora Energy had a power purchase agreement with the Cattle Hill Windfarm, Goldwind. They have nearly completed, in fact the announcement is this Friday; we will be there this Friday to say it is up and running and feeding into the grid; 63 000 households will benefit in terms of the equivalent of that electricity outcome from the Cattle Hill Windfarm with 48 turbines, a $300 million development.
What that means is jobs in rural Tasmania, in the Central Highlands in this case, in the wonderful Lyons electorate, as the member knows and we are so proud of, and employing Tasmanians.
In that project at Cattle Hill Windfarm, the Haywards played a role in the massive towers; Hazell Bros and Gradco were involved in the roadworks and civil construction. Hazell Bros has done a terrific job, as has Gradco, employing Tasmanians, here in Tasmania. 'Buy local' came up from the member for Clark earlier. Again, they are playing their part in that new future for Tasmania. I have a positive view of the prospects for Tasmania with three renewable energy zones.
Aurora Energy is playing its part in delivering those outcomes for Tasmania in terms of jobs, keeping downward pressure on electricity prices and providing opportunities to export our excess energy to the mainland, opening up and unlocking massive renewable energy development opportunities on the north-west coast, the north-east coast, the west coast and across the state. Thanks for the question.
Ms OGILVIE - Back onto the consultancies question, I notice that one of the specific consultancies related to some work that Minter Ellison did for you for legal services. I presume you run a panel for legal service or for local firms to input into that to bid for work. I am wondering why specifically we needed to go to Minters for that piece of work.
Mr BARNETT - That is a good question and I know Minter Ellison quite well.
Ms OGILVIE - So do I. We have great local firms though, too.
Mr BARNETT - I think you have an interest there and having worked at Corrs -
Ms OGILVIE - That was Allens. I have no conflict.
Mr BARNETT - We are aware of the role and the specialist lawyers they have in complex areas. That is an operational matter and I will pass to the CEO. I want to make it very clear that of all the purchases by Aurora Energy, nearly 96 per cent or nearly $1 billion is spent here in Tasmania. We have a very strong buy local, value for money, transparent and robust processes approach. I'll ask the CEO to respond to that part of the question.
Mrs KARDOS - That is related to consultancies from whom we have sought specific advice. My understanding of our relationship with Minter Ellis, and it is typically specific to energy policy, we do use a range of local law firms, more though in the services place than the specific consultancy. This was my understanding for specific energy advice but I would like to call Oliver Cousland to the table, who is our Company Secretary/General Counsel.
Mr COUSLAND - I repeat Rebecca's comments, that we have a panel of local and interstate firms that help us with various pieces of advice. That figure quoted in the annual report is not one piece of work, that was across multiple engagements we got them to assist us with -
Ms OGILVIE - It looked like an annual project. It went for about a year? Are you just reporting on -
Mr COUSLAND - That was an annual number for the services they provided for the year, but we do have local firms that we also engage on a case by case basis.
CHAIR - Last question, Ms Ogilvie.
Ms OGILVIE - Yes, and we would find them in the less than $50 000 category? Is that how that is reported?
Mr COUSLAND - Yes, that would be in the under $50 000.
Mr O'BYRNE - Going back to the PAYG implementation. I have an example of a constituent who has had a bit of a negative experience with the process. Maybe you can assist us. This is a person who was informed by Aurora a number of years ago that the old-fashioned black meter had to be updated. They moved to the PAYG meter in terms of the unit at the place of residence. He then elected to embrace the new technology, which you obviously support. He was told that there was an issue with the connection to the property, with no change to the connection had occurred since the previous updating to this updating, and that he would be up for costs of close to $2000 to fix that connection point, and that is not including work he would have to pay TasNetworks for.
Given this is about providing energy to Tasmanians and ensuring that the lights can be kept on, it seems a bit onerous that this person, through no fault of his own - there have been no changes to his household or the connection point - has to fork out $2000, at a minimum?
Mr BARNETT - The member is referring to an anonymous person and a case study, no doubt from an anonymous person. As a minister, I am unable to -
Mr O'BYRNE - No, I can give you the name. His name is Brian Wilson of 32 Cherry Street, Burnie. I was giving the details of the connection. I would not bring something to the table that is not factually correct, minister.
Mr BARNETT - You have put something to me as minister that I am not aware of, personally.
Mr O'BYRNE - I am not expecting you to be aware of it, but the circumstance goes to the cost. Is this reasonable, when a person seeks to embrace the new technology and has been given one choice - that the old meter has to go - he elects to do that, with the connection to the household apparently not having changed in years? Aurora had been there previously. There is no change to the connection point and no change to the circumstances but he has now been told that he has to upgrade to the new technology. He has to pay $2000, at a minimum, to an electrician to upgrade the connection point. Is that not the Government's responsibility, to provide it to the house?
Mr BARNETT - Thank you for the question. I am not aware of that circumstance. We have outlined the policy of the Government to you reasonably clearly today. I am happy to continue to do so. With respect to specific examples such as the one you have outlined, I will ask the CEO if she is aware of that or can provide any information. In terms of those sorts of costs, they do sound large.
Mrs KARDOS - I'm not aware of the specific customer. However, we do have situations in which when we go to install the meter and we find issues beyond the meter, which is within the customer's property. I can hand over to Grant Russell, our Chief Operating Officer, who can take you through an overview of the specifics and how we manage that. However, I would welcome more details regarding the specific customer matter and we can follow that up after the meeting as well. I will hand over to Grant.
Mr RUSSELL - If you can pass the details on, we will most certainly have a look. The connection point arrangement is primarily a safety issue and compliance rules change. When we turn up on site, we are operating under rules that may be different from what they were five years ago, seven years ago, or nine years ago. It may well have been found, my own premise is a prime example, it was fine when it was installed. Today, it would be non-compliant if I did work to it.
It is down to where the point of non-compliance is. It is the non-compliance of the remediation, if you like, on this side of the meter or the house side of the meter. Those are the two basic issues. Where there are things like isolation switches or other elements we can fix, we will do that and we will put that right on the board. Where it is in the customer's premise, that is a customer issue and we are working individually with customers who have that issue. There are customers who do have that issue and we are working on solutions with each of those customers.
Mr BARNETT - I am more than happy to respond to that particular query. If you get queries any time, I am happy to provide some support but it is a matter for Aurora Energy to respond. I do get queries in my office and we refer those to Aurora Energy to try to use best endeavours to support those vulnerable customers or the needs of those Tasmanian people.
Mr O'BYRNE - My follow-up to that is that, in the experience he relayed to me that when he was informed of this he did not have $2000 sitting around and he felt he could not afford this and it was of concern to him. He called the number for help at Aurora, and when he was informed that he had to pay this cost he asked to speak to the manager to escalate this. He was not allowed to do that. It was not something the person he spoke to said was appropriate. He then referred the matter to the Ombudsman, and it was only after the Ombudsman was made aware of it and worked through the process that Aurora senior management contacted him. Do you think that is an acceptable response to customers with grievances?
Mr BARNETT - The Ombudsman has a particular role. The Ombudsman has responded and Aurora Energy would absolutely respond to the Ombudsman and the directive of the Ombudsman, as I would expect them to do. Complaints to the Ombudsman have reduced over the 12-month period, which is very good news. I have an expectation that Aurora Energy would be diligent, thorough and professional.
With respect to the matter you have referred to with Mr Wilson, I am more than happy to follow up and ask Aurora Energy to do so as well, to see if we can assist you and the committee with respect to that example. There will be lots of examples throughout the year over the thousands of interactions with various customers on a range of matters. I will see if the CEO wants to add anything.
Mrs KARDOS - First of all, no, that isn't ideal and that is not the level of customer service we would intend to do. We are very eager to better understand this customer's experience and what we can learn from that and how we can improve our processes. However, I can't really speak specifically on that but I really do want to know more. Please send through the details. I apologise to Mr Wilson if that has been his experience and we will ensure that we remedy that.
Dr WOODRUFF - Minister, the smart meters are available to some Tasmanians and are being rolled out to PAYG+ customers. They are very helpful in helping people manage their electricity consumption and reduce their power bills. I understand that they are provided to PAYG customers but not to solar users or to other people interested in their electricity use unless they are requested by those people. Could you please provide some information about how many requests have been made for installations and the average wait time? How many installations have been achieved around smart meters for solar users and other users?
Mr BARNETT - Can we get some clarification; if you could clarify if we are talking about PAYG+ or are you talking about the new metering arrangements, or are you talking about something to do with the solar feed-in tariff?
Dr WOODRUFF - Not PAYG+ customers, we have already heard about the use of smart meters, but for other people, solar customers are some people who would like to be able to better understand the details of their usage and monitor that. I would like to know how many people have requested those ones and what the average wait time is for an installation. If you could provide that information.
Mr BARNETT - Thanks for the opportunity to clarify that question. There have been some national rule changes across the country in metering and that occurred in December 2017. Over the past nearly couple of years, Aurora Energy has been very proactive in rolling out the opportunity for the meter installations, providing a greater level of meter installation, and that is benefitting Tasmanians. That has been occurring. My advice is that of 13 November 2019, Aurora Energy, in partnership with Metering Dynamics, has installed more than 40 000 advanced meters since taking over responsibility for the delivery of advanced metering services in Tasmania. Certainly, there are large volumes of advanced meter installations and there have been small number of delays.
Dr WOODRUFF - Can I clarify, do you mean to non-PAYG+ customers when you say 40 000 extra installations?
Mr BARNETT - Across the state. It would be helpful if the CEO outlined a little bit more detail to that answer that I have provided to assist the member.
Mrs KARDOS - It's more than 40 000 in total, so that includes PAYG+as well. We have been proactively - it is all new and replacement meters. Where customers have access issues, which is often the case for solar customers, we have been taking their details and proactively installing advanced meters for those customers. Grant Russell will be able to provide specific details on where those 40 000 meters are, the specifics and how we go about implementing those 500 meters a week.
Dr WOODRUFF - For the non-PAYG+ people?
Mrs KARDOS - That's correct.
Mr RUSSELL - In terms of where we are actually at, we've now done 45 000 meters. We traditionally did 5000 per annum, and we've actually done 45 000 since December 2017. Yes, that includes PAYG+, but we've done 45 000 meters.
There is a prioritisation group. Those customers with farm and biosecurity issues have been prioritised. We have prioritised farms and agribusinesses. We have prioritised those customers in the self-read program, which TasNetworks ran for a number of years. We have also prioritised those customers who have estimated bills and read issues. We are currently processing an average 250 a week EWR, so watch requests, for either a new connection or an exchange meter.
Dr WOODRUFF - That didn't answer the question about solar customers. How long do solar customers have to wait? If they don't fit into an agribusiness or a farm or that other category, what is the wait time? I am hearing very long lengths of time; perhaps there could be some clarification around that?
Mr BARNETT - Yes, certainly solar customers can use those advanced meters. I will see if Grant could add to that.
Mr RUSSELL - We have actually only had five instances where we have not met the 15 and six time line -
Dr WOODRUFF - Sorry, what time line?
Mr RUSSELL - The 15 and six - the installation time line rules. Upon request for an exchange we have 15 days to install that new meter. For a new connection, we have six days from the point of supply being established to putting a meter on the wall. Only on five occasions have we actually failed to do that out of 20 000 plus since the rule came in.
Dr WOODRUFF - Thank you.
Mr RUSSELL - We have worked really hard to meet those time lines. It is probably worth clarifying, if I can, we can't actually hang the meter until supply is established. Supply needs to be put to the premises before a meter can actually be hung.
Dr WOODRUFF - That's for new?
Mr RUSSELL - Yes.
Mrs RYLAH - Delivering energy for Tasmanians is the whole goal of what we are doing and that is what I have heard you say, minister, over a long period of time. Can you explain how, as I understand it, Aurora Energy has signed up to the Energy Charter in 2019? Can you tell about that and how that is working?
Mr BARNETT - It is actually a world first, that is why I am so proud of Aurora Energy in signing this up. What it is all about is the consumer; it is consumer centric, it is consumer focused. It is all about what we can do to support the consumer, those consumers in Tasmania. There are five principles. I will outline the key principles of the charter:
(1) Putting customers at the centre of businesses and the energy system.
(2) Improving energy affordability.
(3) Providing energy safely, sustainably, and reliably.
(4) Improving the customer experience.
(5) Supporting customers facing vulnerable circumstances.
Aurora Energy is one of only 18 companies from across the supply chain, and the only Tasmanian organisation at this point to have voluntarily committed to the Energy Charter, and is a founding signatory of that. I might see if either the Chair or CEO might wish to add to the importance and merit of the charter.
Prof. O'KANE - I will leave it to the CEO and she will tell us about our recent submission to the charter organisation.
Mrs KARDOS - This is one of the few industry-led initiatives and we have been a founding member, so we were part of the design of the actual Energy Charter. We contributed heavily in terms of the five principles that the minister has outlined. The fifth principle around vulnerable customers was one that we were very passionate about. It is fundamental for everyone involved in the energy industry, whether you be a network business, the generator, or the retailer, if we can put the customer at the centre of our businesses, then we will ensure that we can navigate through these turbulent times. As we move to renewable and reliable energy, the Energy Charter should assist us to do that. That is one of the reasons why we are so proud to be one of the founding members.
As part of the Energy Charter, each entity that has signed up has to do an assessment of how we have performed, a self-assessment, and that goes through to an accountability panel that then reviews our self-assessment and provides us with feedback. That is all public.
I appeared before that accountability panel approximately six weeks ago. We are not 100 per cent; we are still a work in progress. There are areas that we can definitely develop and grow from. The spirit of the Energy Charter is one where we actively demonstrate and transparently show that we are really proactively working and ensuring we get the best outcomes for customers and for us at Aurora Energy, the best outcomes for Tasmanians, because that is who we are really passionate about.
Ms OGILVIE - My question goes to the liabilities and risk exposure that the organisation may have. I have two parts to the question, and I am happy for it to be considered two questions. The first is, what is the biggest market -
Dr WOODRUFF - You don't get two questions.
Ms OGILVIE - I will ask it in one question.
What is the biggest market risk the organisation faces, whether that is pricing or pressure on margins, and whether there are any contingent liabilities that also perhaps would overshadow those risks, those two elements to it?
Mr BARNETT - As I said in my opening remarks, it is a very good question because it highlights the future. The fact is, yes, it has been a very sustainable and profitable business in the past and we would expect that to be so going forward. But there are many headwinds, there are many challenges. The operational costs is one of those to deliver pricing that is to the benefit of the Tasmanian consumer, to meet the Government's policy objective of keep downward pressure on prices, and to ensure the cost of living, cost of doing business, is as low as possible. Electricity is a key part of success in terms of cost of living, cost of doing business - so pricing, and ensure that the business is operating in a sustainable and profitable way. It is a tough environment for an electricity retailer. They are doing well and we would expect that to continue but we have many headwinds and many challenges. The CEO might wish to add to that.
Mrs KARDOS - Yes, it's a good question. There are probably three key risks to any energy retailing business. The first one is around wholesale risk and our wholesale exposure to the market. The second one is credit risk, because if we don't get paid we still have to pay the network businesses and settle in the market for our wholesale costs, so we wear that full exposure for credit. The third risk for us is competition. We're in a fully contestable market and we actively have to ensure that our customers choose us because we provide the best value, and that is a key risk we focus on. They are probably the three key risks that we always centre on and look at and focus on.
In terms of your questions around contingent liabilities, I'll ask the General Manager, People and Commercial Services, Kane Ingham, to answer.
Mr INGHAM - There are no contingent liabilities that we could disclose. We would have done so as part of the annual statements if there were any. If there's anything in particular of course I am happy to answer that.
Ms OGILVIE - No, it was just a general question.
Mr O'BYRNE - Back to that circumstance I raised before, say a person pays their bills regularly and pays thousands of dollars a year for the provision of energy. Through an upgraded technology, through no decision that this person has made, they are now expected to pay a minimum of $2000 to a subcontractor and then potentially up to $500 or more to Tas Networks. Do you think it's reasonable that the energy provider passes that cost onto the consumer and is not fulfilling the obligation to get power to a property? Do you think it's fair that they are lumbered with a decision that's been made outside of their control and are having to pay thousands of dollars?
Mr BARNETT - You referred to a Mr Wilson in your earlier question and this is the person you're referring to again.
Mr O'BYRNE - It wouldn't be the only example, I'm sure.
Mr BARNETT - As I indicated to you, I am not familiar personally with that particular matter but Aurora Energy has offered to take that on notice and get back to you and the committee with further and better particulars.
Mr O'BYRNE - Do you think it's fair, though?
Mr BARNETT - If I can answer the question I will continue. As has been answered already, there's the meter and what happens around the meter. Then what is happening beyond the meter, and those matters need to be looked into. As to the particular circumstances of the case you referred to, I am more than happy and would ask Aurora Energy to follow up and advise you and the committee details in and around that. You referred to an Ombudsman's inquiry and report. We support the work of the Ombudsman and the outcome of that report and recommendation and, as a government, we would expect that to be implemented as a top priority. We will certainly take that on notice as well and see what more we need to do to follow up.
Mr O'BYRNE - So you think it's unfair that they've had that cost imposed on them?
Mr BARNETT - As I say, it is a particular circumstance you're referring to. We are more than happy to follow it up.
Mr O'BYRNE - In terms of metering, we understand that historically when there's been asbestos found on the meter board, the board has been upgraded at the cost of the supplier. We understand now that because of the contracting out of the work to upgrade the meter boards to be compliant, if asbestos is found, the cost of removing that has now been transferred to the owner of the property and is not borne by the Government through the GBE.
Mr BARNETT - As has been answered already by Grant, what's at the meter is one thing; what's beyond the meter is another matter. It is a very important matter for the consumer and Tasmanian customers and particularly vulnerable customers. That is why we have such a generous concession system for vulnerable customers. I'll see if the CEO or Grant might be able to add to that answer in terms of asbestos. Of course that's a very important matter. I have been minister for occupational health and safety in the past and did a lot to do whatever we could to address the asbestos issue in Tasmania. We were very proactive in that space as a government and we continue to be in that case very proactive. I will see if Grant would like to add to that answer.
Mr RUSSELL - There is not one simple answer. Depending on the installation, depending on whether it is a multi-tenancy, whether it is one site, and what the board actually is, there is a different outcome. Our service provider has worked very well with TasNetworks to change panels and put new panels on. We have come up with solutions for asbestos panels to manage that situation so that customers don't incur the risk around managing asbestos. It is done professionally in line with safety guidelines under the Department of Justice by our service provider working with TasNetworks in most cases.
Mr O'BYRNE - We don't argue that. We assume that the work is done professionally and people are safe. That is not the nature of the question. The nature of the question was, in context of the minimum $2000 cost to the resident in Burnie, but particularly with the transfer from the old black meters to the PAYG meters, if asbestos was found on the board on the property which holds the meter, that cost was borne by the company. Now we are hearing that that cost is now being borne by the customer. This seems to me to be a massive cost shift for the provision of an essential service.
Mr BARNETT - You have raised a number of matters there and Grant has provided at least a partial answer. I will see if there is anything further to be provided. I am sure we would be more than happy to follow up to see if there is anything further we can add to that answer.
Mr RUSSELL - The only outlay would be where it's a customer on board. Where the board has customer equipment which is not TasNetwork's equipment historically on that said board then it becomes the customer's responsibility, not ours, which we transferred from TN. In most instances that comes down to us to fix, not the customer being charged for that one.
Mr O'BYRNE - Just a point of clarification on that answer: what do you mean 'not on their board'? This is the panels.
Mr BARNETT - Please ask your question.
Mr O'BYRNE - It is a clarification about what is the trigger point. We are hearing that traditionally anything to do with a meter box, if it was upgraded and asbestos was found, it was replaced and made safe because you rely on that meter box to lever the charge for the energy and now if it is found to contain asbestos, that is a charge. Because you have contracted out the work to a series of subcontractors, they are now charging the customer.
Mr BARNETT - That is your question of clarification?
Mr O'BYRNE - Yes.
Mr BARNETT - You are now using what I would consider somewhat hypothetical questions, but in any event I make it very clear that we are more than happy to follow up on the question and provide a response to that. The way you have described it is quite complex. We have made it very clear in terms of the meter and who is responsible for the meter and then what is outside the meter, but obviously the customer is a priority for our Government, as it is for Aurora Energy. We would be more than happy to take that question on notice and get back to you as soon as possible. That is the answer to the question.
Dr WOODRUFF - Minister, many Tasmanians are still connected to both tariff 31 and 41 because they find it works best for them, but if you are running a solar system with tariff 31 for light and power and tariff 41 for heating space for water, I believe it is the case that solar customers aren't able to receive the benefit that other people who choose to use tariffs 31 and 41 would. In other words, they can only offset the solar they produce on one of those tariffs. I understand that the default tariff is 31, which is lights and power. This is complicated, which is why I am going through it slowly. Can you confirm it is still the case that solar generators are being paid 9.347 cents a kilowatt hour for the electricity they produce and sell into the grid, at the same time they are being charged 17.507 cents a kilowatt hour for electricity when they are using it under the tariff 41. In other words, there is gap of over 8 cents a kilowatt hour where it might be a freezing day in the middle of winter, but bright and sunny. They could be using that power they are generating to be heating their hot water system, or heating their space in the room with electricity. But instead of getting it for the same price they are selling it to the grid, they are having to pay 8 cents, regardless of the fact that they are producing electricity and giving it to Aurora.
This is an iniquitous situation. Can you confirm that is actually what is going on?
Mr BARNETT - It was quite a long question. As you say, part of it is technical and I will pass to the CEO to answer that technical part of the question. But let's make it very clear, with respect to solar customers, and solar feed-in tariff, it was the Labor-Greens government that extended that until 31 December last year. It was our Government that removed the massive drop-off and extended the solar rebate -
Dr WOODRUFF - I am not sure how that is relevant to the question I asked, minister, but it's a distraction that you choose to put in.
Mr BARNETT - No.
CHAIR - Dr Woodruff, I ask that you allow the minister to finish his answer, please.
Mr BARNETT - You don't obviously like the answer, but I am actually the minister providing the answer.
Dr WOODRUFF - I draw your attention to the question I asked. I wasn't being political in my question, Chair. I'm just hoping the minister can restrain himself from politics in his answer.
Mr BARNETT - We provided a 5 cents solar feed-in tariff rebate through to 31 December this year to provide that support for those customers and the regulated feed-in tariff rate, as you've indicated, is 9.347 cents per kilowatt hour. With respect to the technical aspects of tariffs 31 and 41 and how they relate to solar customers, I'll pass to the CEO.
Mrs KARDOS - In relation to your question, if a solar customer if the tariff arrangement is a dual tariff arrangement, being tariff 31, 41, technically we aren't able to, without significant cost, allow them to offset by tariffs. The reason they typically choose tariff 31 - they can choose tariff 41 - is because that's the higher charge tariff. So, when they're offsetting, they're importing from the grid, that would be the more favourable one for them. However, there are choices for solar customers. For example, if they chose to go onto a different tariff arrangement, for example tariff 93, they can offset all of their imports from the grid on tariff 93.
Dr WOODRUFF - Thank you. Minister, can you clarify that solar customers are provided with the information that Mrs Kardos has just stated? Do solar customers have the information provided to them that they can switch their tariff so that they get the best possible financial outcome and reduce their - recognising that people on low incomes often get solar to reduce their electricity bills as well?
Mr BARNETT - It is a good question because as a government, our objective is to keep electricity costs as low as possible for our customers, residential and business. So, the answer is yes, but I will ask the CEO to outline in more detail in how that occurs.
Mrs KARDOS - Yes, we do, and we have been in active discussion around this specific issue with various representative groups, including the Tasmanian Renewable Energy Alliance, on this specific matter. We do provide this advice.
We are also bringing a product to market in January called Solar Plus which will enable our solar customers to get greater visibility around when they are importing from the grid and when they are exporting. We are very excited that we will be marketing that product in January 2020. It will give them greater visibility and how they can maximise the investment that they have made in installing solar, and/or battery as well.
Mr TUCKER - Minister, you are very supportive of rural and regional areas across the state as a fellow Lyons member. Can you explain how the Farm Energy Advocate service is practically assisting rural customers in Tasmania?
Mr BARNETT - It is an important question from a rural-based member who understands the importance of rural and regional Tasmania and rural communities. That is why as a government we are keen to get to that $10 billion by 2050 in terms of farmgate value. We are on track, 9 per cent increase in the last 12 months checking.
Yes, we have $6.25 million support for on-farm energy program, $742 000 already approved to assist farmers in lowering their energy costs with the on-farm audit and capital grants program. That has been well received and we have the $5.5 million for mini Hydro as well to keep the costs of electricity prices as low as possible for our farmers in those areas that benefit.
Likewise, we have had Dairy Tasmania involved in all about energy field days and the dairy industry is particularly thankful for that support we have provided. Across the board, it is an important part of the program. We are now into our second year. We have plans to continue in the months and years ahead. It is a good program. In terms of the actual farm energy advocate, you can ring that number through to Aurora Energy. You can get advice and feedback. I have been up there to Aurora Energy and had a look. I have seen where they sit and answered the queries for and on behalf of our agricultural community and the farmers in particular. The service is excellent. I am pleased to know about that and it is available.
We have targeted agricultural communities to provide them with that support, the support they need to keep their electricity costs down because, not just dairies, but across farms, electricity is a significant part of their cost of doing business. If we can keep that cost down as low as possible it will help them be effective, competitive in the marketplace in Tasmania, exporting to the mainland, exporting overseas. We have record exports in agriculture, $740 million plus, which is encouraging and 30 per cent of that goes off to China and other markets in the US and around Asia.
We are doing what we can to keep the costs of business down and it seems to be working but there is a lot more work to do and we are getting on with the job.
Ms OGILVIE - Minister, I refer you to Aurora Energy's Corporate Governance principles, in particular page 29 of the short booklet I have, hopefully it is the same page reference for you. Principle 3 - To promote ethical and responsible decision-making, and the sub-set, Right to Information disclosures. I note there is only one RTI request and then underneath that we learn it wasn't able to be fulfilled in full. I am wondering what that request was for and the reasons for it seems only partial disclosure?
Mr BARNETT - I will see if the CEO or one of the officers can assist the member with the answer.
Mrs KARDOS - Thank you. I invite Mr Cousland to come back to the table, our Company Secretary and General Counsel.
Mr COUSLAND - In relation to that, we had one customer request information about their file, their transactions with Aurora Energy. We gave the vast majority of information to the customer. There were some elements we had to hold back due to them being internal deliberative information of Aurora. I also add that, as a general rule, we have a practice of proactively disclosing information when requested by customers so usually we will not require them to make a formal request and pay a fee.
Ms OGILVIE - If they ring up you generally give them what you can?
Mr COUSLAND - Yes, that is right.
Ms OGILVIE - Is that why you think they are so low, that you have had so few RTIs.
Mr COUSLAND - Yes, that is right.
Ms OGILVIE - Thank you for that.
Mr O'BYRNE - Minister, off the back of your Dorothy Dix about the cost to businesses importing, that you support business. We wholeheartedly agree. We have been contacted by a number of electricians in the building and construction industry, particularly new builds, who are extraordinarily frustrated with the delay in getting meters built in or delivered on site and connected. It is costing jobs. It is costing investment. It is frustrating.
Traditionally, the wait for the meter boxes would be a fortnight in many years of experience. It has now blown out to over a month and we are hearing of even longer delays. Minister, how is this acceptable? It is costing jobs, it is frustrating for business, it is costing investment and reducing the profit for a range of companies because of their frustrations in getting a meter box built in.
Mr BARNETT - There may be a bit of a crossover in your question with TasNetworks and the rollout of some of their work and the services they provide to connect businesses to the network. Obviously there is a crossover with Aurora Energy, so I think there are two parts to the question and I will see if the CEO can assist you with that answer.
Mrs KARDOS - As Grant Russell mentioned earlier, there are specific time frames that we have to adhere to in terms of metering installations, either 15 days or six days. As Grant mentioned earlier, there have only been five occasions where we have been outside of those time frames. I am more than interested in hearing the specifics you are referring to of the customers, but from our understanding, for the 26 000-odd customers who have received an advanced meter since that new rule change came in, we have met those required time frames.
Mr O'BYRNE - When does your time line start? That is a big part of the issue, isn't it? We are hearing from a whole lot of electricians. They go to the Metering Dynamics website - which is essentially Lendlease which has a shopfront down here; it is a Queensland government-owned company - they lodge and it is over a month before they actually see the end result. When does it start for you? When do you receive it and how does it work? There is a whole range of small business people who are extraordinarily frustrated by this. They blame you, they clearly blame the Government, and it is just not acceptable that this is allowed to occur.
Mrs KARDOS - I will get Grant to run through how the handover points work and also some of the proactive measures we have taken. There are many fingers in the pie for metering installations, depending on the nature of them. Grant can talk about some of the proactive measures we have taken to bring all the parties together to get the best outcome for customers.
Mr RUSSELL - To answer your first question, the point of supply becomes the clock, if you like. The clock starts ticking when the point is established to the site. Once the site actually has power, that is when the six days start.
Mr O'BYRNE - For Aurora?
Mr RUSSELL - Yes. Prior to that there will be a whole range of electrical works done, which we and TasNetworks, ourselves, means us putting service orders into the market to get subcontractors - effectively Lendlease and Metering Dynamics - to action the work. Metering Dynamics' process is initiated from us, effectively -
Mr O'BYRNE - Sorry, can you repeat that?
Mr RUSSELL - The Metering Dynamics process kicks off when we put the service order through, so we will then initiate that part. That is all done within a six-day time line for a new connection, six days of supply being put to premises. Unfortunately we cannot control when supply gets to premises but once it does get there we will ensure we have done it within the six days of work we are actually allowed. We are currently doing that within about 2.4 days on average for a new supply.
Mr O'BYRNE - We are hearing that the contracting out to Metering Dynamics has added a significant level of complexity and poor service delivery to electricians and builders. I understand in terms of your ringfenced responsibility, but has contracting out that work to essentially a Queensland-based company with a shopfront here with Lendlease added a level of complexity for builders? That's what they are saying.
Mr BARNETT - First of all, the priority of our Government and Aurora Energy is to do it as quickly and as efficiently as possible. Grant has outlined the record that is on the public record in terms of the response over the last 12 months. Second, you are referring to Metering Dynamics and they employ Tasmanians in Tasmania as field workers mostly out in the field. I am just making that point. I will see if Grant would like to add to that answer.
Mrs KARDOS - I am happy to take it, if that is okay.
Mr BARNETT - Of course.
Mrs KARDOS - With the national Power of Choice reforms we saw a fundamental change to how metering happens. The previous arrangements meant the network business was fully responsible for metering. In December 2017 we saw this significant change where the responsibility of metering went from the network business to the energy retailer, and the energy retailer then chooses who their metering coordinator is.
As part of that change, we went out to tender and Metering Dynamics was selected. We have been progressively working with all the various counterparties involved in metering to ensure that that transition, which had been in place for several decades, was as smooth as possible. However, it has been quite complicated. Sometimes these national reforms take some time to shift, and we appreciate that for a number of our customers there have been delays. I know for a fact that we have been very proactive in how we are putting in place arrangements to make that change less onerous so that our customers are not impacted. I will get Grant to outline some of those proactive things we have done to try to smooth out the challenges we have incurred through this national rule change.
Mr RUSSELL - The first thing I will say is Lendlease is more than a shopfront; so Lendlease scheduling, Lendlease work ordering and Lendlease field force management is all done on-island and undertaken in Tasmania. So it is more than a shopfront at Lendlease. Metering Dynamics was recognised as one of the best meter providers that existed within the national market. We have better outcomes in Tasmania than any other jurisdiction with gas metering, whether that is exchanges or new installs. In terms of time lines, we have actually implemented the rule change better than anyone.
We have had to be flexible enough to change how we interact on a daily basis. We have invested heavily with these home builders and others and arranged a workshop to look at the process and how we could amend that to make it better for all. We have implemented a contractor helpline and we have an email address directly answered. We have after-hours services and are working with the Department of Justice in finalising a metering manual, again to assist ECs here. We attend each G-Cell meeting and proactively present and go through and manage issues.
There is a whole range of factors which impact on installing a meter. It is not just Metering Dynamics, or Lendlease, or Aurora, or TasNetworks. We have a very good relationship between Metering Dynamics, Aurora Energy and TasNetworks. We have worked really hard to make sure the three of us can actually work together to do tee-ups for jobs where both parties are involved. That tends to be the area where there is the biggest risk in terms of a job when there is more than one entity involved. We have worked really hard to try to lessen that. Is it perfect? It is not perfect today, but we have done more meters than any other jurisdictions in terms of volumetric and percentages.
Mr O'BYRNE - We understand the guidelines that have been enforced on the businesses in terms of which bit they do and the responsibilities. But it is pretty clear that it could have been completely reasonable for that service to be taken in-house and those workers from TasNetworks who were doing that work to be moved across to Aurora to continue that work. It is a business decision you have taken not to take those workers on. You have contracted out the work.
I understand the difficulties with dealing with multiple interests in negotiating which piece of the pie you manage, but you have gone from having two now to three. Regardless of national benchmarking, the end result has been that instead of the two-week turnaround it is now over a month, and that is costing jobs and costing businesses money. We think that is unacceptable. So, minister, could you provide some comfort to us that this is being acknowledged as a problem and having month-long waits for something that was delivered in a matter of seven to 14 days is unacceptable.
Mr BARNETT - Thank you for the question raising those concerns. It is important to Government that business is getting on, doing what they want to do and employing Tasmanians. It is a top priority. National rules and regulations apply to Tasmania, as you've indicated in your opening remarks, which is true, so we've responded to that. In 2017, Aurora Energy thought carefully about that, considered the pros and the cons, to ensure that we get the best possible outcomes for Tasmania. I will ask the CEO to outline some of the key principles that underpin that. Some of the principles are like getting value for money, energy efficiency outcomes - doing what we or Aurora Energy does best - metering is a different and complex -
Mr O'BYRNE - A Queensland company is not really 'Tasmania first', is it?
Mr BARNETT - My point is that metering and implementing and rolling out those meters is a particular role and responsibility. The CEO can outline to you how important it is that we get the best outcome for Tasmania and Tasmanians, and to keep the downward pressure on prices. I will see if the CEO can add to that and outline some of those key principles.
Mrs KARDOS - When the national rule change came into effect we had no metering capability. In the time needed for us to build that expertise in-house, we wouldn't have been able to meet the December 2017 time line, which is the fundamental fact. Our strength as a business is our understanding and focus on customers, so we made the decision to go out to tender for metering coordinator services.
We did that in late 2016, we went out to tender for those services. Unfortunately, no Tasmanian businesses tendered for that work. We had a range of tenders received and Metering Dynamics was determined as the best to deliver those services through their employment of local electrical contractors. I appreciate the points that you're making but the business decision we made was that we were better off contracting those services from a reputable company with proven ability in that area so we could get the most value for money outcome for Tasmanians.
Dr WOODRUFF - I understand that after the implementation of what was then the new billing system in 2011, customers who export their power to the grid through solar generation have been receiving an incorrect graph on their bills, which estimates their average daily usage, and also that the billing period comparison information is not correct. On the bill, the exported energy has been counted as energy that is used as well. It looks as though a person's electricity usage may have gone up or down relative to last year but it's meaningless. It's not possible for a person to disaggregate how much they're producing and how much they're using so that they can reduce their power bills and monitor their usage properly.
This was raised in 2011 and it has been repeatedly raised with Aurora. The Energy Ombudsman also raised it. Aurora has put a disclaimer next to that graph on the bill, perhaps as a way of getting out of this inaccuracy. It refers people to the website to get more information but the website doesn't have any information about the graph; it did not when we looked. Can you please tell us when this problem is going to be fixed and when the website will be updated, so people can get some more accurate information because it's very confusing and frustrating for people who want to be able to reduce their power bills?
Mr BARNETT - I appreciate the question. It is a technical and operational matter dating back to 2011 and since then, so I'll ask the CEO to respond to that question.
Mrs KARDOS - Yes, you are correct. For solar customers exporting energy into the grid, that isn't accurately reflected in those consumption graphs. The consumption graphs on the bill is a requirement under the National Energy Customer Framework. When the framework was first established it did not take into consideration that customers could export energy back into the grid, hence the thing. We have done a cost-benefit analysis in terms of making those amendments. However, it is quite a costly process.
Where we have invested our resources, as I mentioned previously, is in looking at the information needs of solar customers and how we can best meet them. That is why we are bringing a new product to market in January 2020, called Solar Plus, which will provide more information than those usage graphs to assist solar customers in understanding when they are exporting energy and how they can make more energy-efficient choices.
Dr WOODRUFF - Minister, does that mean that when Solar Plus is introduced it will fix this problem, that people will know exactly how much they have exported and how much they are using?
Mr BARNETT - I will ask the CEO to respond.
Mrs KARDOS - For those customers who select the Solar Plus product, I think they will find that we don't have those consumption graphs. Those consumption graphs are quite prescribed through the national rules. What we have been able to do through the Solar Plus product is show what their daily usage is and how much they are exporting into the grid at points of time during the day. We have been able to overlay weather data, so it is much more exhaustive. It will provide a lot more detail than those graphs on your current energy bill do.
Dr WOODRUFF - They are wrong at the moment and they have been wrong, so we have been in breach of our conditions under the national requirements by providing wrong information to solar customers. Will Solar Plus be free, or is there going to be a cost? Will solar customers get information about how much power they are using; at no cost, as is their right?
Mrs KARDOS - In answer to your question of are we in breach of the National Energy Customer Framework because we are not offsetting the solar, no, we are not in breach. As I said when I answered the question regarding the National Energy Customer Framework, those graphs were never designed with the intent of export energy. That is why we have included the disclaimer on those. In terms of the Solar Plus product, there will be a product service fee associated with that and that will be 11 cents per day as per the product service fee that we charge on PAYG+.
Mrs RYLAH - Minister, I remember well the excitement about the introduction of the Tasmanian energy efficiency scheme in 2017, where there was a collaboration. It has now come to an end after two years. How many people has this benefitted and what sort of benefits have they been able to achieve?
Mr BARNETT - That is a good question because it had a lot of interest at the time. It was a bit of a nation-leading effort on Tasmania's behalf. We could see the benefits for Tasmanian customers, and we had that agreement with Westpac and Aurora Energy working together with the government. The TEELS program has rolled out some $37 million worth of benefits in terms of no-interest loans to an estimated 9000 Tasmanians since May 2017. I visited many homes that benefitted from the TEELS program. That was a no-interest loan to support energy efficiency in terms of solar panels, or it might have been energy efficiency measures in the home, such as heat pumps or special curtains; any measures that could be demonstrated to provide that energy efficiency for the home, and it was really appreciated.
The uptake was fantastic, year in, year out. The CEO may wish to add more in terms of the benefits to customers and what products were used. I should mention that we still have the NILS program, which is $1 million over the next four years. That is the no-interest loan scheme for vulnerable Tasmanians and we are continuing those efforts. We are pleased and proud of that effort. We had interaction with TasCOSS, the Renewable Energy Alliance, and other community groups and organisations. I will see if the CEO could add to that in terms of the benefits and the types of products used.
Mrs KARDOS - The TEEL scheme is a unique collaboration between the Tasmanian Government, ourselves and Westpac. We were overwhelmed by the response of Tasmanians to the scheme, whether that be a residential customer or a small business customer. I will ask Grant who will give it more colour than I can in relation to the uptake, the investment in terms of the customers who did participate in the program.
Mr RUSSELL - There were just shy of 4300 residential applications for the scheme and 162 business applications. In running order, solar panels were the biggest product request. There were 2500 requests for solar panels; reverse cycle air-conditioning, which tends to be the most efficient form of heating, 2300; down to triple glazing and we know that during the period there was probably a 3-4 month wait on glazing, 2000 applicants; just under for double glazing and triple glazing; all the way through to curtains and blinds, 1200. There was a broad range. Industrial refrigeration, 17 companies benefited from industrial refrigeration. Wood heaters, there was 836.
There was a broad spectrum of products available for customers to seek. We also amended the product range during the program. We had feedback from a window company around sealing windows, to make the windows in the house more efficient. We expanded the rule of the product roll and what products were available for people to benefit from. The range was significant. The number of applications was over 8000 that went through us as the financial partner.
Mr O'BYRNE - On page 23 of your report, you outline a number of performance measures. One of those goes to employee engagement. You had a 2018-19 target of 65 per cent. You only reached 41 per cent of that. Do you want to make some comments around that? It is not great.
Mr BARNETT - Thanks for the question. CEO?
Mrs KARDOS - You are right to point out that the result was nowhere near what we have hoped for. It is a key focus for board and management in terms of how we can ensure that our people are engaged, are proud of what they do. We know from our customer service KPI, our net promoter score, they do a phenomenal job. If any of you ring the Aurora Energy Customer Service Centre I can guarantee that you will have a fantastic experience. Hence, that net promoter score of + 48 demonstrates that. This is a continuing area of focus.
We have been actively working together with our employees over the last few months on re looking at our organisational values. I am pleased to advise that the board approved those values at the board meeting last week. These organisational values - this underpins how we do things at Aurora Energy. They have been co-created with participation from every single employee at Aurora Energy and will be rolled out across the entire business in 2020. Those four values will ensure that we work collaboratively together and we continue to all be very focused on our customers.
One of the great things about being an employee of Aurora Energy is we are a customer, we are a shareholder and we are also an employee. We will continue to focus on that, and on ensuring we have great connection with our people because they do a phenomenal job. It is just that sometimes our processes and our systems prevent them from doing it as well as they would like to. That is what drives those engagement scores.
Mr O'BYRNE - Thank you for that answer. Values are crucially important. They drive an organisation. One of the values that many employees value and hold in high regard is their employment security. My understanding is that you have a labour hire company you engage and then when people work through your labour hire company for a period they then move to a short-term contract if they move into a role, a short-term contract with Aurora. My understanding is, and it's been told to me, that you haven't employed a permanent staff member beyond short-term contracts in a number of years. That can't be right. Is that right?
Mr BARNETT - I ask the CEO to respond to that question.
Mrs KARDOS - When Aurora Energy was established in 2014 as a standalone energy retailer, when the sale was abandoned, but we still had a statement of expectations that we were to retain flexibility for future sale, there was a question around whether we would be sold or not sold. As a business we made a decision at that point to offer maximum term contracts, not permanency. We have been in active discussions with our people around that. It was a key point that was raised in the last enterprise agreement negotiations. Now we do offer permanency off the back of that feedback, and also because we do think the likelihood of sale is probably low. I appreciate that is a policy position for government.
We are very committed to providing our employees with employment security. We know this is a big issue. It was raised as part of our enterprise agreement negotiations. I'll hand over to our General Manager, People and Commercial Services, Kane Ingham, who can talk about the approach we took in making sure that employees can have employment security at Aurora Energy.
Mr O'BYRNE - If through that answer we can get the number of how many have actually been employed permanently, that would be good.
Mr INGHAM - Just back to Rebecca's point around the previous conditions, holding the flexibility for future sale was key to that. Following the EA we spoke to our people and found this was an issue, that security mattered to them a lot, and that the employment agreements that were in place weren't meeting their security needs. We are undertaking a process now where we are reviewing employment agreements across the organisation, where appropriate. We're putting our workforce onto permanency status. That process has begun now and we expect by March next year that process will have concluded.
In terms of the actual numbers, I'll just take that on notice and come back.
Mr O'BYRNE - Is it a handful? Is it a dozen? Is it zero?
Mr INGHAM - No, it's not zero. It's certainly not zero. I'll take it on notice.
Dr WOODRUFF - Minister, just a couple of questions on future risks for Aurora. First Energy joined Aurora earlier this year in making options for people in the retail energy market. Has Aurora noticed any drift of customers to First Energy, and has this already affected the bottom line? What are the expectation going ahead? Is there some better deal that First Energy is providing, or not?
Mr BARNETT - It is a fair question because you have referred to First Energy. I make it very clear from the Government that we welcome competition in the marketplace in terms of energy retailers in Tasmania and in the energy sector, providing consumers with that choice going forward. It has certainly increased competition in line with our Government's policies as a Tasmania First energy policy focused on delivering lower prices, wherever possible. Consumers choosing retailers other than Aurora enter into that market, not regulated contracts, and should ensure they understand the terms and conditions. So, First Energy is one of those.
For a more specific answer, I think if the CEO could indicate the customers and the numbers, and you asked about the drift. So, if the CEO could answer that question.
Mrs KARDOS - We've been competing in a contestable market for our large customers and small business customers for a long time and now we have competition in residential as well. I think at Aurora Energy we fully support customer choice, whether that be product choice or choice of retailer. It empowers customers to demonstrate 'this retailer is meeting my needs better than another retailer'. From our perspective, we also encourage competition. It is good for our business as well.
I can't comment on First Energy, obviously. I can only comment on Aurora Energy and the business that we have. Yes, we have seen some customers choose to leave Aurora Energy. It has not in any way materially affected our financial performance. We've also had customers who have chosen to come back to Aurora Energy.
Dr WOODRUFF - The numbers, as a percentage of the customers? If you take those going and coming back, where are we at?
Mrs KARDOS - It has been less than 1 per cent.
Dr WOODRUFF - Okay, very small. Minister, thank you. Aurora's annual report, under 'financial mismanagement', identifies energy price as one of the primary risks that Aurora is exposed to. Are you worried about the potential $3.1 billion Marinus price tag and how that will flow in and affect the energy prices in Tasmania and the cost of electricity provision by Aurora to people in Tasmania, their household or business electricity prices?
Mr BARNETT - It sounds like a Dorothy Dix coming from the member opposite. First of all, I'm confident about Aurora Energy and its sustainability and profitability. As I said in my opening remarks, we are facing challenges and headwinds. That will be a challenge to Aurora Energy going forward. With respect to the Marinus Link, which is not directly relevant in my view, but nevertheless -
Dr WOODRUFF - It's a $3.1 billion price tag for Tasmania to suck up somewhere in the area of business.
CHAIR - Dr Woodruff, would you allow the minister to answer the question please.
Mr BARNETT - We know the Greens' views with respect to major renewable energy development, which is very disappointing and is not supportive of that.
Dr WOODRUFF - You have never been clear about who is going to pay for it.
Mr BARNETT - Notwithstanding the Greens' position, the Government's position is very supportive of Marinus Link. It is subject to a business case assessment, which is due for release in the not-too-distant future. You will be able to make your own assessment then. I encourage you to have a further view of that and express your views accordingly at the time. We are very positive about the opportunities to put downward pressure on prices, to ensure energy security, to deliver massive investment in jobs in Tasmania as a result of a second interconnector in Marinus Link. The opportunities for the state are massive.
Dr WOODRUFF - Where are the risks that are referred to in the report coming from then?
Mr TUCKER - Minister, we know in Lyons how important community is and we are seeing this with our Tassie businesses and what they are doing in our community. Can you highlight what Aurora Energy has been doing in the community over the past 12 months?
Mr BARNETT - I can and thank you for the question. They have been very busy and I've been out and about with Aurora Energy, the St Helens District School in your patch, member, and you might recall - I recall very fondly meeting with the kids and the teachers, and the important role we had in improving food and cooking opportunities for those kids at St Helens District School. Likewise, the Fingal Valley Neighbourhood House is a very important part of the Fingal Valley. I know you know, John Tucker, that those grants have supported those two organisations providing amazing food programs and benefiting those local communities, encouraging and teaching participants to live a happy and healthy lifestyle. They do a whole lot more than that.
Giant Steps Tasmania is another organisation that was a grant recipient. They provide grants of up to $5000 to community groups, 80 not-for-profit organisations across the state and I have just mentioned a few. That support for the community program during the 2018-19 year was quite extensive. I am proud of their efforts. They are part of the community. They want to support Tasmania. They are for Tasmania, employing Tasmanians. A final example is the Alannah & Madeline Foundation enabling all of the grade 6 students in Tasmanian government schools to access eSmart Digital Licence. They are pro the values that we have as a Government and I think the community has. They are out there trying to make a difference for the local community and Aurora Energy are doing a terrific job in delivering that.
CHAIR - Thank you, minister. The time for scrutiny has expired. The next government business to appear before the committee will be Tasracing at 2 p.m.
The Committee suspended at 1 p.m.