Do you do business with or have contracts with the State of NSW? Do you own bonds in the NSW Government? Would you have done so if you knew the NSW Government would unilaterally rip up your contract or change the terms of your agreement without your consent? Barry O’Farrell has done just that with the Solar Bonus Scheme.
The NSW Solar Bonus Scheme worked like this: You invest a few thousand dollars out of pocket in a solar power generation system which is connected to the NSW AC mains power grid through an inverter, which converts the panels’ DC output into 240V AC power. The AC power your system feeds into the grid is bought by the State of NSW at the contractually agreed feed-in tariff rate of 60c per kilowatt-hour (kWh). If your system generates more power than you use in your home, your power bill is zero and the NSW Government sends you a cheque for the difference. If you use more kilowatt-hours than your solar panels feed into the grid, the value of the amount you generate is taken off of your electricity bill.
I’m a pensioner, which means I have next-to-no disposable income and certainly no savings. My savings account has a $0 balance twice each month, on the same day my pension payment is received, as it all goes out on bills and living expenses. You might say my budget is extremely tight- it’s calculated to the penny every month.
When former NSW Premier Kristina Keneally announced on 27 October 2010 that she was cutting the feed-in tariff on the Solar Bonus Scheme from 60c to 20c/kWh as of midnight on that date, I had to make a snap decision as to whether or not to participate. I searched around a bit and found that Origin Energy was offering a 1.5kW solar package for $2990 on a 2-year, interest-free basis with a $299 down payment and repayments of $112 per month. The 1.5kW system was described as producing an annualised average of 6kWh per day. At a feed-in tariff of 60c/kWh (and barring an excessive amount of cloudy weather), the system would produce about $108 worth of feed-in tariff (FiT) income per month, coming within $4/month of paying for itself. The cost of the feed-in tariff meter and installation would be $300, over and above the cost of the installed solar panels and inverter.
Given that I believed the NSW Government had a contractual obligation to maintain the 60c/kWh FiT rate for those who signed up for installation before midnight on 27 October 2010, for the life of the scheme (until July 1 2016), I decided, in good faith, to bite the bullet and borrow money for the $299 down payment and $300 FiT meter and installation cost. The system’s estimated $108/month output would come very close to covering the 24 months worth of $112/month repayments to Origin. My $599 capital outlay would be covered by about 8-9 months of FiT income. Any FiT income thereafter would go towards offsetting my electricity costs, until the end of the scheme in 2016.
However, despite his explicit pre-election promise to honour all existing Solar Bonus Scheme contracts if elected, new Liberal NSW Premier Barry O’Farrell has now decided unilaterally to breach existing Solar Bonus Scheme contracts. O’Farrell plans to retrospectively cut the FiT rate to 40c/kWh, which means that my solar generation system can produce no more than $72/month worth of FiT income. Instead of being $4/month in the red ($108/mo FiT income, less $112/mo repayments to Origin), I’ll be $40/month in the red.
When your total monthly income as a pensioner is less than $1460- and it’s ALL committed, every single month- $40 less per month means something! What it means is $10/week less for groceries- and I only spend about $40/week on groceries now. BAM, 25% cut in my food budget! Would Mr O’Farrell have me supplant my now dented grocery budget from the local food bank? Perhaps sit with a tin cup and beg for coins in front of Roza Sage’s office? Dr Sage has already replied to a letter I emailed to her last evening, with her clear sentiment that she doesn’t give a damn about my problems and the present NSW Government is going to retrospectively screw anybody on the Solar Bonus Scheme, no matter how much they have invested and no matter their financial situation.
If bonds rating agencies are not considering revising the rating applied to NSW Government bond issues, they should be. Anyone who is party to a contract with the NSW Government should hedge their bets because the NSW Government is simply not trustworthy.
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