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Electricity Industry Acts (Further Amendment)
Bill
Circulation Print
EXPLANATORY MEMORANDUM
General
The Bill amends the Electricity Industry Act 2000 and the Electricity
Safety Act 1998. The principal purposes of the Bill are to clarify
VENCorp's powers and functions in relation to electricity demand
management and the ability of VENCorp to recover its costs in respect of
that task, to modify the operation of the cross-ownership provisions of the
Electricity Industry Act 2000 in relation to new generation projects and to
make provision for the establishment of a deemed contract between
electricity distribution companies and retail customers. The Bill also clarifies
the scope of the obligation created under the retailer of last resort scheme and
modifies the scope of Government's powers to make Orders in Council in
relation to metrology procedures. The amendments to the Electricity Safety
Act 1998 are directed at improving the operation of the electricity safety
management scheme provisions and the provisions dealing with bushfire
mitigation plans.
Clause Notes
PART 1--PRELIMINARY
Clause 1 sets out the purposes of the Act which are to amend the
Electricity Industry Act 2000 to further regulate the electricity
industry and to amend the Electricity Safety Act 1998 in
relation to bushfire mitigation and electricity safety management
schemes.
Clause 2 provides for the commencement of the Act. Sub-section (2)
allows for commencement by proclamation of the provisions of
the Act creating deemed distribution contracts and expanding and
clarifying VENCorp's ability to manage electricity demand and
recover costs. Sub-section (3) provides that if those provisions
541163 BILL LC CIRCULATION 5/4/2001
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listed in sub-section (2) are not proclaimed before 31 December
2002 they come into operation on that date.
PART 2--AMENDMENTS TO ELECTRICITY INDUSTRY
ACT 2000
Clause 3 amends the supplier of last resort provisions in section 27 of the
Electricity Industry Act 2000. Sub-clauses (1) and (2) together
amend section 27 to replace the mechanism allowing for
termination of a supplier of last resort obligation after 3 months
or on written notice. The new sub-section (5A) clarifies the
situations in which the obligations of the supplier of last resort
cease. Under the new sub-section (5A), the obligations of the
supplier of last resort cease 3 months after its commencement, or
when a customer advises the second licensee that supply or sale
is no longer required, or when the customer transfers to become
the customer of another licensee, or when the customer enters
into a new contract with the second licensee, whichever occurs
first.
Sub-clause (3) inserts after section 27(10) new sub-sections (11),
(12) and (13) which provide that the tariffs, terms and conditions
of a contract between a supplier of last resort and a customer,
which have been approved or determined by the Office, may be
varied by the same procedure that is used for approval of those
tariffs, terms and conditions in the first instance.
Clause 4 Sub-clause (1) inserts a new sub-section (3) into section 39 of the
Act. Section 39 creates deemed contracts for supply and sale in
respect of "domestic or small business customers" (within the
meaning of section 35) where there is no contract in existence
between the customer and the licensee and where the customer
commences to take supply of electricity at premises for which
that particular licensee is responsible under the wholesale
electricity market. The new sub-section (3) serves to exclude
from this creation of a deemed contract, those consumers of
electricity who otherwise might fall under the section, but who
have commenced to take their supply of electricity by fraudulent
or illegal means.
Sub-section (3) has identical effect for section 40 of the Act
which relates to deemed contracts for supply and sale to "relevant
customers" within the meaning of section 36.
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Clause 5 inserts a new section 40A. The new section 40A allows a
distribution company, subject to the conditions of its licence, to
give notice of terms and conditions applying in respect of the
distribution or supply of electricity by that company to retail
customers or a class of customers. The terms and conditions
must be approved by the Office of the Regulator-General.
Further, unless the Office approves otherwise in a particular case,
the terms and conditions must not be inconsistent with the
Electricity Distribution Code published by the Office, as
amended or remade from time to time.
Section 40A provides a means whereby the obligations that a
distribution company owes to retail customers may be directly
enforced by those customers against the company and vice versa.
Terms and conditions approved by the Office under the new
section 40A take effect on publication in the Government
Gazette and are binding on the distribution company and the
retail customers to whom they are expressed to apply.
Sub-section (5) provides that a distribution company and retail
customer are deemed to have entered into a contract on the terms
and conditions published in accordance with this section.
The new section 40A also provides that the distribution company
may, from time to time, vary terms and conditions of which
notice is given under this section and that such variation must be
made in accordance with the procedure set out in the section for
making, approval and notice of terms and conditions.
The new sub-section 40A(8) provides that a distribution
company, subject to the conditions of its licence, and a retail
customer may by agreement in writing vary any of the terms and
conditions of a deemed contract under sub-section 40A(5).
The new sub-section 40A(9) provides that a deemed contract
created under subsection (5) may be terminated in accordance
with its terms and conditions.
The new sub-section 40A(10) specifies that the scheme will not
affect any contract existing immediately before the
commencement of section 5 of the Electricity Industry Acts
(Further Amendment) Act 2001.
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The new sub-section 40A(11) provides that a "retail customer"
in relation to a distribution company means a customer of a
retailer to which the distribution company distributes or supplies
electricity.
Clause 6 sub-clause (1) inserts a new sub-section (1A) after section 44(1)
that broadens the Government's power to make an Order in
Council specifying or providing for determination of
requirements for the provision, installation and maintenance of
metering installations to be used to facilitate arrangements
whereby a customer of one retailer elects to become a customer
of another retailer or relating to the settlement of the wholesale
electricity market.
Sub-clause (2) replaces the current paragraph 44(3)(a) with a
new paragraph 44(3)(a) which provides that an Order may
authorise the Office of the Regulator-General or another person
to approve a variation of the requirements referred to in the new
sub-section 44(1A) or the processes and procedures referred to in
sub-section 44(2).
Sub-clause (3) replaces the current sub-section 44(4) with a new
sub-section 44(4) which provides that an Order referred to in
sub-section (3) must provide that the Office or another person, in
approving a variation to a requirement referred to in sub-section
(1A) must have regard to the reasonable costs incurred in
complying with the requirement and the reasonable costs
incurred in complying with the requirement so varied. Further, in
approving a variation to a process or procedure referred to in
sub-section (2), the Office or another person must have regard to
the reasonable costs of complying with the process or procedure
and the reasonable costs of complying with the process or
procedure so varied.
Sub-clause (4) provides that in section 44(5) "a requirement of"
be inserted before "a process".
Sub-clause (5) provides that, in section 44(6)(b), "the
requirements referred to in sub-section (1A) or" be inserted
before "the processes".
Clause 7 amends section 49(5)(b) so that, rather than excluding all matters
determined by the secretary under section 47 (to do with
community services) from referral for determination by the
Office of the Regulator-General, only those matters determined
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by the Secretary under section 47(1)(a) are excluded from the
matters which may be referred to the Office of the Regulator-
General under section 49.
Clause 8 is a statute law revision provision. It amends sections 56 and 57
so that those sections are not subject to section 61 but are more
correctly subject to sections 62 and 63.
Clause 9 inserts a new sub-section (8A) after section 68(8) so that the
general prohibition with respect to cross-ownership, which
would otherwise prevent a generation or distribution company
from holding a controlling interest in another generation
company, does not operate to exclude holding a relevant interest
in a generation company if the Office has determined that the
generation company has established or proposes to establish a
new facility for the generation of electricity for supply or sale
(paragraph (a)), where the Office has issued a licence to that
generation company in respect of the generation of electricity at
the new facility (paragraph (b)), where the person has held the
interest from the time the licence for the new facility was issued
(paragraph (c)) and the generation company is only licensed to
generate electricity for supply or sale at the new facility and any
other facility in respect of which a determination has been made
under paragraph (a) (paragraph (d)). This provision allows
existing generation companies to develop new generation
facilities without thereby being in breach of the cross-ownership
provisions.
Sub-section (2) is a statute law revision provision. It amends
section 68(2) so that it is subject to sub-sections (8) and (8A)
rather than to sub-section (11).
Sub-section (3) amends section 68(3) so that it is subject to
proposed section 68(8A).
Clause 10 inserts a new section 79A which expands VENCorp's power to
manage electricity demand. Under the new section 79A,
VENCorp may, with the approval of the Minister, facilitate the
development of arrangements relating to the management of
electricity demand and may enter into agreements and
arrangements relating to the development and implementation of
proposals for the management of electricity demand. These
powers are in addition to VENCorp's other powers under Part 4.
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This clause also inserts a new section 79B which allows
VENCorp, in accordance with an Order in Council published in
the Government Gazette, to recover from retailers or persons
who purchase electricity directly from the wholesale market
amounts in respect of costs incurred by VENCorp under sections
79A and 80 or in respect of arrangements or agreements under
each of those sections.
The Order in Council may provide that VENCorp may make a
determination in respect of the costs incurred by it but that it
must not make such a determination unless it has first been
approved by the Office of the Regulator-General.
The new sub-sections (4) and (5) provide that the Order in
Council may direct the Office to make a determination under the
Office of the Regulator-General Act 1994 in respect of such
factors and matters or in accordance with such procedures,
matters or bases as are specified in the Order, or both and that the
Order in Council may also confer any powers and functions on,
and leave any matter to be determined by, the Office.
The new sub-section (6) provides that such an Order has effect
from the day specified and for the period specified in the Order.
The new sub-section (7) provides that such an Order has effect
according to its tenor despite anything to the contrary in any
agreement or contract.
This clause also inserts a new section 79C which provides that
Part 4 is relevant legislation for the purposes of the Office of the
Regulator-General Act 1994.
PART 3--AMENDMENTS TO ELECTRICITY SAFETY ACT
1998
Part 3 of the Bill contains amendments to the Electricity Safety Act 1998 to
improve the operation of the electricity safety management scheme
provisions and the provisions dealing with bushfire mitigation plans.
Clause 11 amends the section 83A(1) obligations on electricity suppliers to
prepare and submit proposals for mitigation of bushfire danger in
respect of electrical lines and electrical installations so that the
obligations extend to overhead private electric lines.
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Clause 12 amends section 107 to insert a new sub-section (1A) that allows
for the submission of an electricity safety management scheme
that combines any of the three separate electricity safety
management schemes available under section 107.
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