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Energy Legislation Amendment Bill
2012
Introduction Print
EXPLANATORY MEMORANDUM
General
The Bill will amend the National Electricity (Victoria) Act 2005 to modify
the operation of the National Electricity Rules in Victoria with respect to
electricity distribution network pricing for the 2011-2015 regulatory period,
so as to preserve the intended operation of network performance incentive
schemes put in place by the Essential Services Commission of Victoria.
The Bill will also declare certain provisions of the Electricity Industry Act
2000, the Gas Industry Act 2001 and the Fuel Emergency Act 1977, which
operate in relation to emergency supply situations, to be Corporations
legislation displacement provisions, and make consequential amendments to
existing Corporations legislation displacement provisions in the Electricity
Industry Act 2000 and the Gas Industry Act 2001.
The Bill will also amend the Energy Safe Victoria Act 2005 to enable
Energy Safe Victoria staff to perform functions and duties and exercise
powers under certain Commonwealth laws with the approval of the Minister.
Clause Notes
PART 1--PRELIMINARY
Clause 1 states the purpose of the Bill.
Clause 2 provides for the commencement of the Act. The Act will come
into operation on a day or days to be proclaimed. The default
commencement date for the Act is 1 August 2013.
571254 1 BILL LA INTRODUCTION 15/8/2012
PART 2--AMENDMENT OF ELECTRICITY INDUSTRY
ACT 2000
Clause 3 inserts new section 34A into the Electricity Industry Act 2000,
which provides that Division 4 of Part 2 of the Electricity
Industry Act 2000 is declared to be a Corporations legislation
displacement provision for the purposes of section 5G of the
Corporations Act in relation to the provisions of Chapter 2D and
Chapter 5 of that Act.
Division 4 of Part 2 of the Electricity Industry Act 2000 allows
the Essential Services Commission to appoint an administrator to
the business of an electricity industry licensee where the
Commission considers that the contravention by that licensee of
its licence conditions threatens the security of electricity supply
and other remedies to enforce compliance are not adequate.
Chapter 2D of the Corporations Act regulates the duties of
officers and employees of corporations and Chapter 5 of that Act
regulates the external administration of corporations.
Clause 4 amends section 49K of the Electricity Industry Act 2000.
Section 49K declares Division 8 of Part 2 of the Electricity
Industry Act 2000, which establishes a retailer of last resort
scheme where an electricity retailer's licence is revoked or its
trading rights suspended, to be a Corporations legislation
displacement provision in relation to Chapter 5 of the
Corporations Act. Clause 4 of the Bill will extend this section
to also apply to Chapter 2D of the Corporations Act.
Clause 5 inserts new section 99A into the Electricity Industry Act 2000,
which provides that Division 1 of Part 6 of the Electricity
Industry Act 2000 is declared to be a Corporations legislation
displacement provision for the purposes of section 5G of the
Corporations Act in relation to the provisions of Chapter 2D and
Chapter 5 of that Act. Division 1 of Part 6 of the Electricity
Industry Act 2000 provides for the proclamation of electricity
supply emergencies and Ministerial directions during such
proclaimed emergencies.
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PART 3--AMENDMENT OF GAS INDUSTRY ACT 2001
Clause 6 inserts new section 41A into the Gas Industry Act 2001, which
provides that Division 3 of Part 3 of the Gas Industry Act 2001
is declared to be a Corporations legislation displacement
provision for the purposes of section 5G of the Corporations Act
in relation to the provisions of Chapter 2D and Chapter 5 of that
Act.
Division 3 of Part 3 of the Gas Industry Act 2001 allows the
Essential Services Commission to appoint an administrator to
the business of a gas industry licensee where the Commission
considers that the contravention by that licensee of its licence
conditions threatens the security of gas supply and other remedies
to enforce compliance are not adequate.
Clause 7 amends section 51K of the Gas Industry Act 2001. Section 51K
declares Division 5 of Part 3 of the Gas Industry Act 2001,
which establishes a retailer of last resort scheme where a gas
retailer's licences is revoked or its trading rights suspended, to
be a Corporations legislation displacement provision in relation
to Chapter 5 of the Corporations Act. Clause 7 of the Bill will
extend this section to also apply to Chapter 2D of the
Corporations Act.
Clause 8 inserts new section 213A into the Gas Industry Act 2001, which
provides that Division 1 of Part 9 of the Gas Industry Act 2001
is declared to be a Corporations legislation displacement
provision for the purposes of section 5G of the Corporations Act
in relation to the provisions of Chapter 2D and Chapter 5 of that
Act.
Division 1 of Part 9 of the Gas Industry Act 2001 provides for
the proclamation of gas supply emergencies and Ministerial
directions during such proclaimed emergencies.
PART 4--AMENDMENT OF FUEL EMERGENCY ACT 1977
Clause 9 inserts new section 11 into the Fuel Emergency Act 1977, which
provides that the Fuel Emergency Act 1977 is declared to be a
Corporations legislation displacement provision for the purposes
of section 5G of the Corporations Act in relation to the provisions
of Chapter 2D and Chapter 5 of that Act.
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The Fuel Emergency Act 1977 provides for the proclamation
of a fuel supply emergency by the Governor in Council, and
Ministerial directions relating to the production, supply,
distribution, sale, use and consumption of the fuel to which the
proclamation relates.
PART 5--AMENDMENT OF NATIONAL ELECTRICITY
(VICTORIA) ACT 2005
Clause 10 inserts new Division 4 into Part 3 of the National Electricity
(Victoria) Act 2005. This new Division responds to the recent
decision of the Australian Competition Tribunal in the
proceedings known as Application by United Energy Distribution
Pty Limited [2012] ACompT 1 (file numbers ACT 6 of 2010,
ACT 7 of 2010, ACT 8 of 2010, ACT 9 of 2010 and ACT 10 of
2010).
The Division will modify the operation of the National Electricity
Rules, which regulate electricity distribution network pricing in
Victoria, to preserve the intended operation of certain network
performance incentive schemes put in place by the previous
industry regulator, the Essential Services Commission of
Victoria. These schemes, designed to reward (or penalise)
distribution businesses for satisfying (or failing to satisfy)
performance standards in previous calendar years, were called the
"service adjustment" or "S-Factor scheme", and the "efficiency
carryover mechanism" or "ECM scheme".
Responsibility for electricity distribution network pricing
transferred from the Commission to the Australian Energy
Regulator in 2009. While the Australian Energy Regulator
determined to implement the continued operation of the
Commission's network performance incentive schemes in its
most recent distribution determination decision made in October
2010 and applying for the calendar years 2011 to 2015, this
determination was recently put in doubt by the Australian
Competition Tribunal.
The Division will preserve the intended operation of the
Commission's S-Factor and ECM schemes, consistent with the
original determination of the Australian Energy Regulator.
New section 16H provides definitions for terms used in the
Division. Victorian DNSP means Citipower, Jemena, Powercor,
SPI Electricity or United Energy. Applicable Victorian
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distribution determination means the distribution determination
made by the Australian Energy Regulator under Rule 6.11.1 of
the National Electricity Rules for the 2011-2015 period that
relates to each specific Victorian DNSP.
New section 16I provides that the Division varies the application
of the National Electricity (Victoria) Law and the National
Electricity Rules in Victoria.
New sections 16J to 16L will amend certain definitions in the
National Electricity Rules to directly address the decision of the
Australian Competition Tribunal.
New section 16J provides that the definition of efficiency benefit
sharing scheme in Chapter 10 of the National Electricity Rules,
as it applies to a Victorian DNSP, is to be read as if it included a
reference to the efficiency carryover mechanism that applied to
the Victorian DNSP under the previous 2006-2010 Victorian
distribution pricing determination made by the Essential Services
Commission.
New section 16K provides that--
the reference to a control mechanism in paragraph (b)
of the definition of regulatory control period in
Chapter 10 of the National Electricity Rules, as it
applies to a Victorian DNSP, is taken to include the
efficiency carryover mechanism and service adjustment
(being the Essential Services Commission's S-Factor
and ECM schemes) applicable to the Victorian DNSP;
and
paragraph (b) of the definition of regulatory control
period in Chapter 10 of the National Electricity Rules,
as it applies to a Victorian DNSP, is to be read as if after
"determination" there were inserted a reference to the
2006-2010 Victorian distribution pricing determination
made by the Essential Services Commission.
New section 16L provides that the definition of service target
performance incentive scheme in Chapter 10 of the National
Electricity Rules, as it applies to a Victorian DNSP, is to be read
as if it included a reference to the service adjustment that applied
to the Victorian DNSP under the previous 2006-2010 Victorian
distribution pricing determination made by the Essential Services
Commission.
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New sections 16M and 16N will modify the operation of the
pricing approval process under Rule 6.18 of the National
Electricity Rules. Pursuant to this pricing approval process
each Victorian DNSP must prepare, and the Australian Energy
Regulator must assess, distribution network tariffs for each year,
consistent with an applicable distribution determination.
Sections 16M and 16N modify the definition of applicable
distribution determination for the purposes of Rule 6.18 so that
the applicable Victorian distribution determination must always
include building block amounts for the Essential Services
Commission's S-factor and ECM schemes as specified in
Schedule 1 (which is being inserted by clause 11 of this Bill).
New section 16M applies to a Victorian DNSP that submits a
pricing proposal under rule 6.18.2(a)(2) of the National
Electricity Rules for the third and each subsequent regulatory
year of the regulatory control period 2011 to 2015.
Section 16N(2) provides that Rule 6.18.2 of the National
Electricity Rules applies to the Victorian DNSP as if a reference
to any applicable distribution determination in that rule were a
reference to the applicable Victorian distribution determination
as modified by operation of subsection (3). Section 16N(3)
provides that for the purpose of subsection (2) an applicable
Victorian distribution determination is taken to include the
building block amounts set out in Schedule 1 for the applicable
determination for that Victorian DNSP. Rule 6.18.2 of the
National Electricity Rules provides that a DNSP must submit
annual pricing proposals to the AER, and sets out the information
that must be included in such a pricing proposal.
Rule 6.18.2(b)(7) requires a pricing proposal to demonstrate
compliance with the National Electricity Rules and any
applicable distribution determination.
New section 16N applies if a Victorian DNSP submits a pricing
proposal to the Australian Energy Regulator for approval under
Rule 6.18.8 of the National Electricity Rules that is a pricing
proposal to which section 16M applies. This section provides
that Rule 6.18.8 of the National Electricity Rules is taken to
apply to the Australian Energy Regulator as if a reference to any
applicable distribution determination in that rule were a reference
to the applicable Victorian distribution determination modified to
include the building block amounts specified in Schedule 1 for
that determination. Rule 6.18.8 of the National Electricity Rules
provides that the AER must approve a pricing proposal if it is
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satisfied that the proposal complies with, particularly, any
applicable distribution determination.
New section 16O provides that the AER is not required to
comply with the parts of the decision of the Australian
Competition Tribunal in the proceedings known as Application
by United Energy Distribution Pty Limited [2012] ACompT 1
(file numbers ACT 6 of 2010, ACT 7 of 2010, ACT 8 of 2010,
ACT 9 of 2010 and ACT 10 of 2010) or any other decision of the
Australian Competition Tribunal that relates to an applicable
Victorian distribution determination that are inconsistent with the
modified Rules or the Division. This section applies despite
anything to the contrary in the National Electricity (Victoria)
Law or the National Electricity Rules.
New section 16P provides that a Victorian DNSP is not required
to comply with a decision or a determination, or any part of a
decision or determination, of the Australian Energy Regulator
that is inconsistent with the modified Rules or this Division.
This section applies despite anything to the contrary in the
National Electricity (Victoria) Law, the National Electricity
Rules, the Electricity Industry Act 2000 or a licence under the
Electricity Industry Act 2000 held by a Victorian DNSP.
Clause 11 inserts new Schedule 1 into the National Electricity (Victoria)
Act 2005. Schedule 1 sets out the building block amounts
referred to in sections 16M and 16N. These building block
amounts are based on the amounts determined by the Australian
Energy Regulator as required to preserve the intended operation
of the Essential Services Commission's S-factor and ECM
scheme, but include certain adjustments required to reflect other
aspects of the decision of the Australian Competition Tribunal.
PART 6--AMENDMENT OF ENERGY SAFE VICTORIA
ACT 2005
Clause 12 inserts new section 9A into the Energy Safe Victoria Act 2005.
New section 9A provides that, subject to the approval of the
Minister and any conditions on that approval, an employee of
Energy Safe Victoria may perform a function or duty or exercise
a power, under a law of the Commonwealth related to the
promotion of the development and adoption of products that use
less energy and produce fewer greenhouse gases, and that is
specified in the approval.
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This new section relates to the Commonwealth Greenhouse and
Energy Minimum Standards scheme, which is expected to
commence nationally on 1 October 2012. The GEMS scheme
will regulate energy performance standards and labelling for a
range of products, and will replace the COAG coordinated
Minimum Energy Performance Scheme currently administered
in Victoria by Energy Safe Victoria. This section enables
employees of Energy Safe Victoria to perform delegated GEMS
regulator functions under the GEMS scheme, such as processing
and approving or declining applications for product registration.
This section also enables Energy Safe Victoria employees to be
appointed GEMS inspectors. GEMS inspectors will be able to
carry out compliance activities under the GEMS scheme.
PART 7--REPEAL OF AMENDING ACT
Clause 13 provides for the automatic repeal of this amending Act on
1 August 2014.
The repeal of this Act does not affect the continuing operation of
the amendments made by this Act (see section 15(1) of the
Interpretation of Legislation Act 1984).
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