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This is a Bill, not an Act. For current law, see the Acts databases.
South Australia
Statutes Amendment (National Energy Laws) (Binding Rate
of Return Instrument) Bill 2018
A BILL FOR
An Act to amend the
National
Electricity (South Australia) Act 1996
and the
National
Gas (South Australia) Act 2008
.
Contents
Part 2—Amendment
of National Electricity Law
4Amendment of section
2—Definitions
5Amendment of section 15—Functions and
powers of AER
6Insertion of Part 3 Division 1B
Division 1B—Rate of return
instrument
18GRate of return
instrument has force of law
18HRate of return
instrument is binding on AER and network service providers
Subdivision 2—Requirement to make
rate of return instrument
18IAER to make rate
of return instrument
18JContent of rate
of return instrument
Subdivision 3—Consultation
requirements
18KProcess for
making rate of return instrument
18LOther matters AER must have
regard to in making instrument
18MRequirements before publishing
draft instrument
18OPublication of draft instrument
and other information
18PReport about draft instrument by
independent panel
18QPublication of explanatory
information
18RFailure to
comply does not affect validity
Subdivision 4—Publication, review
and other matters
18SPublication of rate of return
instrument
18TCommencement and
duration of instrument
18UReview and replacement of
instrument
18WRate of return
instrument may apply for this Law and the National Gas Law
Subdivision 5—Confidentiality of
information
18YDisclosure of
information given in confidence
7Amendment of section 28J—Opportunity to
be heard before regulatory information notice is served
90BASouth
Australian Minister may make consequential Rules relating to rate of return
instrument
10Amendment of Schedule 1—Subject matter
for the National Electricity Rules
11Amendment of Schedule 2—Miscellaneous
provisions relating to interpretation
12Amendment of Schedule 3—Savings and
transitional
Part 15—Transitional provisions for rate
of return instrument
29Making first rate
of return instrument if review not completed before commencement
30Making first rate
of return instrument if review completed before commencement
31Application of
this Law to particular decisions
Part 3—Amendment
of National Gas Law
13Amendment of section
2—Definitions
14Amendment of section 27—Functions and
powers of the AER
15Insertion of Chapter 2 Part 1 Division
1A
Division 1A—Rate of return
instrument
30BRate of return
instrument has force of law
30CRate of return
instrument is binding on AER and covered pipeline service
providers
Subdivision 2—Requirement to make
rate of return instrument
30DAER to make rate
of return instrument
30EContent of rate
of return instrument
Subdivision 3—Consultation
requirements
30FProcess for
making rate of return instrument
30GOther matters AER must have
regard to in making instrument
30HRequirements before publishing
draft instrument
30JPublication of draft instrument
and other information
30KReport about draft instrument by
independent panel
30LPublication of explanatory
information
30MFailure to
comply does not affect validity
Subdivision 4—Publication, review
and other matters
30NPublication of rate of return
instrument
30OCommencement and
duration of instrument
30PReview and replacement of
instrument
30RRate of return
instrument may apply for this Law and the National Electricity Law
Subdivision 5—Confidentiality of
information
30TDisclosure of
information given in confidence
16Amendment of section 52—Opportunity to
be heard before regulatory information notice is served
294CASouth
Australian Minister may make consequential Rules relating to rate of return
instrument
19Amendment of Schedule 1—Subject matter
for the National Gas Rules
20Amendment of Schedule 2—Miscellaneous
provisions relating to interpretation
21Amendment of Schedule 3—Savings and
transitional
Part 15—Transitional provisions for
rate of return instrument
91Making first
rate of return instrument if review not completed before
commencement
92Making first
rate of return instrument if review completed before commencement
93Application of
this Law to particular decisions
The Parliament of South Australia enacts as
follows:
This Act may be cited as the Statutes Amendment (National Energy Laws)
(Binding Rate of Return Instrument) Act 2018.
This Act will come into operation on a day to be fixed by
proclamation.
In this Act—
(a) a provision in
Part 2
amends the National Electricity Law set out in the Schedule to the
National
Electricity (South Australia) Act 1996
; and
(b) a provision in
Part 3
amends the National Gas Law set out in the Schedule to the
National
Gas (South Australia) Act 2008
.
Part 2—Amendment
of National Electricity
Law
4—Amendment
of section 2—Definitions
(1) Section 2(1), definition of AER economic regulatory function or
power—after "Rules" insert:
(other than making a rate of return instrument)
Note—
The following Note will be inserted into section 2(1) at the foot of the
definition of AER economic regulatory function or power:
"Note—
The application of a rate of return instrument under this Law is an AER
economic regulatory function or power. See section 18V(2)."
(2) Section 2(1)—after the definition of protected
information insert:
rate of return instrument—see section 18I(2);
5—Amendment
of section 15—Functions and powers of AER
Section 15(1)—after paragraph (ec) insert:
(ed) to make a rate of return instrument; and
6—Insertion
of Part 3 Division 1B
Part 3—after Division 1A insert:
Division 1B—Rate of return
instrument
Subdivision 1—Preliminary
18F—Definitions
In this Division—
consumer reference group, for making a rate of return
instrument, see
section 18M(1)(a)
;
explanatory information, for a rate of return instrument,
means information about the content of the instrument, including (but not
limited to) information explaining——
(a) the reasons for the rate of return on capital or the value of
imputation credits under the instrument; and
(b) how the stated value, or the way to calculate the rate or value, was
decided; and
(c) if the instrument replaces another instrument——
(i) the differences (if any) between the instrument and the replaced
instrument; and
(ii) the reasons for any differences; and
(d) why the AER is satisfied the instrument will, or is most likely to,
contribute to the achievement of the national electricity objective to the
greatest degree; and
(e) how the AER had regard to the following in making the
instrument:
(i) the revenue and pricing principles;
(ii) the matters mentioned in
section 18L
;
(iii) estimation methods, financial models, market data and other evidence
relevant to making the instrument;
(iv) prevailing conditions in the market for equity funds;
(v) the interrelationships between financial parameters used, or to be
used, in relation to deciding the rate or value.
18G—Rate of return instrument has force of
law
(1) A rate of return instrument has the force of law in this
jurisdiction.
(2) An Act of this jurisdiction regulating the making of subordinate
legislation does not apply to a rate of return instrument.
18H—Rate of return instrument is binding on AER and
network service providers
A rate of return instrument is binding on——
(a) the AER in relation to the performance or exercise of an AER economic
regulatory function or power; and
(b) each network service provider in relation to a matter relevant to the
performance or exercise of an AER economic regulatory function or
power.
Subdivision 2—Requirement to make rate of
return instrument
18I—AER to make rate of return
instrument
(1) This section applies if a rate of return on capital or the value of
imputation credits is required for performing or exercising an AER economic
regulatory function or power.
(2) The AER must make an instrument (a rate of return
instrument) stating—
(a) for a rate of return on capital—the way to calculate the rate;
and
(b) for the value of imputation credits—the value or the way to
calculate the value.
(3) The AER may make an
instrument only if satisfied the instrument will, or is most likely to,
contribute to the achievement of the national electricity objective to the
greatest degree.
(4) Subject to
subsection (3)
, the way to calculate a rate of return on capital must include a weighted
average of an allowed return on equity and an allowed return on debt.
(5) In making an instrument, the AER must have regard to—
(a) the revenue and pricing principles; and
(b) other information the AER considers appropriate.
18J—Content of rate of return
instrument
(1) If a rate of return
instrument states the value of imputation credits, the instrument must state a
single value to apply in relation to all regulated network service
providers.
(2) If a rate of return
instrument states a way to calculate the rate of return on capital or the value
of imputation credits, the instrument must—
(a) provide for the same methodology to apply in relation to all regulated
network service providers in calculating the rate or value; and
(b) provide for the methodology to apply automatically without the
exercise of any discretion by the AER.
Example for paragraph (b)—
The instrument can not include different methodologies or a band of values
from which the AER could choose in applying the instrument.
(3) Subject to
subsections (1)
and
(2)
, the instrument may include other matters the AER considers
appropriate.
Example—
Matters to help a regulated network service provider calculate a rate of
return or the value of imputation credits.
Subdivision 3—Consultation
requirements
18K—Process for making rate of return
instrument
Subject to this Division, the AER may make a rate of return instrument in
the way it considers appropriate.
18L—Other matters AER must have regard to in making
instrument
In making a rate of return instrument, the AER must also have regard to the
following:
(a) advice, recommendations or submissions given by a consumer reference
group;
(b) submissions made, and the report published, under
section 18M
;
(c) submissions made under
section 18O
;
(d) the report given by the independent panel under
section 18P
.
18M—Requirements before publishing draft
instrument
(1) Before publishing a
draft rate of return instrument under this Subdivision, the AER
must—
(a) establish a
reference group to help the AER implement an effective consumer consultation
process for making the proposed instrument (a consumer reference
group); and
(b) publish a notice on its website—
(i) inviting persons to make a written submission to the AER about the
proposed instrument; and
(ii) stating the period, not less than 28 days, within which a submission
must be made; and
(c) seek concurrent expert opinions or evidence about the proposed
instrument.
(2) A person may make a submission after the stated period only with the
written approval of the AER.
(3) Subject to
subsections (4)
and
(5)
, the AER may seek the expert opinions or evidence in the way it considers
appropriate.
Example—
The AER might convene a conference of experts to identify key issues, and
areas of dispute and agreement among the experts, about the content of the
proposed instrument.
(4) The AER must call
for nominations of eligible experts but may seek the expert opinions or evidence
from any eligible expert.
(5) If practicable, the
AER must seek the expert opinions or evidence from at least 3 eligible
experts.
(6) The AER must publish on its website—
(a) submissions made under this section; and
(b) a report on the outcomes of seeking the expert opinions or
evidence.
(7) In this section—
eligible expert means a person with qualifications or
experience in a field the AER considers relevant to making a rate of return
instrument.
Examples of relevant fields—
Finance, economics, law, consumer affairs, institutional
investment.
18N—Consumer reference group
(1) A consumer
reference group for making a rate of return instrument—
(a) is to consist of the members appointed by the AER; and
(b) may carry out its
activities, including giving advice or recommendations to the AER about the
instrument, in the way it considers appropriate.
(2) Without limiting
subsection (1)(b)
, the consumer reference group may——
(a) consult with consumers of electricity; and
(b) facilitate consumer engagement in the process for making the
instrument; and
(c) make written submissions to the AER about the content of the
instrument and the process for making it.
(3) The AER must publish on its website any written advice,
recommendations or submissions given to it by the consumer reference
group.
18O—Publication of draft instrument and other
information
(1) The AER must, at least 6 months before making a rate of return
instrument, publish on its website—
(a) a draft of the proposed instrument and the explanatory information for
the instrument; and
(b) a notice—
(i) inviting persons to make a written submission to the AER about the
proposed instrument; and
(ii) stating the period, not less than 28 days, within which a
submission must be made.
(2) A person may make a submission after the stated period only with the
written approval of the AER.
(3) The AER must publish submissions made under this section on its
website.
18P—Report about draft instrument by independent
panel
(1) The AER must, as soon as practicable after publishing the draft
instrument, establish an independent panel to give the AER a written report
about the instrument.
(2) The panel—
(a) may carry out its activities, including giving the report, in the way
it considers appropriate; but
(b) must seek to give the report by consensus.
(3) The panel must—
(a) consist of at least 3 members, appointed by the AER, who have
qualifications or experience in a field the AER considers relevant to making a
rate of return instrument; and
Examples of relevant fields—
Finance, economics, law, consumer affairs, institutional
investment.
(b) give the report to the AER before the AER makes the
instrument.
(4) The AER must take reasonable steps to minimise and manage any
conflicts of interest a panel member may have in relation to making the
instrument.
(5) The report must—
(a) include the panel’s assessment of the evidence and reasons
supporting the rate of return on capital or the value of imputation credits
under the instrument; and
(b) state whether the report is given by consensus.
(6) The AER must publish the report on its website.
18Q—Publication of explanatory
information
The AER must publish explanatory information for a rate of return
instrument on its website when the instrument is published under
section 18S
.
18R—Failure to comply does not affect
validity
Failure to comply with this Subdivision does not invalidate or otherwise
affect a rate of return instrument.
Subdivision 4—Publication, review and other
matters
18S—Publication of rate of return
instrument
After making a rate of return instrument, the AER must publish the
instrument on its website.
Note—
See
section 18Q
for the requirement to publish explanatory information for the
instrument.
18T—Commencement and duration of
instrument
A rate of return instrument—
(a) commences on the day after it is published on the AER’s website;
and
(b) remains in force until the end of the day it is replaced under
section 18U
.
18U—Review and replacement of
instrument
(1) The AER must—
(a) review each rate of return instrument; and
(b) make a new rate of return instrument under this Division to replace
the reviewed instrument.
(2) The AER must replace the reviewed instrument by publishing the new
instrument on its website on the day that is—
(a) the fourth
anniversary of the day the reviewed instrument was published; or
(b) if the day mentioned in
paragraph (a)
is not a business day—the first business day after that
day.
18V—Application of instrument
(1) A rate of return instrument—
(a) applies for the purposes of an AER economic regulatory decision made
after the commencement of the instrument; and
(b) does not affect an AER economic regulatory decision made before the
commencement of the instrument.
(2) To remove any doubt, it is declared that the application of the
instrument under this Law, including, for example, in making a distribution
determination or transmission determination, is an AER economic regulatory
function or power.
18W—Rate of return instrument may apply for this
Law and the National Gas Law
(1) The AER may make 1
rate of return instrument for the purposes of this Law and the National Gas
Law.
(2) If the AER acts under
subsection (1)
—
(a) the process for making the instrument under Chapter 2, Part 1,
Division 1A of the National Gas Law is taken to have been complied with for the
instrument; and
(b) the instrument is taken to be the rate of return instrument for the
purposes of the National Gas Law.
Note—
See also section 30R of the National Gas Law.
(3) To remove any doubt, it is declared that the instrument may include
different ways to calculate the rate of return on capital and the value of
imputation credits for the purposes of this Law and the National Gas
Law.
Subdivision 5—Confidentiality of
information
18X—Confidentiality
(1) If a person wishes
to give information to the AER for the purposes of this Division in
confidence—
(a) the person must give the AER written notice that the person claims the
information is confidential; and
(b) give reasons to support the claim, including—
(i) information about the detriment that might be caused to the person if
the information were disclosed by the AER; and
(ii) information that—
(A) is reasonably within the person’s knowledge and capacity to
give; and
(B) may be relevant to the AER’s consideration under
section 28ZB about whether the public benefit in disclosing the information
outweighs the detriment.
(2) In giving reasons to support a claim under
subsection (1)
about information received from another person (a third party), a person
may include information that——
(a) is reasonably within the person’s knowledge and capacity to
give; and
(b) is about the detriment that might be caused to the third party if the
information were disclosed by the AER; and
(c) may be relevant to the AER’s consideration under
section 28ZB about whether the public benefit in disclosing the information
outweighs the detriment.
(3) In acting under
subsection (1)
, a person must specifically identify the information in relation to which
the claim is made.
(4) Information given to the AER for the purposes of this Division is not
to be regarded as being given in confidence, or to be confidential in any way,
unless the information is subject to an express claim of confidentiality made
under this section.
18Y—Disclosure of information given in
confidence
(1) Division 6 applies in relation to publishing information given to the
AER in confidence under this Division.
(2) In this section—
information includes advice, recommendations, submissions and
reports.
7—Amendment
of section 28J—Opportunity to be heard before regulatory information
notice is served
(1) Section 28J(3)(b)—after "decision" insert:
or a rate of return instrument
(2) Section 28J(3)(c), after "decision" insert:
or rate of return instrument
8—Amendment
of section 28Q—Assumptions where there is non-compliance with regulatory
information instrument
(1) Section 28Q(1)(a)(i)—delete "provider; or" and
substitute:
provider or to make a rate of return instrument; or
(2) Section 28Q(1)(a)(ii)—delete "provider; and" and
substitute:
provider or the making of a rate of return instrument; and
(3) Section 28Q(2)(a)—delete paragraph (a) and substitute:
(a) may make the AER economic regulatory decision or the rate of return
instrument on the basis of the information the AER has at the time it makes that
decision or instrument; and
(4) Section 28Q(2)(b)—after "decision" insert:
or instrument
Part 7 Division 2—after section 90B insert:
90BA—South Australian Minister may make
consequential Rules relating to rate of return instrument
(1) The South
Australian Minister may make Rules that revoke or amend a Rule if the revocation
or amendment is consequential on the enactment of the
Statutes
Amendment (National Energy Laws) (Binding Rate of Return Instrument)
Act 2018
.
(2) Without limiting
subsection (1)
, the South Australian Minister may make a rule providing that the rate of
return on capital under a rate of return instrument in force at the start of a
regulatory period applies throughout the period.
(3) Section 34(3) applies to Rules made under this section in the same way
it applies to Rules made by the AEMC.
(4) As soon as
practicable after making Rules under this section, the South Australian Minister
must—
(a) publish notice of
the making of the Rules in the South Australian Government Gazette;
and
(b) make the Rules publicly available.
(5) The notice referred to in
subsection (4)(a)
must state——
(a) the date on which the Rules commence operation; and
(b) if different Rules will commence operation on different dates, those
dates.
(6) Rules may only be made under this section on the recommendation of the
MCE.
(7) Once the first Rules have been made under
subsection (1)
, no further Rules can be made under that subsection.
(8) In this section—
regulatory period means the period specified in a network
revenue or pricing determination to be the regulatory period.
South Australian Minister means the Minister in right of the
Crown of South Australia administering Part 2 of the
National
Electricity (South Australia) Act 1996
of South Australia.
10—Amendment
of Schedule 1—Subject matter for the National Electricity
Rules
(1) Schedule 1, item 22(d)—delete paragraph (d)
(2) Schedule 1, item 26F(d)—delete paragraph (d)
11—Amendment
of Schedule 2—Miscellaneous provisions relating to
interpretation
(1) Schedule 2, clause 31AD—after paragraph (b) insert:
(ba) a stated document is a copy of a rate of return instrument;
(2) Schedule 2, clause 41(3), definition of statutory
instrument—delete "or the Rules" and substitute:
, the rate of return instrument or the Rules
(3) Schedule 2—after clause 41 insert:
41A—Rate of return instrument construed not to
exceed the legislative power of the Legislature of this jurisdiction or the
powers conferred by this Law
(1) A rate of return instrument is to be construed as operating to the
full extent of, but so as not to exceed, the legislative power of the
Legislature of this jurisdiction or the power conferred by this Law under which
it is made.
(2) If a provision of the rate of return instrument, or the application of
a provision of the instrument to a person, subject matter or circumstance,
would, but for this clause, be construed as being in excess of the legislative
power of the Legislature of this jurisdiction or the power conferred by this Law
under which it is made—
(a) it is a valid provision to the extent to which it is not in excess of
the power; and
(b) the remainder of the instrument, and the application of the provision
to other persons, subject matters or circumstances, is not affected.
(4) Schedule 2—after clause 43 insert:
43A—Invalid rate of return
instrument
(1) This clause applies if the Court orders (by declaration or otherwise)
that a rate of return instrument is invalid.
(2) The AER must make a new rate of return instrument under this Law to
replace the invalid instrument.
(3) Until the invalid instrument is replaced, the rate of return on
capital and the value of imputation credits under the invalid instrument
continue to apply for the purposes of this Law.
(4) However, the
AER must deal with any affected determination to apply the new rate of return
instrument to the determination as if the new instrument had applied from the
start of the determination.
(5)
Subclause (4)
applies despite section 18V(1).
(6) In this clause—
affected determination means a distribution determination or
transmission determination to which the invalid instrument applied or continued
to apply;
deal with, an affected determination, means to do either of
the following the AER considers appropriate in the
circumstances—
(a) revoke the determination and substitute a new determination;
(b) vary the determination.
12—Amendment
of Schedule 3—Savings and transitional
Schedule 3—after Part 14 insert:
Part 15—Transitional provisions for rate of return
instrument
28—Definitions
In this Part—
2013 non-binding guideline means the guideline about
determining the rate of return on capital issued by the AER in 2013;
review, of the 2013 non-binding guideline, means the review
of the guideline started by the AER in 2017;
stakeholders means—
(a) regulated network service providers and consumer organisations;
or
(b) network service users and prospective network service users;
or
(c) any of the following persons the AER considers appropriate to give the
AER advice or comment about the review of the 2013 non-binding
guideline—
(i) persons engaged by a regulated network service provider, a consumer
organisation or another entity to give the advice or comment;
(ii) other persons the AER considers have the qualifications or experience
appropriate to give the advice or comment;
(d) other persons the AER considers have an interest in the review of the
2013 non-binding guideline.
29—Making first rate of return instrument if review
not completed before commencement
(a) the review of the 2013 non-binding guideline is not completed before
the commencement of this clause; and
(b) the AER has sought advice or comment from stakeholders in relation to
the review; and
(c) at least 3 months before making the first rate of return instrument,
the AER has published on its website a draft of the proposed first rate of
return instrument or proposed new non-binding guideline under the Rules;
and
(d) the draft
instrument or guideline has been reviewed by an independent panel consisting of
at least 3 members with qualifications or experience the AER considers
appropriate to conduct the review.
(2) Part 3 Division 1B Subdivision 3 does not apply in relation to making
the first rate of return instrument.
(3) The independent panel mentioned in
subclause (1)(d)
must seek to give the AER a consensus report on the panel’s
review.
(4) However, a failure to give the AER a consensus report does not affect
the making of the first rate of return instrument.
30—Making first rate of return instrument if review
completed before commencement
(1) This clause applies
if, before the commencement of this clause—
(a) the review of the 2013 non-binding guideline was completed and a new
non-binding guideline is in force under the Rules; and
(b) the AER sought advice or comment from stakeholders in relation to the
review; and
(c) at least 3 months before making the new non-binding guideline, the AER
published on its website a draft of the proposed new non-binding guideline;
and
(d) the draft was reviewed by an independent panel consisting of at least
3 members with qualifications or experience the AER considered appropriate to
conduct the review; and
(e) the independent
panel gave the AER a report on the panel’s review.
(2) The new non-binding guideline is taken to be the first rate of return
instrument on the commencement.
(3) For section 18U, the instrument is taken to have been published on the
AER’s website on the commencement.
(4) The report mentioned in
subclause (1)(e)
need not be a consensus report on the panel’s review.
31—Application of this Law to particular
decisions
(1) The amended Law
applies in relation to an AER economic regulatory decision made after the
commencement even if any action or process for making the decision started
before the commencement.
(2) However,
subclause (1)
does not apply in relation to an AER economic regulatory decision made
before the commencement that has been remitted back to the AER to make the
decision again.
(3) In this clause—
amended Law means this Law as amended by the Statutes
Amendment (National Energy Laws) (Binding Rate of Return Instrument) Act
2018;
commencement means the commencement of Part 3 Division
1B.
Part 3—Amendment
of National Gas Law
13—Amendment
of section 2—Definitions
(1) Section 2(1), definition of AER economic regulatory function or
power—after "Rules" insert:
(other than making a rate of return instrument)
Note—
The following Note will be inserted into section 2(1) at the foot of the
definition of AER economic regulatory function or power:
"Note—
The application of a rate of return instrument under this Law is an AER
economic regulatory function or power. See section 30Q(2)."
(2) Section 2(1)—after the definition of queuing
requirements insert:
rate of return instrument—see section 30D(2);
14—Amendment
of section 27—Functions and powers of the AER
Section 27(1)—after paragraph (d) insert:
(da) to make a rate of return instrument; and
15—Insertion
of Chapter 2 Part 1 Division 1A
Chapter 2, Part 1—after Division 1 insert:
Division 1A—Rate of return
instrument
Subdivision 1—Preliminary
30A—Definitions
In this Division—
consumer reference group, for making a rate of return
instrument, see
section 30H(1)(a)
;
explanatory information, for a rate of return instrument,
means information about the content of the instrument, including (but not
limited to) information explaining—
(a) the reasons for the rate of return on capital or the value of
imputation credits under the instrument; and
(b) how the stated value, or the way to calculate the rate or value, was
decided; and
(c) if the instrument replaces another instrument—
(i) the differences (if any) between the instrument and the replaced
instrument; and
(ii) the reasons for any differences; and‚
(d) why the AER is satisfied the instrument will, or is most likely to,
contribute to the achievement of the national gas objective to the greatest
degree; and
(e) how the AER had regard to the following in making the
instrument:
(i) the revenue and pricing principles;
(ii) the matters mentioned in
section 30G
;
(iii) estimation methods, financial models, market data and other evidence
relevant to making the instrument;
(iv) prevailing conditions in the market for equity funds;
(v) the interrelationships between financial parameters used, or to be
used, in relation to deciding the rate or value.
30B—Rate of return instrument has force of
law
(1) A rate of return instrument has the force of law in this
jurisdiction.
(2) An Act of this jurisdiction regulating the making of subordinate
legislation does not apply to a rate of return instrument.
30C—Rate of return instrument is binding on AER and
covered pipeline service providers
A rate of return instrument is binding on—
(a) the AER in relation to the performance or exercise of an AER economic
regulatory function or power; and
(b) each covered pipeline service provider in relation to a matter
relevant to the performance or exercise of an AER economic regulatory function
or power.
Subdivision 2—Requirement to make rate of
return instrument
30D—AER to make rate of return
instrument
(1) This section applies if a rate of return on capital or the value of
imputation credits is required for performing or exercising an AER economic
regulatory function or power.
(2) The AER must make an instrument (a rate of return
instrument) stating—
(a) for a rate of return on capital—the way to calculate the rate;
and
(b) for the value of imputation credits—the value or the way to
calculate the value.
(3) The AER may make an
instrument only if satisfied the instrument will, or is most likely to,
contribute to the achievement of the national gas objective to the greatest
degree.
(4) Subject to
subsection (3)
, the way to calculate a rate of return on capital must include a weighted
average of an allowed return on equity and an allowed return on debt.
(5) In making an instrument, the AER must have regard to—
(a) the revenue and pricing principles; and
(b) other information the AER considers appropriate.
30E—Content of rate of return
instrument
(1) If a rate of return
instrument states the value of imputation credits, the instrument must state a
single value to apply in relation to all covered pipeline service
providers.
(2) If a rate of return
instrument states a way to calculate the rate of return on capital or the value
of imputation credits, the instrument must—
(a) provide for the same methodology to apply in relation to all covered
pipeline service providers in calculating the rate or value; and
(b) provide for the methodology to apply automatically without the
exercise of any discretion by the AER.
Example for paragraph (b)—
The instrument can not include different methodologies or a band of values
from which the AER could choose in applying the instrument.
(3) Subject to
subsections (1)
and
(2)
, the instrument may include other matters the AER considers
appropriate.
Example—
Matters to help a covered pipeline service provider calculate a rate of
return or the value of imputation credits.
Subdivision 3—Consultation
requirements
30F—Process for making rate of return
instrument
Subject to this Division, the AER may make a rate of return instrument in
the way it considers appropriate.
30G—Other matters AER must have regard to in making
instrument
In making a rate of return instrument, the AER must also have regard to the
following—
(a) advice, recommendations or submissions given by a consumer reference
group;
(b) submissions made, and the report published, under
section 30H
;
(c) submissions made under
section 30J
;
(d) the report given by the independent panel under
section 30K
.
30H—Requirements before publishing draft
instrument
(1) Before publishing a
draft rate of return instrument under this Subdivision, the AER
must—
(a) establish a
reference group to help the AER implement an effective consumer consultation
process for making the proposed instrument (a consumer reference
group); and
(b) publish a notice on its website—
(i) inviting persons to make a written submission to the AER about the
proposed instrument; and
(ii) stating the period, not less than 28 days, within which a
submission must be made; and
(c) seek concurrent expert opinions or evidence about the proposed
instrument.
(2) A person may make a submission after the stated period only with the
written approval of the AER.
(3) Subject to
subsections (4)
and
(5)
, the AER may seek the expert opinions or evidence in the way it considers
appropriate.
Example—
The AER might convene a conference of experts to identify key issues, and
areas of dispute and agreement among the experts, about the content of the
proposed instrument.
(4) The AER must call
for nominations of eligible experts but may seek the expert opinions or evidence
from any eligible expert.
(5) If practicable, the
AER must seek the expert opinions or evidence from at least 3 eligible
experts.
(6) The AER must publish on its website—
(a) submissions made under this section; and
(b) a report on the outcomes of seeking the expert opinions or
evidence.
(7) In this section—
eligible expert means a person with qualifications or
experience in a field the AER considers relevant to making a rate of return
instrument.
Examples of relevant fields—
Finance, economics, law, consumer affairs, institutional
investment.
30I—Consumer reference group
(1) A consumer
reference group for making a rate of return instrument—
(a) is to consist of the members appointed by the AER; and
(b) may carry out its
activities, including giving advice or recommendations to the AER about the
instrument, in the way it considers appropriate.
(2) Without limiting
subsection (1)(b)
, the consumer reference group may—
(a) consult with consumers of natural gas; and
(b) facilitate consumer engagement in the process for making the
instrument; and
(c) make written submissions to the AER about the content of the
instrument and the process for making it.
(3) The AER must publish on its website any written advice,
recommendations or submissions given to it by the consumer reference
group.
30J—Publication of draft instrument and other
information
(1) The AER must, at least 6 months before making a rate of return
instrument, publish on its website—
(a) a draft of the proposed instrument and the explanatory information for
the instrument; and
(b) a notice—
(i) inviting persons to make a written submission to the AER about the
proposed instrument; and
(ii) stating the period, not less than 28 days, within which a
submission must be made.
(2) A person may make a submission after the stated period only with the
written approval of the AER.
(3) The AER must publish submissions made under this section on its
website.
30K—Report about draft instrument by independent
panel
(1) The AER must, as soon as practicable after publishing the draft
instrument, establish an independent panel to give the AER a written report
about the instrument.
(2) The panel—
(a) may carry out its activities, including giving the report, in the way
it considers appropriate; but
(b) must seek to give the report by consensus.
(3) The panel must—
(a) consist of at least 3 members, appointed by the AER, who have
qualifications or experience in a field the AER considers relevant to making a
rate of return instrument; and
Examples of relevant fields—
Finance, economics, law, consumer affairs, institutional
investment.
(b) give the report to the AER before the AER makes the
instrument.
(4) The AER must take reasonable steps to minimise and manage any
conflicts of interest a panel member may have in relation to making the
instrument.
(5) The report must—
(a) include the panel’s assessment of the evidence and reasons
supporting the rate of return on capital or the value of imputation credits
under the instrument; and
(b) state whether the report is given by consensus.
(6) The AER must publish the report on its website.
30L—Publication of explanatory
information
The AER must publish explanatory information for a rate of return
instrument on its website when the instrument is published under
section 30N
.
30M—Failure to comply does not affect
validity
Failure to comply with this Subdivision does not invalidate or otherwise
affect a rate of return instrument.
Subdivision 4—Publication, review and other
matters
30N—Publication of rate of return
instrument
After making a rate of return instrument, the AER must publish the
instrument on its website.
Note—
See
section 30L
for the requirement to publish explanatory information for the
instrument.
30O—Commencement and duration of
instrument
A rate of return instrument—
(a) commences on the day after it is published on the AER’s website;
and
(b) remains in force until the end of the day it is replaced under
section 30P
.
30P—Review and replacement of
instrument
(1) The AER must—
(a) review each rate of return instrument; and
(b) make a new rate of return instrument under this Division to replace
the reviewed instrument.
(2) The AER must replace the reviewed instrument by publishing the new
instrument on its website on the day that is—
(a) the fourth
anniversary of the day the reviewed instrument was published; or
(b) if the day mentioned in
paragraph (a)
is not a business day—the first business day after that
day.
30Q—Application of instrument
(1) A rate of return instrument—
(a) applies for the purposes of an AER economic regulatory decision made
after the commencement of the instrument; and
(b) does not affect an AER economic regulatory decision made before the
commencement of the instrument.
(2) To remove any doubt, it is declared that the application of the
instrument under this Law, including, for example, in making a full access
arrangement decision, is an AER economic regulatory function or power.
30R—Rate of return instrument may apply for this
Law and the National Electricity Law
(1) The AER may make 1
rate of return instrument for the purposes of this Law and the National
Electricity Law.
(2) If the AER acts under
subsection (1)
——
(a) the process for making the instrument under Part 3 Division 1B of the
National Electricity Law is taken to have been complied with for the instrument;
and
(b) the instrument is taken to be the rate of return instrument for the
purposes of the National Electricity Law.
Note—
See also section 18W of the National Electricity Law.
(3) To remove any doubt, it is declared that the instrument may include
different ways to calculate the rate of return on capital and the value of
imputation credits for the purposes of this Law and the National Electricity
Law.
Subdivision 5—Confidentiality of
information
30S—Confidentiality
(1) If a person wishes
to give information to the AER for the purposes of this Division in
confidence—
(a) the person must give the AER written notice that the person claims the
information is confidential; and
(b) give reasons to support the claim, including—
(i) information about the detriment that might be caused to the person if
the information were disclosed by the AER; and
(ii) information that—
(A) is reasonably within the person’s knowledge and capacity to
give; and
(B) may be relevant to the AER’s consideration under section 329
about whether the public benefit in disclosing the information outweighs the
detriment.
(2) In giving reasons to support a claim under
subsection (1)
about information received from another person (a third
party), a person may include information that—
(a) is reasonably within the person’s knowledge and capacity to
give; and
(b) is about the detriment that might be caused to the third party if the
information were disclosed by the AER; and
(c) may be relevant to the AER’s consideration under section 329
about whether the public benefit in disclosing the information outweighs the
detriment.
(3) In acting under
subsection (1)
, a person must specifically identify the information in relation to which
the claim is made.
(4) Information given to the AER for the purposes of this Division is not
to be regarded as being given in confidence, or to be confidential in any way,
unless the information is subject to an express claim of confidentiality made
under this section.
30T—Disclosure of information given in
confidence
(1) Chapter 10 Part 2 Division 1 applies in relation to publishing
information given to the AER in confidence under this Division.
(2) In this section—
information includes advice, recommendations, submissions and
reports.
16—Amendment
of section 52—Opportunity to be heard before regulatory information notice
is served
(1) Section 52(3)(b)—after "decision" insert:
or a rate of return instrument
(2) Section 52(3)(c)—after "decision" insert:
or rate of return instrument
17—Amendment
of section 59—Assumptions where there is non-compliance with regulatory
information instrument
(1) Section 59(1)(a)(i)—delete "provider; or" and
substitute:
provider or to make a rate of return instrument; or
(2) Section 59(1)(a)(ii)—delete "provider; and" and
substitute:
provider or the making of a rate of return instrument; and
(3) Section 59(2)(a)—delete paragraph (a) and substitute:
(a) may make the AER economic regulatory decision or the rate of return
instrument on the basis of the information the AER has at the time it makes that
decision or instrument; and
(4) Section 59(2)(b)—after "decision" insert:
or instrument
After section 294C insert:
294CA—South Australian Minister may make
consequential Rules relating to rate of return instrument
(1) The South
Australian Minister may make Rules that revoke or amend a Rule if the revocation
or amendment is consequential on the enactment of the Statutes Amendment
(National Energy Laws) (Binding Rate of Return Instrument) Act
2018.
(2) Without limiting
subsection (1)
, the South Australian Minister may make a rule providing that the rate of
return on capital under a rate of return instrument in force at the start of a
regulatory period applies throughout the period.
(3) Section 74(3) applies to Rules made under this section in the same way
it applies to Rules made by the AEMC.
(4) As soon as
practicable after making Rules under this section, the South Australian Minister
must—
(a) publish notice of
the making of the Rules in the South Australian Government Gazette;
and
(b) make the Rules publicly available.
(5) The notice referred to in
subsection (4)(a)
must state——
(a) the date on which the Rules commence operation; and
(b) if different Rules will commence operation on different dates, those
dates.
(6) Rules may only be made under this section on the recommendation of the
MCE.
(7) Once the first Rules have been made under
subsection (1)
, no further Rules can be made under that subsection.
(8) In this section—
regulatory period means the period specified in an applicable
access arrangement to be the regulatory period;
South Australian Minister means the Minister in right of the
Crown of South Australia administering Part 2 of the
National
Gas (South Australia) Act 2008
of South Australia.
19—Amendment
of Schedule 1—Subject matter for the National Gas
Rules
Schedule 1, item 41(g)—delete paragraph (g)
20—Amendment
of Schedule 2—Miscellaneous provisions relating to
interpretation
(1) Schedule 2, clause 34—after paragraph (b) insert:
(ba) a stated document is a copy of a rate of return instrument;
(2) Schedule 2, clause 51, definition of statutory
instrument—delete "the Rules" and substitute:
the rate of return instrument, the Rules
(3) Schedule 2—after clause 51 insert:
51A—Rate of return instrument construed not to
exceed the legislative power of the Legislature of this jurisdiction or the
powers conferred by this Law
(1) A rate of return instrument is to be construed as operating to the
full extent of, but so as not to exceed, the legislative power of the
Legislature of this jurisdiction or the power conferred by this Law under which
it is made.
(2) If a provision of the rate of return instrument, or the application of
a provision of the instrument to a person, subject matter or circumstance,
would, but for this clause, be construed as being in excess of the legislative
power of the Legislature of this jurisdiction or the power conferred by this Law
under which it is made—
(a) it is a valid provision to the extent to which it is not in excess of
the power; and
(b) the remainder of the instrument, and the application of the provision
to other persons, subject matters or circumstances, is not affected.
(4) Schedule 2—after clause 53 insert:
53A—Invalid rate of return
instrument
(1) This clause applies if the Court orders (by declaration or otherwise)
that a rate of return instrument is invalid.
(2) The AER must make a new rate of return instrument under this Law to
replace the invalid instrument.
(3) Until the invalid instrument is replaced, the rate of return on
capital and the value of imputation credits under the invalid instrument
continue to apply for the purposes of this Law.
(4) However, the AER
must deal with any affected access arrangement decision to apply the new rate of
return instrument to the decision as if the new instrument had applied from the
start of the decision.
(5)
Subclause (4)
applies despite section 30Q(1).
(6) In this clause—
affected access arrangement decision means a full access
arrangement decision to which the invalid instrument applied or continued to
apply;
deal with, an affected access arrangement decision, means to
do either of the following the AER considers appropriate in the
circumstances—
(a) revoke the decision and substitute a new decision;
(b) vary the decision.
21—Amendment
of Schedule 3—Savings and transitional
Schedule 3—after Part 14 insert:
Part 15—Transitional provisions for rate of return
instrument
90—Definitions
In this Part—
2013 non-binding guideline means the guideline about
determining the rate of return on capital issued by the AER in 2013;
review, of the 2013 non-binding guideline, means the review
of the guideline started by the AER in 2017;
stakeholders means——
(a) service providers and consumer organisations; or
(b) end users and prospective end users; or
(c) any of the following persons the AER considers appropriate to give the
AER advice or comment about the review of the 2013 non-binding
guideline——
(i) persons engaged by a covered pipeline service provider, a consumer
organisation or another entity to give the advice or comment;
(ii) other persons the AER considers have the qualifications or experience
appropriate to give the advice or comment; or
(d) other persons the AER considers have an interest in the review of the
2013 non-binding guideline.
91—Making first rate of return instrument if review
not completed before commencement
(a) the review of the 2013 non-binding guideline was not completed before
the commencement of this clause; and
(b) the AER has sought advice or comment from stakeholders in relation to
the review; and
(c) at least 3 months before making the first rate of return instrument,
the AER has published on its website a draft of the proposed first rate of
return instrument or proposed new non-binding guideline under the Rules;
and
(d) the draft
instrument or guideline has been reviewed by an independent panel consisting of
at least 3 members with qualifications or experience the AER considers
appropriate to conduct the review.
(2) Chapter 2 Part 1 Division 1A Subdivision 3 does not apply in relation
to making the first rate of return instrument.
(3) The independent panel mentioned in
subclause (1)(d)
must seek to give the AER a consensus report on the panel’s
review.
(4) However, a failure to give the AER a consensus report does not affect
the making of the first rate of return instrument.
92—Making first rate of return instrument if review
completed before commencement
(1) This clause applies
if, before the commencement of this clause—
(a) the review of the 2013 non-binding guideline was completed and a new
non-binding guideline is in force under the Rules; and
(b) the AER sought advice or comment from stakeholders in relation to the
review; and
(c) at least 3 months before making the new non-binding guideline, the AER
published on its website a draft of the proposed new non-binding guideline;
and
(d) the draft was reviewed by an independent panel consisting of at least
3 members with qualifications or experience the AER considered appropriate to
conduct the review; and
(e) the independent
panel gave the AER a report on the panel’s review.
(2) The new non-binding guideline is taken to be the first rate of return
instrument on the commencement.
(3) For section 30P, the instrument is taken to have been published on the
AER’s website on the commencement.
(4) The report mentioned in
subclause (1)(e)
need not be a consensus report on the panel’s review.
93—Application of this Law to particular
decisions
(1) The amended Law
applies in relation to an AER economic regulatory decision made after the
commencement even if any action or process for making the decision started
before the commencement.
(2) However,
subclause (1)
does not apply in relation to an AER economic regulatory decision made
before the commencement that has been remitted back to the AER to make the
decision again.
(3) In this clause—
amended Law means this Law as amended by the Statutes
Amendment (National Energy Laws) (Binding Rate of Return Instrument) Act
2018;
commencement means the commencement of Chapter 2 Part 1
Division 1A.