Electricity Trust of South Australia

The Electricity Trust of South Australia (ETSA) was the South Australian Government-owned monopoly vertically integrated electricity provider. Its controversial privatisation in 1999 was one of the most important political events in recent South Australian history.

Establishment of ETSA

The Electricity Trust of South Australia (ETSA) was created by South Australian Liberal and Country League (LCL) premier Tom Playford through the nationalisation of the Adelaide Electric Supply Company (AESC) in 1946. Before then it was a private company (with headquarters in London) which held a monopoly over electricity supplies in Adelaide at the time. It was the company's refusal to use brown coal as advocated by Playford, even going to the extent of buying black coal only boilers, which triggered the request from Playford for commonwealth funds to nationalise the company - Labor Prime Minister Ben Chifley readily agreed. The LCL suffered a split in its ranks with regard to nationalisation, and the state legislation only passed with the support of ALP and independent members of parliament. [cite book|last=Crocker |first=Walter |year=1983 |title=Sir Thomas Playford: A Portrait |publisher=Melbourne University Press |id=ISBN 978-0-522-84250-0]

Contribution to South Australia's post-war growth

ETSA participated in the post-war growth and industrialisation of the South Australian economy, including providing modern and reliable power for regional areas.

As a vertically integrated generator, distributor and retailer of electricity, ETSA was responsible for the development of new energy sources (brown coal mined at Leigh Creek), two major power stations (Port Augusta and Torrens Island) as well as expanding the electricity distribution network to areas where there was no supply, or low voltage (32 volt) supply generated locally.

Disaggregation, privatisation and competition

After the State Bank collapse in the early 1990s the State was left with a huge budget deficit. At the 1997 State election, the incumbent Liberal (successor to the LCL) Olsen government pledged not to privatise ETSA. However after being re-elected they began plans to privatise it, citing the dire financial situation of the State, and claiming to be confronted with new information such as a warning from the State Auditor General and the introduction of the Australian National Electricity Market. With the Liberals not having the numbers in the Legislative Council, and unable to sway the Australian Democrats or independent Nick Xenophon, the legislation only passed after two Labor members, Terry Cameron and Trevor Crothers, supported the legislation and subsequently resigned from the Labor Party.

The privatisation involved the disaggregation of the vertically integrated business, with the generation, transmission, distribution and retail assets taken up by distinct investors.

Also, the South Australian Government retained freehold ownership of the generation, transmission and distribution assets, with the investors acquiring long term leasehold interests in the assets. Also, the Government introduced a regime of industry regulation, calculated to ensure that the public interest was protected and that safety standards are maintained.

The acquiror of the distribution business took the name "ETSA Utilities", while the acquirors of the other parts of the business adopted distinct identities for their businesses.

With privatisation came the establishment of a competitive retail market for electricity. The retailing component of ETSA was acquired by AGL. With the advent of competition, other electricity retailers entered the marketplace, offering consumers choice- competition focussing on tariffs and discounts for "bundling" of gas and electricity supply from one retailer.

Although the State's fiscal situation was substantially improved with funds derived from the sell-off, debate continued as to whether ETSA's privatisation has been to the benefit of the South Australian community. It was estimated that with higher electricity prices, the net loss from ETSA would total between $2-3 billion over a ten year period. [PRIVATISATION Selling Australia - the price we pay, Advertiser (Adelaide). June 3 2004.]

Following the de-regulation of the State's electricity market from 1 January 2003, AGL's electricity prices increased by an average 23.7%. This has been a political sorepoint for both the Labor and Liberal Parties in South Australia: with the Liberals having enacted privatisation, then the Rann government approving the price increases.

However in 2006, with a number of competing electricity retailers now in the market, many South Australian households have negotiated electricity contracts delivering reductions in price of up to 15% and substantially larger price reductions negotiated by businesses, however these still well-exceed the pre-sale supply price.

Notes

ee also

* ETSA Utilities
* ESCOSA
* ESIPC

External links

* [http://www.etsa.com.au ETSA Utilities] (operator of the distribution network)
* [http://www.electranet.com.au ElectraNet] (operator of the transmission network)