Northern Territory Second Reading Speeches

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NATIONAL ELECTRICITY (NORTHERN TERRITORY) (NATIONAL UNIFORM LEGISLATION) BILL 2015

Madam Speaker, I move that the National Electricity (Northern Territory) (National Uniform Legislation) Bill be now read a second time.

The purpose of this bill is to facilitate the transfer of economic regulation of the Territory’s prescribed electricity networks from the Utilities Commission to the Australian Energy Regular, referred to as the AER, and thus achieve greater alignment of the Territory’s regulatory arrangements with the national framework.


The Utilities Commission was established in 2000 as part of a series of regulatory reforms under the auspices of national competition policy. The commission is the Territory’s independent electricity network regulator with responsibility for administering the electricity networks third-party access regime, as well as for licencing electricity suppliers, and monitoring of market conduct and performance. Despite the Utilities Commission’s regulatory oversight and improved arrangements for third-party access to regulated electricity networks in the Territory, there is still a lack of competition in the Territory’s electricity market. This lack of competition is in part due to both potential and new entrants being concerned about differences between the Territory’s regulatory regime and the national one. Adoption of the electricity framework, including transferring electricity network regulation responsibilities to the AER, the national electricity network regulator, will improve certainty for national electricity suppliers to establish operations in the Territory.


This draft bill will enable the AER to regulate the Territory’s prescribed electricity networks through a three-phase approach. Phase 1 will begin on 1 July 2015, with the AER initially replacing the Utilities Commission as regulator under the Territory’s existing regulatory model. Part 5 of the draft bill amends the
Electricity Networks (Third Party Access) Act and the Electricity Reform Act to provide for the interim arrangements. Key changes to the Electricity Networks (Third Party Access) Act primarily seek to replace and consolidate provisions spread across multiple Territory acts and correspond with those in the national electricity law where appropriate.

Amendments include a new Part 3 to replace and consolidate various powers and functions of the regulator and its ability to make network price determinations, new Parts 3A and 3B to replace information gathering and disclosure provisions for the regulator, and a new Part 6 to replace procedures for the regulator to enforce compliance with the act. A new amendment has been included in Part 7 to provide for the making of regulations to enable modification to this act to correspond with those amendments in the national electricity law and to provide for associated transitional matters.


Transitional arrangements to ensure the continuation of certain required arrangements, such as the gazettal of prescribed electricity networks, continuation of the existing 2014-19 network price determination, continuation of other regulatory determinations and some transitional arrangements for the Utilities Commission are included in the new Part 8. Several minor amendments to the
Electricity Reform Act are necessary and include transferring provisions regarding the creation and oversight of the Network Technical Code and Network Planning Criteria, and Energy Loss Factors Code from the Electricity Networks (Third Party Access) Code. This transfer is necessary so that the Utilities Commission can retain administration over these technical codes which relate to electricity system operations, which are not the responsibility of the AER as an economic regulator.

Phase 2 will begin from 1 July 2016 and sees the AER continue the economic regulation of the Territory’s electricity networks under the amended Territory framework. However, the Territory will begin transitioning to the national framework from this date with some aspects of the National Electricity Law to be adopted.


Part 2 of the draft bill provides for the application of the National Electricity Law in the Territory, with modifications to suit the Territory circumstances as set out in Schedule 1. It also provides for the declaration of local distribution systems to be subject to economic regulation in Schedule 2, and confers the associated regulatory powers on the AER and the Australian Competition Tribunal.


Operating the Territory law with some aspects of the national law in tandem from 1 July 2016 to 30 June 2019 will enable the AER to regulate the current Network Price Determination made under the
Electricity Networks (Third Party Access) Act, while also preparing the 2019-2024 Network Price Determination under the national legislation which commences after the expiry of the 2014-2019 Network Price Determination.

Under Phase 3, the draft bill provides for further sections of the National Electricity Law to be adopted from 1 July 2019. This will see the AER regulate the Territory’s electricity networks under the national framework and the
Electricity Networks (Third Party Access) Act repealed.

The draft bill provides for the Territory to make exemptions, referred to as derogations, to the National Electricity Law and rules. The exemptions recognise that parts of the national framework are not suitable for the Territory situation, particularly given the Territory is not physically connected to the National Electricity Market. Examples of such derogations include exempting the Territory from participating in the National Electricity Market’s wholesale electricity exchange and treating provisions relating to the Australian energy market operator, which operates the National Electricity Market as inapplicable.


Given it is not possible at this time to predict what transitional provisions or consequential amendments will be required on 1 July 2019, and to cater for future changes to the National Electricity Law, Part 3 of the draft bill provides for the matters to be dealt with by regulation. This is similar to the approaches taken recently by New South Wales and Queensland in their adoption of the National Energy Retail Law.


The bill will see network regulation transferred from the Utilities Commission to the AER, which is better resourced and has greater expertise. Further adoption of the national framework will improve certainty with national electricity suppliers to establish operations in the Northern Territory.


I commend these bills to honourable members and table the explanatory statement to accompany the bills.


Debate adjourned.


 


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