EXPLANATORY STATEMENT

 

Select Legislative Instrument 2005 No. 144

 

Subject -    Australian Energy Market Regulations 2005

 

This explanatory statement relates to the Australian Energy Market Regulations 2005 (the Regulations) and is made for the purposes of the Legislative Instruments Act 2003.

 

The Australian Energy Market Act 2004 (the Act) applies uniform energy laws as law of the Commonwealth in the offshore adjacent areas to the States and Territories, and makes provision for them to apply to other places, circumstances and persons that are prescribed.

 

Subsection 14(1) of the Act provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters that are required or permitted by the Act to be prescribed or are necessary or convenient to be prescribed for carrying out or giving effect to the Act. Subsection 14(2) of the Act provides that regulations may be made providing for the interpretation of a uniform energy law when applied as a law of the Commonwealth.  Subsection 14(3) of the Act provides that the regulations may modify or adapt any provision of the National Electricity (Commonwealth) Law, the National Electricity (Commonwealth) Regulations or the National Electricity (Commonwealth) Rules, or a uniform energy law applied as a law of the Commonwealth, when those provisions apply as a law of the Commonwealth.

 

Subparagraph 6(a)(ii) of the Act provides that the National Electricity Law set out in the Schedule to the National Electricity (South Australia) Act 1996 of South Australia, as in force from time to time, applies as a law of the Commonwealth in any other places, to any circumstances, or to any persons, that are prescribed by the regulations.

 

The purpose of the Regulations is to apply the National Electricity Law – as amended by the National Electricity (South Australia) (New National Electricity Law) Amendment Act 2005 of South Australia – to all access undertakings given to the Australian Competition and Consumer Commission (ACCC) by constitutional corporations (as defined) under section 44ZZA of the Trade Practices Act 1974, in compliance with the requirements and terms of the National Electricity Code. These undertakings set out the terms and conditions on which access to a particular service is provided.

 

The Regulations will ensure that the provisions of the new National Electricity Law will apply to access undertakings previously given under the National Electricity Code.  In particular, they would ensure that transitional provisions in the National Electricity Law which provide that references in a document to the National Electricity Code now mean the National Electricity Rules, will apply to the undertakings.

 

Details of the Regulations are set out in the Attachment.

 

The Regulations commence on the day that Part 2 of the National Electricity (South Australia) (New National Electricity Law) Amendment Act 2005 of South Australia commences.  This has not happened yet and is expected to be 1 July 2005.

The Regulations reflect reforms being made to enact a new National Electricity Law (which is the Schedule to the National Electricity (South Australia) Act 1996 of South Australia) and to convert the National Electricity Code into the National Electricity Rules.  Industry has been consulted extensively on these reforms. Given this, no separate consultation on the Regulations was necessary.

ATTACHMENT

 

Details of the Australian Energy Market Regulations 2005

 

 

Regulation 1 – Name of Regulations

 

This regulation provides that the title of the Regulations is the Australian Energy Market Regulations 2005.

 

Regulation 2 – Commencement

 

This regulation provides for the Regulations to commence on the day that Part 2 of the National Electricity (South Australia) (New National Electricity Law) Amendment Act 2005 of South Australia (the SA Amendment Act) commences.  This has not happened yet and is expected to be 1 July 2005.

 

Regulation 3 – Definitions

 

This regulation defines terms, used in the Regulations, that are not already defined in the Australian Energy Market Act 2004 (the Act).

 

In particular, it is necessary to define the National Electricity Code, for which there is no current definition in the Act.  While the National Electricity Code will be superceded by the National Electricity Rules, the undertakings referred to in the Regulations were given in compliance with the terms of the National Electricity Code.  Section 8 of the Act refers to the Code.  When this was drafted, it was thought that the new rules would continue to be called the Code, but this will not be the case.

 

Regulation 4 – Application and interpretation of the National Electricity Law

 

Subregulation 4(1) provides that, for the purposes of subparagraph 6(a)(ii) of the Act, the following circumstances and persons are prescribed – access undertakings given to the ACCC by constitutional corporations (as defined) under section 44ZZA of the Trade Practices Act 1974, in compliance with the requirements and terms of the National Electricity Code, and the continued operation of those undertakings.

Subregulation 4(2) provides that a ‘document’ in clauses 7, 8 and 9 of Schedule 3 to the new National Electricity Law (as amended by the SA Amendment Act) is taken to include an access undertaking referred to in subregulation 4(1). Subregulation 4(2) is supported by either or both of subsections 14(2) and (3) of the Act, depending on whether this provision is merely seen as confirming the position that would otherwise exist, or modifying the National Electricity (Commonwealth) Law.

The note to regulation 4 explains the purpose of the Regulations. Under the National Electricity Code, network service providers were obliged to give an undertaking to the ACCC to provide access to services in accordance with the Code and any applicable regulatory instruments, as in force from time to time. Transitional provisions in the new National Electricity Law (as amended by the SA Amendment Act) provide, in summary, that:

•     every reference in a document to the National Electricity Code is deemed to be a reference to the National Electricity Rules (Schedule 3, clause 7);

•     every reference in a document to a provision of the National Electricity Code is deemed to be a reference to the corresponding provision of the National Electricity Rules (clause 8); and

•     every reference in a document to a ‘Code participant’ is deemed to be a reference to a ‘Registered participant’ (clause 9).

These transitional provisions, applied as State and Territory law, and as Commonwealth law in the offshore adjacent area, would generally be effective to keep in force existing access undertakings, given that the undertakings refer to the Code and applicable regulatory instrument as in force from time to time.  As such, the provisions would have the effect of deeming references to the National Electricity Code in the undertakings to be references to the National Electricity Rules.  However, to remove any doubt on that question, the Regulations will apply the new National Electricity Law (including the transitional provisions) as a law of the Commonwealth to those access undertakings.