Electricity Supply Industry (Price Control) Amendment Regulations 2010

Electricity Supply Industry (Price Control) Amendment Regulations 2010

I, the Governor in and over the State of Tasmania and its Dependencies in the Commonwealth of Australia, acting with the advice of the Executive Council, make the following regulations under the Electricity Supply Industry Act 1995 .

28 June 2010

PETER G. UNDERWOOD

Governor

By His Excellency's Command,

MICHAEL AIRD

Treasurer

1.   Short title

These regulations may be cited as the Electricity Supply Industry (Price Control) Amendment Regulations 2010 .

2.   Commencement

These regulations take effect on 1 July 2010.

3.   Principal Regulations

In these regulations, the Electricity Supply Industry (Price Control) Regulations 2003 are referred to as the Principal Regulations.

4.    Regulation 3 amended (Interpretation)

Regulation 3 of the Principal Regulations is amended as follows:

(a) by omitting the definition of adjustment payment ;

(b) by omitting the definition of Associate Regulator ;

(c) by omitting the definition of Cabinet record and substituting the following definition:

Cabinet record means a record which –

(a) is referred to in section 26(1) of the Right to Information Act 2009 ; and

(b) contains exempt information, within the meaning of that Act, to which that section applies;

(d) by omitting the definition of Consumer Price Index ;

(e) by omitting the definition of draft transmission revenue cap determination ;

(f) by omitting the definition of jurisdictional derogations and substituting the following definition:

Hydro-Electric Corporation means the corporation continued by the Hydro-Electric Corporation Act 1995 ;

(g) by omitting the definition of pass-through event ;

(h) by omitting the definition of pricing order ;

(i) by omitting "a transmission revenue cap determination or" from the definition of relevant tax and substituting "a transmission determination or";

(j) by omitting the definition of relevant vesting agreement ;

(k) by omitting "a transmission revenue cap determination or" from the definition of tax event and substituting "a transmission determination or";

(l) by omitting the definitions of transmission revenue cap determination , transmission revenue cap investigation , Transend and vesting agreement adjustment event and substituting the following definition:

transmission determination means a transmission determination made in accordance with the National Electricity Rules.

5.    Part 2 rescinded

Part 2 of the Principal Regulations is rescinded.

6.    Regulation 19 amended (Declaration of declared electrical service)

Regulation 19(1) of the Principal Regulations is amended by omitting "transmission revenue cap determination" from the definition of good or service provided by an electricity entity and substituting "transmission determination".

7.    Regulation 22 rescinded

Regulation 22 of the Principal Regulations is rescinded.

8.    Regulation 25 amended (Conduct of declared electrical service pricing investigation)

Regulation 25 of the Principal Regulations is amended as follows:

(a) by omitting paragraph (a) from subregulation (3) ;

(b) by omitting from subregulation (4)(a) "person; and" and substituting "person; or";

(c) by omitting from subregulation (4)(b) "seminars; and" and substituting "seminars; or";

(d) by inserting the following paragraph after paragraph (b) in subregulation (4) :

(ba) hold hearings; or

(e) by omitting from subregulation (4)(c) "workshops; and" and substituting "workshops; or".

9.    Regulation 26 amended (Hearings)

Regulation 26 of the Principal Regulations is amended as follows:

(a) by omitting from subregulation (1) "Before holding a hearing in respect of a declared electrical service pricing investigation," and substituting "If, in conducting a declared electrical service pricing investigation, the Regulator decides to hold a hearing,";

(b) by omitting subregulation (6) and substituting the following subregulation:

(6)  The following information is taken to be classified by the Regulator as confidential and is not liable to disclosure under the Right to Information Act 2009 :

(a) evidence and documents in respect of which a direction under subregulation (4)(b) has been made;

(b) records of the giving or production of such evidence and documents.

10.    Regulation 28 amended (Use of documents and other information)

Regulation 28 of the Principal Regulations is amended as follows:

(a) by omitting subregulation (4) and substituting the following subregulation:

(4)  The following information is taken to be classified by the Regulator as confidential and is not liable to disclosure under the Right to Information Act 2009 :

(a) any answer, document, other information or part of any answer, document or other information in respect of which a direction under subregulation (2) has been given;

(b) records relating to the production of any such answer, document, other information or part.

(b) by omitting from subregulation (5)(b) " Freedom of Information Act 1991 " and substituting " Right to Information Act 2009 ".

11.    Regulation 31 amended (Declared electrical service price determination)

Regulation 31 of the Principal Regulations is amended as follows:

(a) by omitting paragraph (b) from subregulation (3) ;

(b) by omitting from subregulation (4) " subregulation (3)(a) , (b) or (c) " and substituting " subregulation (3)(a) or (c) ";

(c) by omitting from subregulation (4) ", specified vesting agreement adjustment event".

12.    Regulation 32 amended (Principles to be given effect)

Regulation 32 of the Principal Regulations is amended as follows:

(a) by omitting the definitions of regulated service and relevant code from subregulation (1) and substituting the following definitions:

ancillary services means ancillary services as defined in the National Electricity Rules;

notional electricity generator means a notional new electricity generating plant, located on mainland Tasmania, intending to generate electricity using a source of energy available on mainland Tasmania;

regulated service means a service to which a transmission determination applies.

(b) by omitting from subregulation (2) "relevant code and any relevant transmission revenue cap determination (as adjusted from time to time in accordance with Division 3 of Part 2 )" and substituting "National Electricity Rules and any relevant transmission determination";

(c) by omitting subregulation (3) and substituting the following subregulations:

(3)  In making a declared electrical service price determination, relating to a declared electrical service that is or includes a retail service provided by Aurora Energy to non-contestable customers on mainland Tasmania, the Regulator is to make an estimate of electricity supply costs.

(4)  An estimate of electricity supply costs made by the Regulator under subregulation (3)  –

(a) must take into consideration the price Aurora Energy would pay to purchase electricity in Victoria and transport the electricity to mainland Tasmania for supply to non-contestable customers on mainland Tasmania; and

(b) must be more than or equal to the long-run marginal cost of electricity generation by a notional electricity generator to supply electricity to non-contestable customers on mainland Tasmania.

(5)  When determining, for the purpose of subregulation (4)(b) , if an estimate of electricity supply costs is more than or equal to the long-run marginal cost of electricity generation by a notional electricity generator, the Regulator must –

(a) assume the notional electricity generator would generate electricity in an efficient and cost-effective manner; and

(b) take into consideration the costs that would be incurred by the notional electricity generator for the procurement of ancillary services; and

(c) take into consideration any Commonwealth legislation, relating to the emission of carbon in the generation of electricity, that would impose costs on the generation of electricity by the notional electricity generator.

(6)  The Regulator may, once in any 6-month period, amend an estimate of electricity supply costs made in accordance with this regulation, if the Regulator –

(a) considers the determination made under subregulation (5) no longer satisfies or takes into consideration the matters referred to in that subregulation; or

(b) considers it otherwise necessary to do so.

(7)  If the Regulator amends an estimate of electricity supply costs under subregulation (6) , the Regulator is to notify Aurora Energy of the amendment.

13.    Regulation 33 amended (Matters to be considered)

Regulation 33(2) of the Principal Regulations is amended by inserting after paragraph (m) the following paragraph:

(ma) the National Electricity Rules;

14.    Regulation 34 amended (When declared electrical service price determination takes effect and ends)

Regulation 34(1) of the Principal Regulations is amended by omitting paragraph (b) from the definition of existing determination .

15.    Regulation 35 amended (Adjustment for tax event)

Regulation 35 of the Principal Regulations is amended as follows:

(a) by omitting paragraph (b) from the definition of adjustment in subregulation (1) ;

(b) by omitting from subregulation (3) ", a vesting agreement adjustment event specified in the declared electrical service price determination".

16.    Regulation 36 amended (Revocation or amendment of declared electrical service price determination)

Regulation 36 of the Principal Regulations is amended as follows:

(a) by omitting from subregulation (1) "is to" and substituting "may";

(b) by omitting from subregulation (1) "transmission revenue cap determination" and substituting "transmission determination";

(c) by inserting the following paragraph after paragraph (b) in subregulation (2) :

(ba) that the determination included an estimate of electricity supply costs, made under regulation 32(3) , which has subsequently been amended under regulation 32(6) ; or

17.    Part 3A substituted

Part 3A of the Principal Regulations is rescinded and the following Part is substituted:

PART 3A - Contractual Relationship between Hydro-Electric Corporation and Aurora Energy

37A.   Interpretation

(1)  In this Part –

relevant period, in relation to a contractual relationship or alternative contractual arrangement, means the period beginning on the date on which the relationship or arrangement comes into effect and ending on the date on which the relationship or arrangement terminates;

retail price determination, in relation to a relevant period, means one or more declared electrical service price determinations that –

(a) relate to the provision of retail services to tariff customers; and

(b) are in force during all or part of the relevant period.

(2)  For the purposes of this Part, the Treasurer may only be satisfied that the terms and conditions of –

(a) a contractual relationship established, or to be established, under regulation 37B ; or

(b) an alternative contractual arrangement referred to in this Part –

are adequate, if the Treasurer holds the relevant opinion.

(3)  The Treasurer holds the relevant opinion if he or she is of the opinion that the effect of the terms and conditions of the relationship or arrangement is that Aurora Energy may expect that it will not cost Aurora Energy more, during the relevant period, to supply energy to non-contestable customers as a whole, than Aurora Energy is permitted, under any retail price determination in relation to the relevant period, to charge those customers as a whole for that supply.

37B.   Establishment of contractual relationship

(1)  A contractual relationship is established between Aurora Energy and the Hydro-Electric Corporation on the date on which the terms and conditions of the relationship come into effect under regulation 37C(6) .

(2)  The contractual relationship established under subregulation (1) is terminated –

(a) on the date specified, in accordance with regulation 37C(3)(b) in a term of the relationship approved under regulation 37C(1) , as the date on which the terms and conditions of the contractual relationship are terminated; or

(b) if the date referred to in paragraph (a) is amended, varied or substituted under regulation 37D , on the date specified in the term as so amended, varied or substituted.

37C.   Terms and conditions of contractual relationship

(1)  The Treasurer may approve the terms and conditions of a contractual relationship, which is to be established under regulation 37B(1) , by publishing in the Gazette a notice setting out those terms and conditions.

(2)  The Treasurer may only approve under subregulation (1) the terms and conditions of a contractual relationship, which is to be established under regulation 37B(1) , if –

(a) the Treasurer is satisfied that the terms and conditions of the contractual relationship are adequate; and

(b) Aurora Energy has not notified the Treasurer in writing that there is in place, between Aurora Energy and the Hydro-Electric Corporation, an alternative contractual arrangement which will be in force at the time the terms and conditions of the contractual relationship would come into effect; and

(c) the Treasurer is satisfied that there is no alternative contractual arrangement, the terms and conditions of which are adequate, which will be in place between Aurora Energy and the Hydro-Electric Corporation at the time the terms and conditions of the contractual relationship would come into effect.

(3)  The Treasurer may not approve terms and conditions under subregulation (1) unless they include –

(a) a term specifying the date on which the terms and conditions come into effect; and

(b) a term specifying the date on which the terms and conditions terminate.

(4)  The Treasurer may not specify, in accordance with subregulation (3)(a) , in the terms and conditions of a contractual relationship that are approved under subregulation (1) , a date, unless it is a date on or after the date on which the terms and conditions are so approved.

(5)  The Treasurer may not specify, in accordance with subregulation (3)(b) , in the terms and conditions of a contractual relationship that are approved under subregulation (1) , a date, unless it is a date before a day on which there will be no retail price determination in force.

(6)  The terms and conditions of a contractual relationship that are approved under subregulation (1) come into effect on the date, specified in the terms and conditions, in accordance with subregulation (3)(a) , as the date on which the terms and conditions come into effect.

37D.   Amendment, &c., of terms and conditions

(1)  The Treasurer may –

(a) amend, vary or substitute a term or condition approved under regulation 37C(1) or a term or condition amended, varied, substituted or added under this regulation; or

(b) revoke a term or condition approved under regulation 37C(1) or a term or condition amended, varied, substituted or added under this regulation; or

(c) add a new term or condition to a contractual relationship established under regulation 37B  –

by publishing in the Gazette a notice setting out the amendment, variation, substitution, revocation or addition.

(2)  The Treasurer may only amend, vary, substitute, revoke or add a term or condition under subregulation (1) if the prescribed requirements are satisfied.

(3)  The prescribed requirements are that –

(a) the Treasurer has consulted with Aurora Energy and the Hydro-Electric Corporation about the notice proposed to be published under subregulation (1) ; and

(b) the Treasurer is satisfied that the terms or conditions, of the contractual relationship established under regulation 37B , as in force after the notice is published under subregulation (1) , will be adequate.

(4)  Without otherwise limiting the generality of subregulation (1)  –

(a) the terms that may be amended, varied or substituted under that subregulation include a term specifying the date on which the terms and conditions terminate; and

(b) a term specifying the date on which the terms and conditions terminate may not be revoked.

(5)  The Treasurer may not amend, vary or substitute under subregulation (1) a term, of a contractual relationship established under regulation 37B , specifying the date on which the terms and conditions of the contractual relationship terminate, unless the date specified in the term, as so amended, varied or substituted, is a date before a day on which there will be no retail price determination in force.

(6)  The Treasurer must, under subregulation (1) , amend, vary or substitute a term specifying the date on which the terms and conditions of a contractual relationship terminate, if –

(a) the Treasurer is satisfied that on the date as so amended, varied or substituted, there will be in place between Aurora Energy and the Hydro-Electric Corporation an alternative contractual arrangement, the terms and conditions of which are adequate; and

(b) the date will be in accordance with subregulation (5) .

(7)  Subregulation (2) does not apply to an amendment, variation or substitution under subregulation (1) of a term specifying the date on which the terms and conditions of a contractual relationship will terminate.

37E.   Aurora Energy to notify Treasurer if adequate alternative contractual arrangement in place

Aurora Energy must notify the Treasurer in writing as soon as practicable after entering into an alternative contractual arrangement with the Hydro-Electric Corporation that contains terms and conditions that the Treasurer may be satisfied are adequate.

37F.   Enforcement of contractual relationship

A contractual relationship that is established under regulation 37B is enforceable in a court of competent jurisdiction in the same manner as a contract may be enforced.

18.    Regulation 38 amended (Offences)

Regulation 38 of the Principal Regulations is amended as follows:

(a) by omitting from subregulation (1)(a) " regulation 8(1) or 27(1) " and substituting " regulation 27(1) ";

(b) by omitting from subregulation (1)(c) ", an Associate Regulator";

(c) by omitting from subregulation (2) " regulation 8(1) or 27(1) " and substituting " regulation 27(1) ".

19.    Regulation 40 rescinded

Regulation 40 of the Principal Regulations is rescinded.

20.    Regulations 42 , 43 and 44 rescinded

Regulations 42 , 43 and 44 of the Principal Regulations are rescinded.

21.    Schedules 1 and 2 rescinded

Schedules 1 and 2 to the Principal Regulations are rescinded.

22.   Rescission of regulations

These regulations are rescinded on the ninetieth day from the day on which these regulations take effect.

Displayed and numbered in accordance with the Rules Publication Act 1953.

Notified in the Gazette on 30 June 2010

These regulations are administered in the Department of Treasury and Finance.

EXPLANATORY NOTE

(This note is not part of the regulation)

These regulations amend the Electricity Supply Industry (Price Control) Regulations 2003 by –

(a) removing the requirement for the Regulator to conduct transmission revenue cap investigations and determinations in respect of Transend; and

(b) providing for the establishment of a contractual relationship between Hydro Tasmania and Aurora Energy and setting out the manner by which the terms and conditions of that relationship are to be established; and

(c) revising the principles the Regulator is to give effect to when making a determination regulating the prices that electricity entities may charge in relation to retail services to be provided to non-contestable customers, so as to include an estimate of electricity supply costs; and

(d) rescinding certain provisions that are no longer required.