Northern Territory Explanatory Statements

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ELECTRICITY LEGISLATION AMENDMENT BILL 2016

2016

LEGISLATIVE ASSEMBLY OF THE
NORTHERN TERRITORY

TREASURER

NATIONAL ELECTRICITY LEGISLATION AMENDMENT BILL 2016

SERIAL NO. 169

EXPLANATORY STATEMENT


GENERAL OUTLINE


The purpose of the legislation is to amend the National Electricity (Northern Territory) (National Uniform Legislation) Act and the Electricity Networks (Third Party Access) Act to ensure the operation of the National Electricity Law, the National Electricity Rules, and the National Electricity Regulations in the Territory are consistent with other participating jurisdictions to the greatest extent possible while addressing the Territory’s circumstances.

The National Electricity Law, Rules and Regulations form part of a co-operative scheme for the regulation of electricity networks in the National Electricity Market (of which electricity systems in all jurisdictions except for the Territory and Western Australia form a part). The lead legislation is the National Electricity (South Australia) Act 1996 (SA).


NOTES ON CLAUSES


Part 1. Preliminary Matters

Clause 1. Short Title

This is a formal clause which provides for the citation of the Act. The Bill when passed may be cited as the Electricity Legislation Amendment Act 2016.

Clause 2. Commencement

This clause provides for the commencement of the Act.

The Act, apart from Part 3, Division 3, commences on 1 July 2016.

Part 3, Division 3 commences on the day fixed by the Administrator by Gazette notice. Part 3, Division 3 contains amendments that will need to commence on the day Western Australia adopts the National Electricity Law as a law of its jurisdiction, to recognise Western Australia as a participating jurisdiction.


Part 2. Amendment of Electricity Networks (Third Party Access) Act

Clause 3. Act amended

This clause provides that Part 2 amends the Electricity Networks (Third Party Access) Act.

Clause 4. Section 2A amended

This clause omits from section 2A(1) the definitions National Electricity Law, National Electricity Regulations, and National Electricity Rules.

It inserts new definitions into section 2A(1) for National Electricity Law and National Electricity Rules so that:


These definitional amendments are required so that references in the Electricity Networks (Third Party Access) Act to National Electricity Law and National Electricity Rules mean (in effect) the National Electricity Law and National Electricity Rules as modified for the purposes of their application in the Northern Territory.

There is no need to retain the definition of National Electricity Regulations since neither the Electricity Networks (Third Party Access) Act nor regulations made under that Act refer to the National Electricity Regulations.


Clause 5. Section 53 amended

This clause omits from section 53(3) the words from ‘set out’ to ‘(SA)’.

This amendment will ensure the reference to the National Electricity Law in s 53(3) is a reference to the National Electricity Law modified for the purposes of its application in the Northern Territory.

This amendment is consistent with the new definition of National Electricity Law inserted in section 2A.

Clause 6. Section 57A inserted

This clause inserts a new section 57A.

New section 57A modifies the operation of the 2014 NT Network Price Determination, Part B, on and from 1 July 2016, as follows:


For the purposes of new section 57A:
In general, the modifications to the 2014 Network Price Determination facilitate the transition to the first regulatory control period, beginning 1 July 2019, under the national electricity framework.

Part 3. Amendment of National Electricity (Northern Territory) (National Uniform Legislation) Act

Division 1. Act amended

Clause 7. Act Amended

This clause provides that Part 3 amends the National Electricity (Northern Territory) (National Uniform Legislation) Act.


Division 2. Amendments commencing on 1 July 2016

Clause 8. Section 6 amended

This clause omits from section 6 the words ‘for the time being’ and replaces them with ‘from time to time’.

This amendment has the effect of applying the National Electricity Law with ambulatory operation in the Northern Territory, meaning that when the National Electricity Law is amended by the South Australian Parliament, the amended version will apply automatically in the Territory. It also means that the National Electricity Rules, made under the National Electricity Law, will have ambulatory operation in the Territory.

Clause 9. Section 7 amended

This clause omits from section 7 the words ‘for the time being’ and replaces them with ‘from time to time’.

This amendment has the effect of applying the National Electricity Regulations with ambulatory operation in the Northern Territory, meaning that when the National Electricity Regulations are amended by the Governor of South Australia, the amended version will apply automatically in the Territory.

Clause 10. Section 8 amended

This clause omits from section 8(1) the definition of the National Electricity Law or this Law and inserts a new definition.

The new definition provides that the National Electricity Law or this Law means:


This has the effect of ensuring that references to the National Electricity Law or this Law in the National Electricity Law or the National Electricity Regulations means, where appropriate, the National Electricity (NT) Law.

This clause also omits section 8(2) and inserts a new section 8(2).

The new section 8(2) provides that the Acts Interpretation Act 1915 (SA) and other Acts of South Australia do not apply to the National Electricity (NT) Law or the National Electricity (NT) Regulations.

Clause 11. Section 9A inserted

This clause inserts a new section 9A.

New section 9A provides that, as soon as practical after a modification instrument is made (being an instrument that modifies the operation of the National Electricity Rules for the purpose of their having the force of law in the Territory, as described below), the Minister must notify the Australian Energy Market Commission (AEMC) of its making.

Section 9A also provides that the Minister may delegate this notification function.

For the purposes of section 9A:


Clause 12. Section 12 amended

This clause inserts into section 12(1)(b)(i) after ‘time’, ‘on the occurrence of a future event’.

Section 12 of the National Electricity (Northern Territory) (National Uniform Legislation) Act enables powers to be exercised under provisions of the National Electricity (NT) Law, the National Electricity (NT) Rules or the National Electricity (NT) Regulations before those provisions take effect as part of a law of the Territory because of a modification. The amendment extends the kinds of modifications to which section 12 applies to modifications expressed to expire on the occurrence of a future event (for example, the adoption of the National Energy Retail Law by the Northern Territory).

Clause 13. Section 12A and 12B inserted

This clause inserts new section 12A and new section 12B.

New section 12A ensures that instruments (such as guidelines) and decisions (such as appointments, determinations or approvals) made by the Australian Energy Regulator under provisions of the NT national electricity legislation that have yet to commence can, in certain circumstances, be taken to be valid and effective.

New section 12B ensures that if the Australian Energy Regulator is required to take preparatory steps (such as undertaking consultation before making an instrument or a decision) under a provision of the NT national electricity legislation that has yet to commence, it is taken, in certain circumstances, to have complied with the requirement to take the preparatory steps.

For the purposes of these provisions, the NT national electricity legislation means any of the following:


Clause 14. Section 13 amended

This clause omits from section 13(2)(b) ‘for the time being’ and replaces it with ‘from time to time’. This ensures that the reference in section 13(2)(b) to the regulations under Part 4 of the National Electricity (South Australia) Act 1996 (SA) is a reference to those regulations as in force from time to time.

This clause also inserts section 13(4), which provides that regulations made under section 13 may apply, adopt or incorporate (with or without changes) a matter contained in another document or instrument as in force or existing at a particular time or from time to time.

This clause also inserts section 13(5), which provides that, in section 13, National Electricity Rules means the National Electricity Rules as defined in section 2(1) of the National Electricity Law set out in the Schedule to the National Electricity (South Australia) Act 1996 (SA), as in force from time to time. This amendment is consequential to the amendments made by clause 16 to the definition of National Electricity Rules in section 2 of the National Electricity Law.

Clause 15. Schedule 1, clause 3 amended

This clause inserts into Schedule 1, clause 3(2), the following new definitions:


The effect of this clause is to modify the definitions of National Electricity Rules or Rules and Regulations in section 2 of the National Electricity Law so that a reference to the National Electricity Rules or National Electricity Regulations in the National Electricity Law means, where appropriate, a reference to the National Electricity Rules or National Electricity Regulations as modified, for the purposes of the Northern Territory, by or under the National Electricity (Northern Territory) (National Uniform Legislation) Act .

Clause 16. Schedule 1, clause 4 replaced

This clause omits Schedule 1, clause 4 and replaces it with new clauses 4 and 4A.

Clause 4

New clause 4 inserts a new section 2EA into the National Electricity Law. Section 2EA states that a reference to the definition of additional Minister initiated Rules, initial National Electricity Rules or National Electricity Rules or Rules to Rules made under this Law or a provision of this Law:

The effect of new section 2EA is to ensure that certain Rules made prior to the application of the National Electricity Law by the Northern Territory will have the force of law in the Territory, subject to modifications made by or under the National Electricity (Northern Territory) (National Uniform Legislation) Act.

Clause 4A

New clause 4A modifies section 8 of the National Electricity Law, which relates to the statements of policy principles of the MCE or Ministerial Council of Energy (now Council of Australian Governments Energy Council).

It inserts, after section 8(2), new section 8(2a). New section 8(2a) provides that for the purpose of section (2), the MCE must regard the reference to the national electricity objective to the national electricity system as a reference to whichever of the following the MCE considers appropriate in the circumstances –
The effect of new section 8(2a) is to allow the MCE to have regard, where appropriate, to the Northern Territory’s ‘local electricity systems’ in performing its function under section 8.

Clause 17. Schedule 1, clauses 9A to 9C inserted

This clause inserts, after Schedule 1, clause 9, new clauses 9A, 9B and 9C.

Clause 9A

New clause 9A inserts new section 32A into the National Electricity Law. New section 32A provides that, subject to section 88(2a), for the purposes of this Law, the AEMC must have regard to the reference in the national electricity objective to the national electricity system as a reference to whichever of the following the AEMC considered appropriate in the circumstances –


The effect of new section 32A is to allow the AEMC to have regard, where appropriate, to the Northern Territory’s ‘local electricity systems’ in performing its functions under the National Electricity Law.

Clause 9B

New clause 9B modifies section 34 of the National Electricity Law, which sets out the AEMC’s Rule making powers.

The clause omits section 34(1)(a)(iii) of the National Electricity Law and inserts new sections 34(1)(a)(iia) and (iii).

New sections 34(1)(iia) and (a)(iii) effectively provide that the AEMC may make Rules with respect to regulating:
· the operation of a local electricity system for the purposes of the safety, security and reliability of that system; and
· the activities of persons (including Registered participants) participating in the national electricity market or involved in the operation of the national electricity system or a local electricity system.

The clause also inserts, after section 34(3)(b), new sections 34(3)(ba) and (bb). New sections 34(3)(ba) and (bb) effectively provide that Rules made by the AEMC may:
· vary in their terms as between: · have no effect with respect to one or more of the above systems.

The effect of the above amendments is to allow the AEMC to have regard, where appropriate, to the Northern Territory’s ‘local electricity systems’ in performing its Rule making functions.

Clause 9C

New clause 9C modifies section 46 of the National Electricity Law, which requires the AEMC to maintain on its website, and make available for inspection, copies of the National Electricity Rules as in force from time to time.

The effect of the modification is to ensure that the AEMC maintains on its website, and makes available for inspection, copies of the National Electricity Rules as modified for the purposes of their application in the Northern Territory. In that regard, the AEMC will be required to update the copies of the National Electricity Rules it maintains for these purposes to reflect modifications made by or under the National Electricity (Northern Territory) (National Uniform Legislation) Act, but only where the relevant Northern Territory Minister notifies the AEMC of the modifications.
Clause 18. Schedule 1, clause 10 amended

This clause omits from Schedule 1, clause 10, ‘Before Part 5, Division 1’ and inserts ‘After Part 5, heading’

This amendment is to ensure that the National Electricity (Northern Territory) (National Uniform Legislation) Act is structured in conformance with the Northern Territory’s drafting guidelines. It does not change the legal effect of the Act.

Clause 19. Schedule 1, clause 12A inserted

This clause inserts into Schedule 1, after clause 12, new clause 12A.

New clause 12A modifies section 71A of the National Electricity Law, which sets out definitions relating to merits review and other non-judicial review.

The clause modifies paragraph (a) of the definition of reviewable regulatory decision to make that aspect of the definition ‘subject to the Regulations’. The effect of this modification is that while a reviewable regulatory decision relevantly means a network revenue or pricing determination that sets a regulatory period, this meaning may be altered by the National Electricity Regulations.

Clause 20. Schedule 1, clause 14 replaced

This clause omits Schedule 1, clause 14 and inserts new clauses 14 to 14K.

Clause 14

New clause 14 modifies section 87 of the National Electricity Law, which sets out definitions relating to the making of the National Electricity Rules.

The clause inserts new definitions, for differential Rule and uniform Rule, and replaces the existing definition of urgent Rule.

The term differential Rule is defined to mean:
· a Rule that:

· but is not a jurisdictional derogation, participant derogation or Rule that has effect with respect to an adoptive jurisdiction for the purpose of section 91(8).

The term uniform Rule is defined to mean a Rule that:
· does not vary in its terms as between: · has effect with respect to all of those systems.

The term urgent Rule is now defined to mean a Rule relating to any matter or thing that, if not made as a matter of urgency, will result in that matter or thing imminently prejudicing or threatening:
· the effective operation or administration of the wholesale exchange operated and administered by the Australian Energy Market Operator in the other participating jurisdictions; or
· the safety, security or reliability of:
The effect of these new definitions, together with the other modifications to provisions of the National Electricity Law concerning the AEMC’s Rule making functions, is to allow the AEMC to take into account the Northern Territory’s ‘local electricity systems’ in exercising its Rule making functions, and, where appropriate, to make differential Rules suitable to the Northern Territory’s systems (rather than uniform Rules).

Clause 14A

New clause 14A modifies section 88 of the National Electricity Law, which relates to the application of the national electricity objective in the context of the AEMC’s Rule making functions. Relevantly, under section 88(1), the AEMC may only make a Rule if it is satisfied that the Rule will or is likely to contribute to the achievement of the national electricity objective.

The clause inserts, after section 88(2), new section 88(2a). New section 88(2a) provides, that for the purposes of Part 7 of the National Electricity Law (which concerns the making of the National Electricity Rules), the AEMC must regard the reference in the national electricity objective to the national electricity system as a reference to whichever of the following the AEMC considers appropriate in the circumstances having regard to the nature, scope or operation of the proposed Rule:
· the national electricity system;
· one of more, or all, of the local electricity systems;
· both the national electricity systems and local electricity systems.

The effect of new section 88(2a), together with the other modifications to provisions of the National Electricity Law concerning the AEMC’s Rule making functions, is to allow the AEMC, where appropriate, to take into account in accordance with this provision the Northern Territory’s ‘local electricity systems’ in exercising its Rule making functions.



Clause 14B

New clause 14B inserts new section 88AA into the National Electricity Law.

New section 88A sets out the circumstances in which the AEMC may make a differential Rule. It effectively provides that:
· in addition to complying with sections 88, 88A and 88B, the AEMC may only make a Rule if it is satisfied that it is a uniform Rule; but
· despite the above requirement, the AEMC may make a differential Rule if the AEMC is satisfied that, having regard to any relevant MCE statement of policy principles, the differential Rule will, or is likely to, better contribute to the achievement of the national electricity objective than a uniform Rule.

New section 88AA does not apply in relation to:
New section 88AA has a dual effect. It ensures, to the extent possible, that there will be a uniform set of Rules applying to all electricity systems. However, together with the other modifications to provisions of the National Electricity Law concerning the AEMC’s Rule making functions, it also allows the AEMC to take into account the Northern Territory’s ‘local electricity systems’ in exercising its Rule making functions, and, where appropriate, to make differential Rules suitable to the Northern Territory’s systems (rather than uniform Rules).

Clause 14C

New clause 14C modifies section 88A of the National Electricity Law, which provides that the AEMC must take into account the form of regulation factors in certain cases.

The clause inserts into section 88A, after ‘sections 88’, ‘, 88AA’.. This modification makes it clear that the AEMC must also comply with new section 88AA, in addition to complying with section 88A (and other provisions).

Clause 14D

New clause 14D modifies section 88B of the National Electricity Law, which provides that the AEMC must take into account revenue and pricing principles in certain cases.

The clause inserts into section 88B, after ‘sections 88’, ‘, 88AA’. This modification makes its clear that the AEMC must also comply with new section 88AA, in addition to complying with section 88B (and other provisions).

Clause 14E

New clause 14E modifies section 89 of the National Electricity Law, which provides that the AEMC must have regard to certain matters in relation to the making of jurisdictional derogations.

The clause omits from section 89(c) ‘the national electricity system’ and replaces it with ‘the local electricity system’. The effect of this modification is to ensure that in making a jurisdictional derogation for the purposes of the Northern Territory, the AEMC has relevant regard to the Northern Territory’s ‘local electricity systems’, rather than the ‘national electricity system’.

Clause 14F

New clause 14F modifies section 91 of the National Electricity Law, which relates to the initiation of making a Rule. Relevantly, under section 91(1), the AEMC may make a Rule at the request of any person, the MCE or the Reliability Panel.

The clause inserts, after section 91(1), new section 91(1a). New section 91(1a) provides that a request made under section 91(1) may request the AEMC to make a differential Rule.

Clause 14G

New clause 14G modifies section 91A of the National Electricity Law, which provides that the AEMC may make a more preferred Rule in certain cases.

The clause effectively inserts new section 91A (2) at the end of the provision. New section 91A (2) provides that, to avoid doubt, the AEMC may, in accordance with section 88AA, make a more preferable Rule that is a differential Rule, whether or not the market initiated proposed Rule (to which the more preferable Rule relates) proposed the making of a differential Rule.

Clause 14H

New clause 14H inserts new section 95A into the National Electricity Law.

New section 95A provides that if the AEMC considers that it should take certain action in respect of a request for the making of a Rule, and the request included a request that the AEMC make a differential Rule, then, in addition to the requirements of section 95 (which also concerns notification of a proposed Rule), the AEMC must give the Minister of this participating jurisdiction:
· a copy of the notice published under section 95(1a)(a); and
· a draft of the proposed Rule; and
· any other documentation prescribed by the Regulations.

Clause 14J

New clause 14J modifies section 99 of the National Electricity Law, which relates to draft Rule determinations.

The clause inserts new section 99(1c), after section 99(1b), and new section 99(2)(a)(iia), after section 99(2)(a)(ii).

New section 99(1c) provides that, in the case of a proposed Rule that is a differential Rule, the AEMC must also, as soon as practicable after publishing a notice under section 99(1a)(b) or (1b), give the Minister of this participating jurisdiction the draft Rule determination and a copy of the notice.

Section 99(2)(a) provides that a draft Rule determination must contain the reasons of the AEMC as to whether or not it should make the proposed Rule, and those reasons must include the matters specified in the provision. New section 99(2)(a)(iia) effectively provides that those matters include, in the case where the proposed Rule is a differential Rule, the reasons of the AEMC as to whether it is satisfied the proposed Rule will, or is likely to, better contribute to the achievement of the national electricity objective than a uniform Rule.

Clause 14K

New clause 14K modifies section 102 of the National Electricity Law, which relates to final Rule determinations.

The clause inserts new section 102(1c), after section 102(1b), and new section 102(2)(a)(iia), after section 102(2)(a)(ii).

New section 102(1c) provides that, if the Rule to be made is a differential Rule, the AEMC must also, as soon as practicable after publishing a notice under section 99(1a)(b), give the Minister of this participating jurisdiction:
· the final Rule determination; and
· a copy of the notice.

Section 102(2)(a) provides that a final Rule determination must contain the reasons of the AEMC as to whether or not it should make a Rule, and those reasons must include the matters specified in the provision. New section 102(2)(a)(iia) effectively provides that those matters include, in the case where the Rule made is a differential Rule, the reasons of the AEMC as to whether it is satisfied the Rule will, or is likely to, better contribute to the achievement of the national electricity objective than a uniform Rule.

Clause 21. Schedule 1, clause 17 replaced

This clause replaces Schedule 1, clause 17 with a new clause 17.

New clause 17 also modifies Schedule 1, item 32 of the National Electricity Law, which informs the subject matter for the National Electricity Rules.

The new clause inserts into item 32, after ‘system’, ‘or local electricity system’. The effect of this modification, together with the other modifications to provisions of the National Electricity Law concerning the AEMC’s Rule making functions, is to allow the AEMC to have regard, where appropriate, to the Northern Territory’s ‘local electricity systems’ in performing its Rule making functions under the National Electricity Law.

Division 3. Amendments commencing on day to be fixed

Clause 22. Schedule 1, clause 3 amended

This clause amends Schedule 1, clause 3(2) and clause 3(3), which in turn modify or insert definitions into section 2(1) of the National Electricity Law.

The definition of interconnected national electricity system is, in effect, to be further modified by inserting, after ‘the other participating jurisdictions’, ‘(other than Western Australia)’.

Paragraph (a) of the definition of national electricity market is, in effect, to be further modified by inserting, after ‘in the other participating jurisdictions’, ‘(other than Western Australia)’.

The modifications, when they commence, will recognise Western Australia as a participating jurisdiction which, like the Territory, does not have interconnected electricity systems.

Clause 23. Schedule 1, clause 12 replaced

This clause omits Schedule 1, clause 12 and replaces it with a new Schedule 1, clause 12, which in turn modifies section 62 of the National Electricity Law.

Section 62 is, in effect, to be further modified by inserting into section 62(b),after ‘in the other participating jurisdictions’, ‘(other than Western Australia)’.

The modifications, when they commence, will recognise Western Australia as a participating jurisdiction which, like the Territory, does not have interconnected electricity systems.

Clause 24. Schedule 1, clause 14 amends

This clause amends Schedule 1, clause 14, which in turn modifies the definition of urgent Rule in section 87 of the National Electricity Law.

The definition of urgent Rule is, in effect, to be further modified by inserting, after ‘in the other participating jurisdictions’,‘(other than Western Australia)’.

The modifications, when they commence, will recognise Western Australia as a participating jurisdiction which, like the Territory, does not have interconnected electricity systems.

Clause 25. Schedule 1, clause 17 amended

This clause amends Schedule 1, clause 17(1), which in turn modifies Schedule 1, items 4, 7, 9 and 34(a) to the National Electricity Law.

These items are, in effect, to be further modified by inserting, after ‘in the other participating jurisdictions’, ‘(other than Western Australia)’.

The modifications, when they commence, will recognise Western Australia as a participating jurisdiction which, like the Territory, does not have interconnected electricity systems.


Part 4. Expiry of Act

Clause 26. Expiry of Act

This clause provides that the Act expires on the day after it commences.


 

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