Breakup in the 1990s of Electricity Trust of South Australia into units, anticipating national power market
The Electricity Trust of South Australia's headquarters on Greenhill Road, in the Adelaide suburb of Eastwood, from the 1960s. The building later became the Air Apartments and AGL, who replaced ETSA electricity retail role, built offices next door.
A significant phase that started the restructuring of the Electricity Trust of South Australia (ETSA) was Robin Marrett taking over as chief executive in 1988 when Leon Sykes retired as general manager.
Marrett was the first head the organisation without previous history in it or electricity supply. Bringing his global experience with a major oil company, Marrett believed public utilities had be in step with their customers and the demands of their market.
ETSA was in good financial shape with plenty of engineering expertise and decades of achievement. But Marrett saw problems: lack of forward planning; high electricity tariffs; financial returns on assets were low; a highly-centralised organisation with management performance never adequately assessed. The state government also saw ETSA as uncompromising and inflexible, egged on by the nationwide push for more efficient management and workforce in the public electricity utilities.
Marrett’s emphasis on a customer-oriented organisation with a commercial outlook was in line with the reforms envisaged by the Australian government. Reform of ETSA involved reorganising its activities and a big cut in staff numbers. A change of government from Labor to Liberal in South Australia in 1993, an audit commission report, and the passing of the Electricity Corporations Act 1994 began the move towards the ETSA Corporation being broken down into business units, one of being ETSA Transmission.
Transforming the picture on a wider scale was the endorsement of a real-time pricing market for electrical energy, with the unique concept of a National Electricity Market Management Company (NEMMCO) to act as both the electricity market manager and the independent system operator to manage energy trading and the security of the power system. As soon as NEMMCO was in position to take over coordinating preparations for the National Electricity Market, the national grid management council was to be phased out.
In South Australia in 1995, there was still some uncertainty about how far ETSA should be divided. The federal Industry Commission was invited by the state government to review the South Australian electricity industry's future. The review saw a clear need to establish a completely separate transmission and distribution and have at least two or three generators in the state promote supply-side competition. The state government at that time wasn’t fully convinced and it only allowed a minor restructuring.
As a further compromise, from January 1, 1997, the generation entities were totally separated out from ETSA and placed into one company – the South Australian Generation Corporation. To satisfy the national competition commission framework for the coming National Electricity Market, a structure with three separate generators, a separate transmission entity, separate distribution entity with a potentially separate electricity retail entity, and a separate gas trading business was eventually proposed by the state government.
Also in 1997, a critical phase of the National Electricity Market was introduced with limited electricity trading between Victoria and New South Wales. This saw the entire Australian electricity industry positioning and restructuring to ensure their place in this new national marketplace.
