The ACCC released its final decision on six changes to the National Electricity Market (NEM) access code on 31 August 2005.
On 22 June 2005 the ACCC received a request from the NECA to vary the approved NEM access code (the code) subject to Part IIIA of the Trade Practices Act. The variations sought were the inclusion of the changes to the code that had been authorised by the ACCC and gazetted since 1 March 2005, except to the extent that those changes related to chapter 3 of the code.
The ACCC released a draft decision on 27 June 2005 proposing to consent to NECA's request. The subsequent public consultation generated no submissions on the issue. Therefore, the final decision is to vary the NEM access code to include all of the code changes that had been authorised since 1 March 2005.
The following variations are covered by the decision:
New South Wales full retail competition metering derogation (20 May 2005)
extension of reserve trader sunset (20 May 2005)
Tasmania’s entry to the NEM (28 April 2005)
Victoria full retail competition metering derogation (21 April 2005)
New South Wales transmission revenue cap derogation (8 April 2005)
market ancillary services for Tasmanian entry (17 March 2005)
On 22 August 2005 the AER issued a compendium of regulatory guidelines for electricity transmission.
The compendium is a user-friendly compilation of the AER’s guidelines. While largely based on approaches developed by the ACCC, it draws all the material together as a complete set of reference documents.
The AER will adopt these guidelines as a starting point for its own approach to electricity transmission regulation. These guidelines will evolve over time in consultation with industry participants and energy users, and the compendium will be updated accordingly. The AER will monitor the effectiveness of these guidelines and will review aspects in response to issues raised by industry and other interested parties and as circumstances, theory and best practice regulation develop over time.
As well as reflecting the AER's role as national regulator, the guidelines also incorporate the revised structure of electricity regulation arrangements under the National Electricity Law. The compendium covers:
the statement of regulatory principles for the regulation of electricity transmission services (SRP)
the regulatory test
service standard guidelines
guidelines for the negotiation of discounted transmission charges
transmission ring-fencing guidelines
information requirement guidelines
the post tax revenue model and a handbook explaining the model.
A copy of the compendium and supporting documentation can be found on the AER’s website at: www.aer.gov.au.
AER submission to the AEMC review of electricity transmission revenue and pricing rules—scoping paper
The AER made a submission to the scoping paper that was released by the Australian Energy Markets Commission (AEMC) as part of its review of chapter 6 of the National Electricity Rules. Chapter 6 sets out the rules by which the AER regulates the revenue of electricity transmission network operators. The National Electricity Law requires the AEMC to complete this review by 1 July 2006, or a later date prescribed by regulation.
The AER’s submission notes that the approach canvassed in the scoping paper appears to suggest a wide review of chapter 6. This approach has the potential to introduce significant regulatory uncertainty. For this reason the submission argues that the review should focus on any specific concerns with the existing framework.
The AER’s submission also notes that many of the issues which are raised in the scoping paper have already been the subject of extensive consultation in the development of the Statement of Regulatory Principles. The submission encourages the AEMC to have due regard to the principles and the consultation process already undertaken. The high level of support for the principles lends support to ensuring that chapter 6 continues to underpin the principles.
The AER’s submission also notes that the scoping paper pre-empts different approaches to the regulation of distribution and transmission regulation. The AER considers that the AEMC should, to the extent practicable, ensure that the rules are consistent between distribution and transmission regulation.
Process
The AEMC has proposed a two stage review, split between revenue setting principles and pricing principles. The revenue setting principles are due to be finalised on 1 July 2006 and AEMC have proposed pricing principles be finalised on 1 January 2007.
The AEMC plans to release an issues paper on 12 October on revenue setting requirements and the AER will provide input into this process.
Central Ranges pipeline—lodgment of access arrangement
On 3 August 2005 the ACCC granted an extension of time to Central Ranges Pipeline Pty Ltd (CRP) to lodge its access arrangement for the pipeline it is building to transport gas from Dubbo to Tamworth in NSW.
On 23 August 2005 CRP submitted its proposed access arrangement and access arrangement information for the pipeline from Dubbo to 10 towns in the Central Ranges. The ACCC is calling for submissions on the access arrangement. The closing date for submissions is 23 September 2005.
On 19 August 2005 Epic Energy South Australia Pty Ltd (Epic) submitted to the ACCC an application for a further extension of time for the lodgment of revisions to the access arrangement for the Moomba to Adelaide Pipeline System (MAPS). This is the second application submitted by Epic. Epic has proposed that the lodgment date be extended from 1 October 2005 to 1 March 2006 due to extensions to the timetable for the National Competition Council’s planned release of its recommendation on Epic’s application for revocation of coverage of the MAPS as a covered pipeline under the gas code. The ACCC is considering Epic’s application.
On 24 August 2005 the chairman of the ACCC, Graeme Samuel, addressed the National Infrastructure Forum at the National Press Club in Canberra. Mr Samuel presented evidence that, contrary to recent claims, Australia does not have an infrastructure crisis. Two separate inquiries prepared in May 2005 (the Commonwealth Government’s Export Infrastructure Taskforce and the Allen Consulting Group report for the Victorian Government) concluded that infrastructure regulation in Australia has led to significant gains for consumers, business and the economy as a whole. We need to move on from this debate and instead continue to look for ways to improve regulatory arrangements and practices to promote investment in essential national infrastructure in the long-term interest of the nation.
On the following day, 25 August 2005, Mr Ed Willett, ACCC commissioner, addressed the Australian Financial Review’s 4th Annual National Infrastructure Summit in Sydney. The summit’s theme was ‘Assessing the sustainability of Australia's infrastructure capabilities’.
Mr Willet argued that criticism of energy regulation in Australia is partly due to the number of different regulatory bodies in commonwealth and state jurisdictions. Streamlining and improving regulation in the energy sector is a key priority—the formation of the AER provides a good model in this respect. While the level of investment in energy infrastructure remains strong under the current regulatory arrangements, there is a need to develop a national approach to regulation of facilities of national significance.
