Under the National Electricity Rules, the Australian Energy Regulator is responsible for regulating revenues associated with the non-contestable elements of transmission services provided by Powerlink Queensland. The AER will set Powerlink’s revenue cap for a five-year period from 1 July 2007 to 30 June 2012.
The AER received Powerlink’s revenue cap application on 3 April 2006. Powerlink provided an overview of its application at a public forum in Brisbane on 20 April 2006, and interested parties were given the opportunity to comment on the it.
On 3 May the AER commenced its formal consultation process, calling for submissions on Powerlink’s application. Five submissions from interested parties and a response from Powerlink to an interested party’s submission were received.
The AER has engaged PB Associates to assist in reviewing elements of Powerlink’s application, including capital and operating expenditures and service standards. The AER plans to release its draft decision on Powerlink’s application in November 2006, with a final decision planned for March 2007.
All relevant documents can be found on the AER website.
Access arrangements
South West Queensland pipeline—draft decision
On 21 September the ACCC released its draft decision on Epic Energy’s proposed access arrangement revisions for the South West Queensland Pipeline. The SWQP supplies gas from the Cooper Basin in south-west Queensland to Wallumbilla, and so is also known as the Ballera to Wallumbilla Natural Gas Pipeline. It is 756 km long, with a diameter of 406 mm.
The ACCC’s draft decision is to approve the revised access arrangement in its current form because it is satisfied that Epic’s proposed revisions are consistent with the provisions and principles of the national gas code.
These revisions relate to the supply of five transportation services currently available (other than the main forward haul service). Epic proposed minimal changes to its access arrangement and a two-year regulatory period reflecting uncertainty about the likely usage of the pipeline over the next few years. The current review does not cover the tariffs for the main forward haul service as these tariffs were established by the Queensland Government and will not be subject to regulatory review until 2016.
The ACCC will make its final decision after considering submissions in response to the draft decision, which are due by 6 October 2006.
All relevant documents can be found on the AER website.
Guidelines
Electricity Distribution Regulatory Guidelines: Statement of Approach
On 7 September 2006 the AER issued the Electricity Distribution Regulatory Guidelines: Statement of Approach. This statement outlines the scope and timeframes for consultation on the development of guidelines for the regulation of electricity distribution services, and is part of the AER’s preparation for assuming responsibility for electricity distribution regulation (expected to occur by 1 January 2008).
Because the legislative framework for energy regulation is still under development, the AER will consult on the guidelines in late 2006 and throughout 2007 in the lead-up to the transfer of responsibilities by early 2008. The specific scope and timetables outlined in the statement of approach are as follows:
Stage 3:Connection and capital contributions Tariff setting Ring-fencing Incentive mechanisms (for opex, capex and service standards)
First half 2007
Third quarter 2007
Early 2008
The AER believes there is sufficient consensus among stakeholders on the fundamental elements of the likely regulatory regime to warrant beginning work on the guidelines. The AER has been particularly guided by the AEMC’s recent draft rule determination for electricity transmission, and the Ministerial Council on Energy’s latest announcements regarding the 2006 and 2007 legislative packages for energy network regulation.
The AER is mindful of the stakeholders’ concerns about the possible pre-emption of policy outcomes, and will ensure that its guidelines comply with the relevant legislation as it is developed and implemented.
The statement of approach is available on the AER website.
National Electricity Market monitoring and enforcement
The AER hosted the fourteenth meeting of the Energy Intermarket Surveillance Group in Sydney early in September. The EISG comprises bodies responsible for monitoring and enforcement of competitive electricity markets around the world.
The group provides a forum for the private exchange of market monitoring experiences and techniques, and develops common ideas with respect to information requirements, market performance indicators and the types of conduct that should be subject to mitigation or sanction.
The EISG meeting ran over two days, was chaired by the AER and was attended by 18 delegates who represented member organisations based in New Zealand; Singapore; South Korea; the Philippines, Canada and the United States of America. Representatives from the Economic Regulation Authority and the Independent Market Operator of Western Australia were guests of the AER.
An inquiry was directed to Callide Power Trading relating to rebids between 14 and 24 July 2006. National Grid Australia was asked to explain a rebid associated with Basslink on 18 August 2006. A third rebidding inquiry was issued to Tarong Energy about a series of rebids in June and August 2006.
The AER continues to publish weekly market analyses that set out the spot price for each 30–minute trading interval in each region of the National Electricity Market. These reports highlight wholesale market prices more than three times the weekly average. They compare the demand and price forecasts published by NEMMCO four and twelve hours ahead of dispatch with actual outcomes and publish the most probable reasons for significant variations between actual and forecast prices. The reports are available on the AER website.
During September, the AER Markets Branch presented to delegates from Western Australia, Canada, Singapore, South Korea and Saudi Arabia.
