Costly Miscommunication

Energy Minister Peter Collier has blamed a breakdown in communication with energy provider Synergy for the $46 million solar scheme cost blow out.

Mr Collier has come under fire after it was revealed the scheme’s estimated cost was more than tripled, with the final bill likely to be even higher after it took the government a whole month to end the scheme once capacity was reached.

The scheme pays residences with solar power systems for feeding their excess electricity into the electrical grid.

The original cost estimate of $28.2 million increased to $114 million after the scheme proved more popular than expected.

In an attempt to contain the price result from the soaring demand, the government imposed a cap of 150 megawatts for the scheme, but the actual cost rose to $180 million after the cap was breached by 15 megawatts.

Energy Minister Peter Collier told ABC radio yesterday that although there had been a cost blowout, the extra costs were not a result of the scheme running a month longer than it was meant to.

“The blowout in terms of funding was not because we took a month to close the scheme,” he said.

“The notion that the blowout is a result of the extra month is abject nonsense and scare mongering.

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“The vast majority of that comes from the 13,000 extra applications that came through from budget time until the end of June.”

Mr Collier said the issue was due to incorrect information and a breakdown in communication between Synergy and the Office of Energy.

He had been wrongly told the scheme was approaching the half-way mark of around 70 megawatts close to budget time in May last year.

“The information we received was blatantly wrong”, he said.

“I can only go on the information I was provided.”

In actual fact the figure was much higher and less than two months later he was informed the scheme was nearing the cap of 150 megawatts, which was then reached in late June.

Mr Collier defended the decision to allow the scheme continue running for a further month until August 1.

“We decided to hold off (on closing the scheme) until we had the most forensic figures available,” he said.

By this stage applications had slowed down, he said, with the cost blowout a result of applications launched before June.

There had been “a disconnect between the Office of Energy and Synergy,” Mr Collier said, with Synergy providing data for the number of solar installations, which the Office of Energy actually thought was application data.

Mr Collier admitted the breakdown in communication needed to be rectified.

“We’re not impressed, and we need more rigour in the offices,” he said.

Despite the blowout Mr Collier insisted the scheme was not a failure, citing the popularity of the scheme, which saw 76,000 households signing up and stimulating the solar industry.

Shadow Energy Minister Bill Johnston said the blowout was an example of the chaos Mr Collier had brought to the portfolio and said he needed to take responsibility for his performance.

He said it was concerning the Energy Department knew the cap had been reached and spent time discussing how to end the scheme with his department.

“Peter Collier knew as early as June 8 that the cap had been reached, what was going on in his mind?” Mr Johnston asked.

“This is a complete failure of administration by the minister; all these issues come back to his desk.”

Mr Johnston said Mr Collier left several elements out of his statements to the media, including the incorrect processing of applications.

Before the cap had been reached, 5,000 people had applied for the benefit but had been recorded as “zero value” and had not been taken into account for calculations, he said.

Mistakes such as these meant the cap had probably been reached in May, three months before the scheme finished, but the department did not realise it, Mr Johnston said.

“He [Mr Collier] says the outcome was good anyway because all these people have got solar panels, but how many people would have had solar panels at a lower cost to government?” he said.

“Clearly there was a better way to encourage people to get solar panels.”

Mr Johnston said it was the latest example of mismanagement, pointing to a 680 per cent increase in complaints to Synergy and the overhaul of the energy provider’s billing system, which had cost $93.4 million since its introduction in 2009, when the original budget was set at $38.5 million.

“The shambles of a billing system that he [he Mr Collier] said was fabulous,” Mr Johnston said.

“I asked him to show any statistics that show improvement with Synergy and he couldn’t do it.”

The Author

I took an interest in the Australian energy sector close to ten years ago and since then have monitored the trends, technologies and direction of the Australian Energy Market. I was drawn to the Australian solar market in 2008 and since then have worked heavily in the field. I am partnered with national and international solar energy companies, from manufacturers of solar panel and inverter technology, online software developers that introduce tools to quote, monitor and manage solar power systems and media organisations who like myself, closely monitor the solar and renewable energy sector.

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