EXPLANATORY STATEMENT

 

Select Legislative Instrument 2008 No. 137

 

Issued by the authority of the Minister for Competition Policy and Consumer Affairs

 

Trade Practices Act 1974

 

Trade Practices Amendment Regulations 2008 (No. 3)

 

Section 172 of the Trade Practices Act 1974 (the Act) provides, in part, 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.

 

The Regulations amend the Trade Practices Regulations 1974 (the Principal Regulations) to support the transfer of gas and electricity distribution and transmission regulation to a national framework with the Australian Energy Regulator (AER) as the single national regulator and the Australian Competition Tribunal (the Tribunal) as the single energy merits review body. The creation of a national framework for regulation of electricity and gas is an important energy market reform. It is implemented through two pieces of cooperative state‑based legislation: the National Electricity Law and the National Gas Law.

 

Section 44AB of the Act provides for regulations to be made for the purposes of prescribing a state and territory energy law.

 

The Regulations prescribe relevant provisions of the Gas Industry Act 2001 (Victoria), Electricity Supply Industry Act 1995 (Tasmania) and Gas Pipelines Access (Western Australia) Act 1998 as being ‘State/Territory energy laws’ under section 44AB of the Act. The prescription is for the purpose of conferring specific state regulatory functions on the AER to assist the transition to the national framework.

 

Subsection 44AAF(3) of the Act provides for the AER to provide certain bodies with information, including the Australian Competition and Consumer Commission, the Australian Energy Market Commission, the National Electricity Market Management Company and staff of those bodies in performing their respective functions and powers. Paragraph 44AAF(3)(e) further provides that the AER may disclose information to other persons or bodies prescribed in regulations.

 

The AER needs to share information with a range of Commonwealth, state and territory statutory bodies in relation to the performance of its functions. The Regulations prescribe a range of Commonwealth, state and territory statutory bodies for the purposes of paragraph 44AAF(3)(e) of the Act. These bodies perform related energy functions similar to the AER and information may usefully be shared to assist each organisation to perform its functions.

 

On a day to be fixed by Proclamation, the Australian Energy Market Amendment (Gas Legislation) Act 2007 will insert a new section 44ZZR into the Act. Section 44ZZR will apply procedural provisions for the Tribunal when performing functions under a state/territory energy law or a designated Commonwealth energy law. Section 44ZZR will also provide for regulations to be made about the following matters:

 

a)      the constitution of the Tribunal;

b)      the arrangement of the business of the Tribunal;

c)      the disclosure of interests by members of the Tribunal;

d)      determining questions before the Tribunal and questions that arise during a review;

e)      procedure and evidence, including the appointment of persons to assist the Tribunal by giving evidence (whether personally or by means of a written report); and

f)        the fees and expenses of witnesses in proceedings before the Tribunal.

 

The Regulations will apply procedures of the Tribunal to merits review processes undertaken under the National Gas Law and the National Electricity Law. There will also be a limited merits review function in relation to possible AER decisions administering Victorian distribution pricing arrangements under section 29 of the National Electricity (Victoria) Act 2005.

 

The Regulations also make a minor amendment to a reference in subregulation 6AA(2) of the Principal Regulations.

 

The policy implemented by these Regulations has undergone extensive consultation during the development of the National Electricity and Gas Laws. This has involved active participation of all State and Territory governments through the Ministerial Council on Energy process and extensive public consultation. Public consultation has involved two exposure drafts of the National Gas Law and Rules and the National Electricity Law and Rules. State and territory officials and regulatory bodies have been further involved in the drafting process of legislative instruments which are part of the schemes.

 

The state and territory energy laws referred to in the Regulations can be found at the relevant legislation websites of each State and Territory. The MSO rules are a statutory instrument under the Gas Industry Act 2001 (Victoria) and can be found at http://www.vencorp.com.au/.

 

Details of the Regulations are set out in the Attachment.

 

Regulations 1, 2, 3 and Schedule 1 to the Regulations, which relate to the prescription of state and territory energy laws and information sharing by the AER, commenced on the day after the Regulations were registered on the Federal Register of Legislative Instruments. Regulation 4 and Schedule 2 to the Regulations, which relate to merits review by the Tribunal, will commence on the commencement of Schedule 1 to the Australian Energy Market Amendment (Gas Legislation) Act 2007, which is expected to be on or after 1 July  2008.

 

 

Details of the Trade Practices Amendment Regulations 2008 (No. 3)

 

Regulation 1 — name of Regulations

 

This regulation provides that the title of the Regulations is the Trade Practices Amendment Regulations 2008 (No. 3).

 

Regulation 2 — commencement

 

This regulation provides that regulations 1, 2 and 3 and Schedule 1 commence on the day they are registered and that regulation 4 and Schedule 2 commence on the commencement of Schedule 1 to the Australian Energy Market Amendment (Gas Legislation) Act 2007, which will be on or after 1 July 2008.

 

Regulation 3 — amendment of the Trade Practices Regulations 1974

 

This regulation provides that Schedule 1 amends the Trade Practices Regulations 1974.

 

Regulation 4 — amendment of the Trade Practices Regulations 1974

 

This regulation provides that Schedule 2 amends the Trade Practices Regulations 1974.

 

Schedule 1

 

Item 1: inserts a definition of the ‘MSO Rules’ to allow them to be referred to as a state/territory energy law

 

Item 2: inserts new regulations 7 and 7A

 

Regulation 7 — Australian Energy Regulator may disclose information to prescribed persons and bodies

 

The National Gas and Electricity Laws envisage that the AER should be able to share information with a range of other bodies including the National Competition Council and jurisdictional energy regulators.

 

To allow this to happen, the regulations prescribe the National Competition Council, the Tribunal, the Victorian Energy Networks Corporation, state and territory energy regulators and state and territory energy ombudsmen.

 

Regulation 7A — prescribed energy laws

 

A number of state and territory laws, other than the national electricity and gas regime, confer functions on the AER under the Australian Energy Market Agreement. For the AER to perform these functions these laws need to be prescribed by regulation as ‘State /Territory energy laws’ for the purposes of section 44AI of the Act. This regulation prescribes Parts 3 and 4 of the Victorian Gas Industry Act 2001 and Chapters 1 to 9 of the Victorian MSO Rules.

 

Schedule 2

 

Items 1 and 2: these items amend references to a section of the Trade Practices Act 1974 to reflect amendments that will be made to the Act by the Australian Energy Market Amendment (Gas Legislation) Act 2007. The amendment moved the definition of ‘State/ Territory energy law’ from section 44AB to the general definition in subsection 4(1).

 

Item 3: replaces regulation 7A and inserts new regulations 7B, 7C and 7D

 

Regulation 7A — prescribed energy laws

 

A number of state and territory laws, other than the national electricity and gas regime, confer functions on the AER under the Australian Energy Market Agreement. For the AER to perform these functions these laws need to be prescribed by regulation as ‘State/Territory energy laws’ under section 44AI of the Act. This regulation prescribes the following laws:

 

·        Parts 3 and 4 of the Victorian Gas Industry Act 2001;

·        Chapters 1 to 9 of the Victorian MSO Rules;

·        section 15 of the Gas Pipelines Access (Western Australia) Act 1998; and

·        Division 7 of Part 2 of the Electricity Supply Industry Act 1995 (Tasmania).

 

The Gas Industry Act 2001 and Chapters 1 to 9 of the Victorian MSO Rules are prescribed as state or territory energy laws by both Schedules 1 and 2. The reason for this is that Schedule 1 prescribes them under the definition of ‘State/ Territory energy law’ in section 44AB of the Trade Practices Act 1974 and this definition will move to section 4 upon the commencement of the Australian Energy Market Amendment (Gas Legislation) Act 2007. Schedule 2 then prescribes them under the new definition.

 

Regulation 7B — merits review by Tribunal

 

The Tribunal is empowered to review regulatory decisions made under the National Gas and Electricity Laws. To allow this to occur the procedural provisions applying to the Tribunal for decisions under the Act need to be replicated for decisions under the National Gas and Electricity Laws. This provision was prepared in consultation with the Tribunal and other interested stakeholders.

 

Regulation 7C — register of applications for review under state/territory energy law

 

This regulation requires the Tribunal to keep a register of all applications for review under the National Gas and Electricity Laws. It replicates the merger authorisation register established by section 95AZ of the Trade Practices Act 1974, which ensures consistency in the administration of the Tribunal.

 

Regulation 7D — confidential claims etc.

 

This regulation allows the Tribunal to treat information given to it in a review as confidential. It replicates the effect of section 95AZA of the Trade Practices Act 1974. This mechanism ensures consistency in the Tribunal's administration and allows parties to a review to claim confidentiality on potentially commercially sensitive documents at the time the document is given to the Tribunal.