The South Australian Electric Light and Motive Power Company was formed in 1895 and was authorised to provide power throughout the colony of South Australia. Previously, municipal councils had been empowered to provide electricity within their areas, but none did so. The company started to supply electricity from its Nile Street generator to Port Adelaide on 1 January 1899. Over time the company extended electricity supply to most of the settled areas of the state. Ownership of the company passed in 1904 to the privately owned and London-based Adelaide Electric Supply Company (AESC). In August 1923, AESC opened the Osborne 'A' Power Station near Port Adelaide on an 84-year term lease. The boilers in the power station initially used black coal imported from New South Wales. Until 1946, it held a monopoly over electricity supplies in Adelaide.
During the Second World War, coal supplies became critically low. The state government sought to establish a reliable long-term source of coal for the state and the sub-bituminous coal from the Telford Cut at Leigh Creek, South Australia, though of poorer quality, was considered the most viable source. The deposits seemed extensive and extracting the coal by open cut methods was considered feasible. Exploratory boring started in 1941 and plans were made to develop the first open cut mine. The South Australian Government led by Liberal and Country League (LCL) Premier Tom Playford had committed to the use of Leigh Creek coal, and excavation started in 1943.
In 1946, AESC refused to use Leigh Creek coal as proposed by the government, even going to the extent of buying boilers that could only use black coal. Playford responded by requesting Commonwealth funds to nationalise the company, which was provided by Labor Prime Minister Ben Chifley. The Electricity Trust of South Australia (ETSA) was created in 1946 for the nationalisation of AESC. The LCL suffered a split in its ranks because of the nationalisation, and the state legislation passed only with the support of ALP and independent members of parliament.
Work on the Osborne 'B' Power Station started in 1947 and was completed soon after. The boilers at the Osborne Power Stations were modified to burn Leigh Creek coal.
In 1948, control of the Leigh Creek coalfield was transferred to ETSA, its largest user.
ETSA built major power stations near Port Augusta: Playford A was completed in 1954, Playford B in 1963 and later Northern in 1985, and on Torrens Island. The combined Playford A and B plants had a total generating capacity of 330 megawatts (440,000 hp). Northern Power Station was fuelled by Leigh Creek coal. The use of large excavating machines and efficient mining equipment at Leigh Creek, together with the rebuilding of a railway line between Leigh Creek and Port Augusta by the Commonwealth Railways, resulted in economic production and delivery of coal to the power station. Pacific National provided the coal freight service from 2001.
After the State Bank collapse in the early 1990s the State was left with a large debt after fulfilling its obligation to bail out the bank. In the lead up to the 1997 state election, the incumbent Olsen Liberal government pledged not to privatise ETSA. However, after being re-elected, the government proceeded with privatisation plans citing the dire financial situation of the State, and claiming to be confronted with new information such as a warning from the State Auditor General and the introduction of the Australian National Electricity Market.
Following the 1997 state election, the Olsen Liberal government needed the support of an additional two non-Liberal upper house members to pass legislation, with the Australian Democrats retaining the balance of power on three seats. However, defectors from Labor in the upper house, Terry Cameron and Trevor Crothers, brought independent member Nick Xenophon in to play. In 1998, Xenophon voted with Cameron and the government to proceed with the second reading of the ETSA power sale bill. The bill became law when Cameron and Crothers voted with the Liberal government. They subsequently resigned from the Australian 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. However, 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 purchaser of the distribution business took the name "ETSA Utilities" (later renamed "SA Power Networks"), 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 and 3 billion over a ten-year period.
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.
ETSA expanded the electricity distribution network to areas where there was previously no supply, or only low voltage (32 volt) supply generated locally. By the end of the Playford era, South Australia had one of the cheapest and most efficient electricity networks in the world. The same low price for electricity was charged in Mount Gambier as it was at the point of production at Torrens Island.
Following the deregulation 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. Further price increases followed, and by 1 July 2017 led to South Australia having the highest electricity prices in the world.
- Electricity Supply Industry Planning Council
- Essential Services Commission of South Australia
- SA Power Networks
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- PRIVATISATION Selling Australia - the price we pay, Advertiser (Adelaide). 3 June 2004.
- South Australia power prices to rise to highest in the world on Saturday, energy expert warns ABC News, 28 June 2017. Retrieved 31 August 2017.
- Adelaide's infamous cock-ups: The lasting legacy of big decisions in the City of Churches ABC News, 24 August 2017. Retrieved 31 August 2017.