The establishment of the national electricity market has taken a major step forward.
The Australian Competition and Consumer Commission today indicated it will conditionally authorise the National Electricity Code and is prepared to accept the network access code provided certain changes are made.
The code establishes the rules for a national wholesale market for electricity and sets out the framework for third party access to the electricity networks in southern and eastern Australia.
ACCC Chairman, Professor Allan Fels, today released the ACCCs Draft Determinations for the National Electricity Code and the National Electricity Market Access Code for public consideration.
The ACCC's assessment indicates that significant public benefits, in the form of greater efficiencies, lower input costs for other industries, lower prices and better service delivery to end users, may flow from the code's arrangements. However, the assessment and submissions have highlighted a number of shortcomings which detract from the code and will reduce the likelihood of realising the full benefits of electricity reform. In particular, the ACCC is seeking:
- enhanced rules and market surveillance for the wholesale spot market;
- removing distortions to encourage the timely development of a more competitive wholesale market; and
- prudent and transparent use of intervention to maintain a reliable supply of electricity.
The ACCC indicated the code will be authorised subject to certain conditions.
The ACCC has determined that, in general, the NEM access code provides an acceptable framework for parties to gain access to and use of the electricity transmission and distribution networks in participating jurisdictions (NSW, Victoria, Queensland, South Australia and the ACT). However, there are certain features of the access code that do not meet the requirements for an acceptable access code in Part IIIA of the Trade Practices Act and regulations. For example, the ACCC will be seeking that:
- the regulators of the transmission and distribution networks be independent of governments;
- pricing arrangements for networks be more cost-effective; and
- transitional arrangements be completed by 2002.
These and other concerns will have to be resolved by the applicant prior to the ACCC accepting the access code.
The applicants and interested parties are invited by the ACCC to notify it within 14 days if they wish a pre-decision conference to be held on the draft determinations.
The ACCC will publish final determinations after taking into account any issues raised in the conference and any submissions made after the release of the draft determinations.
Copies of the draft determinations can be obtained from the major issues - electricity section of the ACCCs Internet homepage. Alternatively, a copy of the paper can be obtained from ACCC offices or by contacting Alison Milton on (02) 6264 2880.