The Local Government Association of South Australia (LGASA) has revealed new research which shows that outdated legislation that gives large energy companies council rate discounts could be costing regional South Australians $6 million a year.
The Equitable Rating of the Energy Sector report, commissioned by LGASA, highlights electricity providers are not contributing their fair share to councils’ rating burden, leaving local residents and businesses to pick up the shortfall from their own pockets.
Rate exemptions have been ongoing since 1999, when the State Government at the time introduced ‘Rates Prohibition Clauses’ into the Electricity Corporations (Restructuring and Disposal) Act to try and maximise the potential sale price of South Australia’s electricity assets as part of the privatisation of the sector.
LGASA has worked closely with Member of the South Australian Legislative Council, Frank Pangallo, over the past 12 months on this issue, recognising the inequity of the current system, and discussed options to close this legislative loophole.
LGASA President, Mayor Heather Holmes-Ross, said that this legacy legislation serves no purpose today and should be removed to protect communities from having to subsidise the rates of big energy companies.
“For 25 years, local families and businesses have been forced to stump up and pay extra due to electricity generators enjoying a rates holiday – we cannot let this continue,” Mayor Holmes-Ross said.
“In the middle of a cost-of-living crisis, we shouldn’t be taking money out of the pockets of everyday ratepayers to cover the rates gap left by big energy companies – many of which aren’t even based in South Australia.
“Since the early 2000s, the amount of electricity being generated in South Australia through wind and solar farms has increased significantly, meaning the amount of rate revenue regional communities are forgoing has risen as well.
“Our state has a goal of net zero emissions by 2050, and there will continue to be significant investment in renewable energy projects in South Australia, with more electricity generators establishing themselves in our regions where land is most available.
“It is our regional communities who will be most impacted unless outdated electricity rating laws are changed.
“I thank Frank Pangallo MLC for the keen interest he’s taken in supporting our push to have this legislation rectified and we look forward to engaging further with him to address this long-standing issue for regional communities.”
Regional Development South Australia’s Regional Blueprint released in 2024 found electricity generation as a key growth area in coming years.
Mayor Holmes-Ross said that the Australian Energy Market Operator anticipated renewable electricity generation in South Australia could increase by 500 per cent in the next decade in a green energy exports scenario, meaning the time for action is now.
“All signs point to a massive influx of investment in renewable energy generation in South Australia over the coming five-to-ten years, which is extremely positive – but the longer we wait to fix this legislation, the bigger the shortfall in rates paid by electricity generators will be.
“Every new parcel of land used for electricity generation is eligible for the rates discount meaning other ratepayers will have to fund the growing deficit, which hurts regional communities.
“Other states in Australia, like Victoria and Queensland, already have laws in place that ensure appropriate rate contributions from electricity generators, and they have lower power prices than we do.
“The electricity market is national, all generators are price takers – they don’t have any ability to pass cost increases on to electricity customers.
“Removing rate exemptions won’t impact electricity prices, but it will mean electricity generators are paying their fair share.”
Mayor Holmes-Ross said while electricity companies would need to absorb rate increases, the cost of rates is negligible in their businesses and evidence shows the electricity sector has been earning massive profits for many years.
“What it will do is change the rules so that obligations to pay rates are shared fairly amongst all ratepayers, easing cost of living pressures faced by many households and businesses,” Mayor Holmes-Ross said.
“LGASA will advocate with all sides of parliament to remove these outdated rate discounts for electricity generators and remove the unnecessary burden from communities as South Australia enters a new phase of renewable energy growth.”
