South Australia's electricity grid is a lifeline, powering homes, hospitals, and businesses. Yet, its sole distributor, SA Power Networks, majority-owned by Hong Kong billionaire Li Ka-Shing's Cheung Kong Infrastructure, is raking in after-tax profits of $420 per customer annually, four-and-a-half times more than its sister company, UK Power Networks, makes in Britain ($92 per customer). This stark disparity, branded "super profits" by SA's Energy Minister Tom Koutsantonis, raises a critical question: what happens when we let globalist free-market zeal override common sense and hand strategic assets like electricity to foreign interests? The answer, as South Australia and parts of the United States show, is higher costs, reduced accountability, and a creeping threat to sovereignty that demands a rethink of regulation and ownership.
SA Power Networks, formerly the state-owned ETSA, was privatised in 1999 and sold to Li Ka-Shing's conglomerate for $3.5 billion. Today, it controls the "poles and wires" that deliver electricity to South Australians, accounting for about 40% of the average $1,911 household bill. Energy economics consultant Bruce Mountain, speaking at the London School of Economics, pointed out that cost differences between Australia and the UK don't justify the massive profit gap. He argues that Australia's regulatory system has failed consumers, allowing companies to exploit lax oversight for outsized gains. Mark Henley of UnitingCommunities echoes this, noting that pensioners are skipping heating in winter because of sky-high bills, while SA Power Networks pushes for price hikes to fund "gold-plated" infrastructure that critics say is overkill.
The issue isn't just profits, it's accountability. SA Power Networks claims its financial outcomes are set by the Australian Energy Regulator (AER), not the company itself, and boasts of being among Australia's most efficient distributors. Yet, the AER's silence and the government's limited clout leave consumers footing the bill for a system that prioritises corporate interests. Henley puts it bluntly: the rules, policies, and weak regulation have "heavily favoured the companies," leaving consumers with little power to demand fairness. When a foreign-owned monopoly controls an essential service, where's the incentive to choose local needs over shareholder value?
The United States isn't immune to this problem. Critical infrastructure, like energy grids, ports, and telecommunications, has increasingly been acquired by foreign entities, often with minimal scrutiny. For example, in 2006, the proposed sale of six U.S. port operations to Dubai Ports World sparked a bipartisan outcry over national security risks, ultimately forcing the company to divest. More recently, concerns have arisen over Chinese-owned companies like Huawei gaining footholds in U.S. telecom networks, prompting bans due to fears of espionage and data control. Even energy assets, like Texas's power grid components, have faced scrutiny as foreign investors, including Chinese firms, have sought stakes in utilities.
The U.S. faces a similar dilemma to South Australia: free-market ideology often trumps strategic caution. The Committee on Foreign Investment in the United States (CFIUS) reviews some transactions, but its scope is narrow, focusing primarily on national security rather than economic or social impacts. When foreign entities control power grids or water systems, they can value profits over reliability or affordability, just as SA Power Networks does. The 2021 Texas power crisis, where outages left millions freezing, wasn't directly tied to foreign ownership, but it exposed the fragility of profit-driven utilities in a deregulated market. If those utilities were foreign-owned, the lack of local accountability could worsen such crises.
The root issue in both South Australia and the U.S. is an overzealous embrace of free-market principles without enough guardrails. Privatisation and foreign investment can bring efficiency and capital, but when applied to essential services, electricity, water, healthcare, the pursuit of profit often clashes with public welfare. SA Power Networks' "super profits" illustrate this: a monopoly with no competition has little reason to lower prices or innovate for consumers' benefit. In the U.S., similar dynamics play out when private equity firms or foreign investors buy up hospitals or utilities, driving up costs while cutting services to maximise returns.
There's also a sovereignty angle. Essential services are the backbone of a functioning society. Handing them to foreign entities risks ceding control over critical infrastructure, especially in times of crisis. Imagine a geopolitical standoff where a foreign owner could, theoretically, influence energy supply decisions. Even without malice, their priorities, shaped by distant boardrooms, may not align with local needs. South Australia's pensioners shivering through winter are a case study in what happens when profit motives override community welfare.
So, how do we fix this? First, regulators need teeth. In South Australia, the AER must move beyond theoretical models and scrutinise actual outcomes, as Mountain suggests. Price controls should cap excessive profits, and infrastructure investments must be justified, not "gold-plated" for shareholder gain. In the U.S., CFIUS could expand its mandate to consider economic and social impacts, not just security. Both regions need transparent benchmarks to compare foreign-owned utilities against domestic or publicly owned ones.
Second, governments should rethink what's for sale. Essential services aren't just businesses, they're public goods. South Australia's experience with SA Power Networks shows that privatising monopolies without robust oversight is a recipe for exploitation. The U.S. could learn from this, imposing stricter limits on foreign ownership of critical infrastructure or requiring joint ventures with local stakeholders to ensure accountability.
Finally, consumers need a voice. Community advocacy, like Henley's work with UnitingCommunities, can pressure regulators and companies to prioritise affordability. In the U.S., grassroots campaigns have successfully blocked some foreign takeovers, like the Dubai Ports deal. Public awareness and political will can shift the balance back toward people, not profits.
Free markets have their place, but when it comes to strategic assets, blind faith in deregulation is reckless. South Australia's electricity woes, driven by a foreign-owned monopoly's "super profits," mirror risks in the U.S., where unchecked foreign investment in critical infrastructure threatens affordability and security. The solution isn't to demonise foreign capital but to regulate it wisely, ensuring essential services serve the public first. As Bruce Mountain puts it, "The proof of a cake is in its eating." Right now, South Australians and Americans are being served a bitter slice. It's time to rewrite the recipe.
"SA's electricity distributor makes four-and-a-half times more profit per customer than its sister company reaps in the UK.
SA Power Networks makes after-tax profits of $420 a year from each customer, while UK Power Networks makes $92.
Both entities are majority owned by billionaire Li Ka-Shing's companies. Experts say the figures show how SA's system favours companies ahead of customers.
The lopsided figures have been branded "super profits" by the State Government.
Energy economics consultant Bruce Mountain said SA Power Networks, the state's sole electricity distributer, must explain why its after tax profits per customer were so much higher than its sister company's.
"Cost differences between Britain and South Australia do not seem to explain such large differences in profits,'' he said.
"It is hard to see how the argument that both costs and profits should be higher in Australia than Britain can be sustained. Australia's regulators need to keep a beady eye on actual outcomes, not just theoretical models of what is happening.
"The proof of a cake is in its eating."
Mr Mountain, a director of energy economics consultancy CME, highlighted the figures at a symposium at the London School of Economics, based on the annual reports of the two companies.
He said the figures showed SA customers were suffering under a system in which the government regulator did not act in their interests. The Federal Government had an obligation to tilt the balance back towards the customer.
"It is not the UK system which is odd, rather the bizarre Australian outcomes reflect price controls that have allowed these regulated businesses to earn much more than is needed to satisfy lenders and investors,'' Mr Mountain said.
"It is time to get serious about fixing failures in the design and execution of regulation. But it should not stop there, the regulated businesses also need to be accountable for the way they respond to regulations.''
SA Power Networks (formerly ETSA) and UK Power Networks are majority-owned by Asian infrastructure giant Cheung Kong Infrastructure.
It means SA Power Network's ultimate owner is Mr Li, whose fortune of $36.2 billion makes him the world's 15th richest person.
Charges for SA Power Networks services, the so-called "poles and wires" of the electricity system, are around 40 per cent of the average $1911 household electricity bill.
UnitingCommunities energy expert Mark Henley said SA Power Networks — and not just the government regulator — was to blame for the high profits it made from an essential service. Those profits had contributed to some SA pensioners being unable to use heating this winter.
"In the end, it is a combination of rules and government policies that have heavily favoured the companies, limited regulator clout, and limited capacity for consumers to demand accountability of companies,'' he said.
"After a number of years of rapidly rising energy prices, it is clear that SA customers are paying too much. It's time to actively reduce the network costs (in particular) paid by SA consumers and not maintain the current excessive prices.
"SA Power Networks in their various guises have pushed the system to their own benefit. Consumer best interests have been hit for six over a number of years. So I am saying blame is shared.''
Energy Minister Tom Koutsantonis described the money made from SA customers as "super profits".
"I will be writing to the Federal regulator and to the Prime Minister Tony Abbott to say that it is unacceptable for a regulated company like SA Power Networks to make super profits from its customers,'' he said.
SA Power Networks is asking the Federal Government for two more price rises, one of which would add $20 to the average annual power bill.
The money would be spent on infrastructure which critics say is "gold plated" and already costing customers too much money.
The other rise is a share of a $95 annual increase being sought by three companies, including SA Power Networks.
A spokesman for SA Power Networks said it did not determine the financial conditions under which electricity companies operated.
"The financial outcome for SA Power Networks is determined by the Australian Energy Regulator (AER) within the national electricity framework established by Federal and State Governments,'' the spokesman said.
" ... historically, independent benchmarking has shown SA Power Networks among the most efficient distributors here in Australia."
The regulator refused to comment.
WHO IS LI KA-SHING
Born: July 19, 1928, in Chaozhou, Guangdong, China. Is aged 86.
Net worth: $36.2 billion, making him the 15th-richest person in the world.
Personal: Quit school at age 12 to help support his family. A decade later began his own business making toys and, later, plastic flowers.
His wife, Chong Yuet Ming, died in 1990.
Li Ka-Shing's wealth is estimated at $36.2 billion.
In 1999, his Cheung Kong Group bought ETSA utilities, now SA Power Networks, for $3.5 billion.
Currently owns 51 per cent of SA Power Networks, Victorian electricity distributor Powercor Australia, and Citipower.
He has two sons, Richard and Victor. Victor was kidnapped in 1996 and then freed after a $1 billion ransom was paid.
Occupation: Chairman of Cheung Kong Holdings, which employs about 280,000 staff across 52 countries. The company has many arms and is the world's largest container operator, and health and beauty retailer. He was also an early investor in Facebook, Siri and Skype.
Philanthropy: The Li Ka-Shing Foundation, set up in 1980, is reported to have donated $1.86 billion to numerous causes, with a focus on health and education.
Hobbies: Keen golfer."