AustLII Tasmanian Numbered Acts

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ELECTRICITY REFORM (IMPLEMENTATION) ACT 2013 (NO. 5 OF 2013) - SECT 12

Sections 40AA , 40AB , 40AC and 40AD inserted

After section 39 of the Principal Act , the following sections are inserted in Subdivision 2:

40AA.     Determination of certain maximum prices

(1)  The Regulator must determine –
(a) the maximum prices that may be charged by a regulated offer retailer under standard retail contracts in respect of small customers; or
(b) a method of determining the maximum prices that may be charged by a regulated offer retailer under standard retail contracts in respect of small customers.
(2)  The Regulator must make a separate determination under subsection (1) in relation to each regulated offer retailer.
(3)  The Regulator may amend or revoke a determination under subsection (1) .
(4)  An amendment to a determination under subsection (1) may not be made if the determination, as so amended, would be a determination that did not take into account the principles set out in section 40AB .
(5)  The regulations may make provision in relation to –
(a) the making of determinations under this section; and
(b) the matters that are to be considered in taking into account the principles set out in section 40AB(1) ; and
(c) the amending or revocation of determinations under this section; and
(d) the making of adjustments to determinations under this section; and
(e) the charging to an electricity entity, or a regulated offer retailer, of costs incurred by the Regulator in exercising the Regulator's powers under this Division or the regulations.
(6)  A determination made under this section remains in force for the period determined in accordance with the regulations.
(7)  If the regulations make provision in relation to the making, amendment or revocation of a determination under this section, a determination under this section that is to be made, amended or revoked, is to be, respectively, made, amended or revoked in accordance with the regulations.

40AB.     Principles to be taken into account in making determinations under section 40AA

(1)  In determining for the purposes of section 40AA the maximum prices that may be charged by a regulated offer retailer under standard retail contracts in respect of small customers, or a method of determining the maximum prices that may be charged by a regulated offer retailer under standard retail contracts in respect of small customers, the Regulator is to –
(a) estimate the operational costs of the retailer in providing standard retail services; and
(b) take into account the principle that the maximum prices that may be imposed by the retailer under standard retail contracts in respect of small customers are to be such as will enable the retailer, after the operational costs are taken into account, to make a reasonable return on its investment in respect of the provision of standard retail services, taking into account the risk of making that investment; and
(c) take into account the principle that small customers should be protected from the adverse effects of the exercise of substantial market power by 
(i) the Hydro-Electric Corporation; or
(ii) the regulated offer retailer in relation to prices, pricing policies and standards of service in respect of the provision of standard retail services by the regulated offer retailer; and
(d) take into account the principle that, for the purpose of benefiting the public interest, there is a need for efficiency in the provision of standard retail services.
(2)  For the purposes of this section, the operational costs of the regulated offer retailer in providing standard retail services are –
(a) the wholesale electricity costs of the regulated offer retailer in relation to the provision of those services; and
(b) the transmission and distribution costs of the regulated offer retailer in relation to the provision of those services; and
(c) the cost to serve of the regulated offer retailer in relation to the provision of those services; and
(d) any other costs, incurred by the regulated offer retailer in relation to the provision of those services, that the Regulator thinks fit, including but not limited to –
(i) the cost of any obligation imposed on the retailer by or under this Act or by or under the National Energy Retail Law (Tasmania) Act 2012 ; or
(ii) the costs to the retailer, in relation to the generation of electricity, that may be imposed under any Commonwealth legislation relating to the emission of carbon.
(3)  For the purposes of this section, the wholesale electricity costs of a regulated offer retailer in relation to the provision of standard retail services consist of the costs of the retailer in purchasing electricity for the purposes of providing those services, including any adjustment to the costs that would be made if the regulated offer retailer and the Hydro-Electric Corporation were to enter into a contract that –
(a) was a contract in an approved standard form determined under section 43G(1) for a load following swap; and
(b) contained prices calculated in accordance with the approved methodology in relation to contracts in that approved standard form; and
(c) related to the same number of units of electricity as the number of units of electricity purchased by the retailer for the purposes of providing those services.
(4)  For the purposes of this section, the transmission and distribution costs of the regulated offer retailer in relation to the provision of standard retail services consist of –
(a) the prices, as determined in accordance with any relevant distribution determination made under the National Electricity Rules, charged to the regulated offer retailer for the distribution of electricity; and
(b) the prices, as determined in accordance with any relevant transmission determination made under the National Electricity Rules, charged to the regulated offer retailer for the transmission of electricity –
but only in so far as the costs relate to electricity used in the provision of standard retail services.
(5)  For the purposes of this section, the cost to serve of the regulated offer retailer in relation to the provision of standard retail services consists of the costs (other than those referred to in subsection (2)(a) , (b) or (d) ) that are, in the opinion of the Regulator, reasonably incurred by the regulated offer retailer in the efficient provision of those services.
(6)  In this section –
standard retail services , in relation to a regulated offer retailer, means services to be provided by the retailer under standard retail contracts in respect of small customers.

40AC.     Making of first determinations under section 40AA in relation to regulated offer retailers

(1)  The regulations may provide that –
(a) the Minister is to make a submission to the Regulator in relation to each of the first determinations, in relation to each of the regulated offer retailers, to be made by the Regulator under section 40AA ; and
(b) the submission may be made in relation to an authorised retailer as if the retailer were a regulated offer retailer; and
(c) the submission is to specify the structure and methodology to be applied in the determination; and
(d) the submission may specify the cost to serve for the purposes of section 40AB ; and
(e) the submission is to specify the period for which the determination is to remain in force; and
(f) the submission may specify that the Regulator is only to approve under section 41 draft standing offer prices to be fixed by a regulated offer retailer under section 40 in accordance with the determination, if the prices are in accordance with a pricing structure specified in the determination; and
(g) the submission may specify a pricing structure that is to be included, for the purposes of paragraph (f) , in the determination.
(2)  If –
(a) the regulations specify that the Minister is to make a submission to the Regulator in relation to each of the first determinations, in relation to each of the regulated offer retailers, to be made by the Regulator under section 40AA ; and
(b) a matter referred to in subsection (1)(c) , (d) , (e) , (f) or (g) is specified in the submission –
the determination is to be in accordance with the matter so specified.
(3)  The regulations may provide that a determination made under regulations in force before this section comes into operation is to be taken to be a determination made under section 40AA in relation to the authorised retailer specified in the determination.
(4)  A determination, in relation to a regulated offer retailer, to be made, or taken to be made, by the Regulator under section 40AA  –
(a) may be specified to apply to an authorised retailer even though, at the time the determination is made, the authorised retailer is not a regulated offer retailer; but
(b) does not apply in relation to the authorised retailer until the retailer is a regulated offer retailer.

40AD.     Declarations and determinations in relation to certain services

(1)  The Regulator may declare that goods or a service that are or may be provided by an electricity entity, or an authorised retailer, specified in the declaration are a declared electrical service.
(2)  A declaration may not be made under subsection (1) in relation to –
(a) a service provided under standard retail contracts in respect of small customers; or
(b) a distribution service or a transmission service.
(3)  The Regulator may only make a declaration under subsection (1) in relation to goods, or a service, that are or may be provided by an electricity entity, or an authorised retailer, specified in the declaration, if –
(a) the electricity entity or authorised retailer has substantial market power in respect of the service; and
(b) the promotion of competition, efficiency or the public interest requires the making of the declaration.
(4)  The Regulator may amend or revoke a declaration made under subsection (1) .
(5)  If the Regulator declares in accordance with subsection (1) goods or a service to be a declared electrical service, the Regulator may, in accordance with the regulations, determine the maximum prices, in relation to the declared electrical service, that the electricity entity or authorised retailer specified in the declaration may charge for the provision of the service.
(6)  If the Regulator determines in accordance with subsection (5) the maximum prices that the electricity entity or authorised retailer specified in the declaration may charge for the provision of a declared electrical service, the electricity entity or authorised retailer must only impose a price in respect of the service if the price is in accordance with the determination, as amended, if at all, under subsection (7) .
Penalty:  Fine not exceeding 1 000 penalty units.
(7)  The Regulator may amend or revoke a determination made under subsection (5) .
(8)  The regulations may make provision in relation to –
(a) the making by the Regulator of declarations or determinations under this section; and
(b) the amending or revocation of declarations or determinations under this section; and
(c) the matters that the Regulator is to take into account in making, amending or revoking declarations or determinations under this section; and
(d) the making of adjustments to determinations made under this section; and
(e) the charging to an electricity entity or an authorised retailer of costs incurred by the Regulator in exercising the Regulator's powers under this Division or regulations for the purposes of this Division.
(9)  If the regulations make provision in relation to the making, amendment or revocation of a declaration or determination under this section, a declaration or determination under this section that is to be made, amended or revoked, is to be, respectively, made, amended or revoked in accordance with the regulations.
(10)  A declaration or determination under this section remains in force for the period determined in accordance with the regulations.



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