Explanatory Memorandum
(Circulated by authority of the Treasurer, The Honourable Peter Costello MP)Outline, financial impact statement and regulatory impact statement
Outline
This Bill is part of a package of legislation to provide for the operation of an Australian energy market. In December 2002, the Council of Australian Governments (COAG) Independent Review of Energy Market Directions was released. The Review identified a number of strategic issues for Australian energy markets, and potential policy responses required from all Governments to deliver an open, effective and competitive national energy market.
On 11 December 2003, the Ministerial Council on Energy (MCE) finalised a comprehensive response to the COAG-commissioned Review. This report set out the major policy directions for the MCE's national energy market reform program, and has been endorsed by COAG.
The MCE has agreed to introduce a national legislative framework for the Australian energy market, on a collaborative basis between Commonwealth, State and Territory Governments. The Commonwealth, the States, the Australian Capital Territory and the Northern Territory have entered into a new inter-governmental agreement, the Australian Energy Market Agreement. As part of the new legislative framework, the MCE agreed to Commonwealth legislation establishing an Australian Energy Regulator (AER) through amendments to the Trade Practices Act 1974 (TPA).
Current energy regulation involves:
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- the Commonwealth TPA;
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- co-operative legislative schemes for both electricity and gas:
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- the National Electricity Law and National Electricity Code under the National Electricity (South Australia) Act 1996 (SA), applied as a law of the jurisdiction by participating States and Territories; and
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- the Gas Pipelines Access Law and National Third Party Access Code for Natural Gas Pipeline Systems under the Gas Pipelines Access (South Australia) Act 1997, applied as a law of the jurisdiction by the Commonwealth and participating States and Territories; and
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- State and Territory specific regulation of electricity and gas, generally involving licensing and retail regulation.
1. Under these laws, the Australian Competition and Consumer Commission (the Commission) and a range of State and Territory bodies have regulatory functions. The first part of the energy reforms will rationalise the number of regulators. Two new bodies will be established. The AER will be established by this Bill to be the regulator. The Australian Energy Market Commission (AEMC) will be established by South Australian legislation. The AEMC will be responsible for rule-making and market development.
2. Initially, the new bodies will have electricity functions. In due course, they will be given gas functions too. The conferral of electricity functions will be done by amending the National Electricity Law, and Regulations under the National Electricity (South Australia) Act 1996, and converting an amended version of the National Electricity Code to Rules under the Law. There will also be amendments of State and Territory laws which apply the Law, Regulations and Rules and a new Commonwealth Act to apply the Law, Regulations and Rules offshore.
3. Under this model, the AER is to be established as a separate legal entity to perform national energy market regulation functions, including enforcement of the National Electricity Code. The Members that constitute the AER will make all decisions in respect of the functions that have been conferred upon it. However, for other purposes, including staffing and financial management, the AER will be a constituent part of the Commission. For instance, staff required by the AER will be staff of the Commission made available to the AER by the Chairperson of the Commission (see new section 44AAC). These staff and consultants will also continue to assist the Commission in relation to its functions in the energy sector.
4. These arrangements are in accordance with the Australian Energy Market Agreement.
5. In accordance with the Australian Energy Market Agreement, the Commonwealth will introduce two separate Bills into the Parliament:
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- this Bill, which will establish the AER by way of amendments to the TPA; and
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- the Australian Energy Market Bill 2004 (see paragraph 1.14 below).
Trade Practices Amendment (Australian Energy Market) Bill 2004
6. The AER will be established through amendments to the TPA. Some consequential amendments to other legislation are also required. The AER will have responsibility for economic regulation of Australian energy markets and will perform functions and exercise powers as conferred by the Commonwealth, State and Territory legislation. It will initially be responsible for regulation of electricity wholesale and transmission arrangements.
7. In undertaking this function, the AER will combine and subsume the relevant regulatory functions which are currently the responsibilities of the Commission and the National Electricity Code Administrator (NECA). The Commission will retain its existing responsibilities under the TPA with respect to competition law enforcement, authorisation and access regulation. The responsibilities that the AER will assume are presently conferred on the Commission and NECA by the National Electricity Law, Regulations and Code.
8. It is intended that the AER will assume regulatory responsibility for gas access arrangements in 2005, and distribution and retail regulation (excluding retail pricing) in 2006 in accordance with the agreed MCE timeline and the Australian Energy Market Agreement. Further legislation will be required to implement these reforms.
9. The Bill establishes the governing regime for the AER, including the establishment of three AER Members, one of which will also be a Member of the Commission. The AER Members will be responsible for establishing the priorities for, and making the decisions of, the AER.
Australian Energy Market Bill 2004
10. The Australian Energy Market Bill 2004 will apply the National Electricity Law, Regulations, and Rules (including the Code) as Commonwealth law in 'adjacent areas' offshore. This will complement the application of the Law, Regulations and Rules by States and the Australian Capital Territory. The Bill also allows regulations to prescribe further energy laws to be applied in the adjacent areas.
Financial impact statement
11. The Commonwealth Budget provided funding of $10.7 million for the AER in 2004-05. Future funding for the AER will be considered in the context of the 2005-06 Budget. The cost of the establishment and operation of the AER will be recovered from industry once an appropriate mechanism is established.
Regulatory impact statement
12. A Regulatory Impact Statement was not required for this process, exemption numbers 5732 and 5991 apply to this Bill and the Australian Energy Market Bill 2004.
Notes on clauses
Trade Practices Amendment (Australian Energy Market) Bill 2004
This clause provides the short title by which the Act may be cited.
2.2 This clause provides that Sections 1 to 3 of the Bill and any other provision that is not specifically covered in this commencement provision commence on the day on which the Act receives the Royal Assent.
2.3 This clause also provides that Schedules 1 and 2 of the Bill commence on a day or days to be fixed by Proclamation. However, if any provision does not commence within the period of 12 months beginning on the day on which this Act receives the Royal Assent, they will commence on the first day after the end of that period.
2.4 This clause provides that changes to the Acts named in this Bill will be amended in the way that the change is specified in the Schedules.
Schedule 1 - Amendment of the Trade Practices Act 1974
3.1 The purpose of this Schedule is to amend the TPA to insert relevant provisions establishing the AER and governing its arrangements. These amendments will:
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- define terms relevant to the establishment of the AER;
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- establish the AER and describe its functions and powers;
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- outline the AER's administrative arrangements and its composition, including staffing;
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- establish the AER's confidentiality and information sharing procedures; and
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- provide for any consequential or transitional measures as appropriate.
3.2 Subsection 2A(1) of the TPA provides that the TPA binds the Crown in right of the Commonwealth in so far as it carries on a business. New section 44AC provides that the new Part IIIAA of the TPA, which establishes the AER, will bind the Crown in each of its capacities, with no requirement that the Crown be carrying on a business. This item amends subsection 2A(1) to ensure that it is subject to the new section 44AC.
3.3 These items insert new definitions into subsection 4(1). These include definitions of AEMC, AER, AER Chair, AER Member, and State/Territory AER Member.
3.4 This item inserts a note at the end of subsection 7(2) to the effect that the Member of the Commission who is also appointed to the AER will remain a full-time Member of the Commission.
3.5 This item inserts a new section 8AB which will provide that State/Territory Members of the AER will be deemed Associate Members of the Commission. However, in keeping with the decision that their role as Associate Members will be advisory only, the Chairman of the Commission will have no capacity to direct that the State/Territory Members be treated as full time Members of the Commission. Similarly, other relevant provisions in Part II relating to Associate Members will not apply. State/Territory Members of the AER will instead be subject to the explicit provisions for Members of the AER, as they relate to:
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- terms and conditions (s.44AP and 44AQ of this Bill);
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- remuneration (s.44AT and 44AU of this Bill);
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- termination (s.44AAB of this Bill);
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- resignation (s.44AZ of this Bill); and
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- disclosure of interests (s.44AY of this Bill).
3.6 However (as reflected in the note), new section 8AB is not intended to prevent the appointment of State/Territory Members as Associate Members of the Commission under section 8A of the Act. In such cases the State/Territory Members will be subject to the relevant provisions of Part II of the TPA.
3.7 This item inserts a new Part IIIAA into the TPA which provides for establishment of the Australian Energy Regulator.
Division 1 - Preliminary
New Section 44AB (Definitions)
4.1 New section 44AB provides for definitions that are relevant to the establishment and operation of the AER.
Definitions are inserted for the following terms:
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-
Australian Energy Market Agreement
means the agreement, as amended from time to time:
- (a)
- that relates to energy; and
- (b)
- that is between the Commonwealth, all of the States, the Australian Capital Territory and the Northern Territory; and
- (c)
- that is first made in 2004; and
- (d)
- that agrees to the establishment of the AER and the AEMC.
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- Commonwealth AER member means the member referred to in new section 44AM. This is the member of the AER chosen by the Commonwealth.
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- full-time AER member means an AER member appointed on a full-time basis.
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- part-time AER member means an AER member appointed on a part-time basis.
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-
South Australian Electricity Legislation
means:
- (a)
- the National Electricity Law set out in Schedule 1 to the National Electricity (South Australia) Act 1996 of South Australia as in force from time to time. The Law will be amended to confer functions on the AER; and
- (b)
- any regulations, as in force from time to time, made under Part 4 of that Act; and
- (c)
- any rules (including the National Electricity Code), as in force from time to time, made under the National Electricity Law. The National Electricity Code will also be amended to confer functions on the AER.
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-
State/Territory energy law
means any of the following laws:
- (a)
- a uniform energy law that applies as a law of a State or Territory. This would include, for example, the National Electricity Law as applied in New South Wales by the National Electricity (New South Wales) Act 1997 (NSW); and
- (b)
- a law of a State or Territory that applies a law mentioned in paragraph (a) as a law of its own jurisdiction. This would include, for example, the National Electricity (New South Wales) Act 1997 (NSW) itself; and
- (c)
- any other provisions of a law of a State or Territory that are prescribed by the regulations for the purposes of this paragraph This would include a law of a State which gives functions to the AER and which is prescribed.
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-
uniform energy law
means:
- (a)
- the South Australian Electricity Legislation; and
- (b)
- provisions of a law of a State or Territory that:
- (i)
- relate to energy; and
- (ii)
- are prescribed by the regulations for the purposes of this subparagraph;
- being those provisions as in force from time to time. The Commonwealth will, in due course, prescribe the Gas Pipelines Access Law and the Gas Pipelines Access Regulations made under the Gas Pipelines Access (South Australia) Act 1997.
New Section 44AC (This Part binds the Crown)
4.2 New section 44AC provides that the new Part IIIAA of the TPA, which establishes the AER, will bind the Crown in each of its capacities.
New Section 44AD (Extra-territorial operation)
4.3 As noted above, the AER will, under relevant Commonwealth, State and Territory energy laws, regulate the Australian energy market. The operation of the Australian energy market may, however, be affected by things (eg. contracts), acts, transactions and matters that are, or are entered into or occur, outside the jurisdiction of the Commonwealth and the States and Territories. Accordingly, new section 44AD extends the operation of Part IIIAA of the TPA, which establishes the AER, to such things, acts, transactions or matters, whether they are (or occur etc) in or outside Australia, and whether or not they are otherwise affected by the law of another jurisdiction, including a foreign country.
Division 2 - Establishment of the AER
New Section 44AE (Establishment of the AER)
5.1 The AER will:
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- be a body corporate with perpetual succession;
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- have a common seal;
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- be able to acquire, hold and dispose of real and personal property; and
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- be able to sue and be sued in its corporate name.
5.2 It will operate as a constituent part of the Commission in such matters as staffing and financial management.
New Section 44AF (AER to hold money and property on behalf of the Commonwealth)
5.3 This new section is intended to ensure that the AER holds any money or property for and on behalf of the Commonwealth. The Financial Management and Accountability Regulations 1997 will be amended to provide that the AER is a constituent part of the Commission for the purposes of the Financial Management and Accountability Act 1997 (FMA Act). The Commission is currently a prescribed Agency for the purposes of the FMA Act.
New Section 44AG (Constitution of the AER)
5.4 This new section establishes that the AER will consist of one Commonwealth Member (who will also be a Member of the Commission) and two State/Territory Members (who will also be Associate Members of the Commission).
5.5 These Members will be appointed for a period no longer than 5 years, and in accordance with provisions contained in the Australian Energy Market Agreement.
Division 3 - Functions and Powers of the AER
New Section 44AH (Commonwealth functions)
6.1 This new section provides that the functions of the AER may be conferred under a law of the Commonwealth. This will include functions under the National Electricity Law, Regulations and Rules applied as a law of the Commonwealth by the Australian Energy Market Act 2004. This will also include, in due course, functions under the Gas Pipeline Access Law and Regulations applied as law of the Commonwealth by the Gas Pipeline Access (Commonwealth) Act 1998. Its functions will also be those prescribed by regulations made under the TPA (as amended by this Bill).
6.2 However it is anticipated that significant AER functions and powers will be conferred under State and Territory laws (see new sections 44AI, 44AJ and 44AK).
New Sections 44AI, 44AJ and 44AK
6.3 As noted above, it is anticipated that significant AER functions and powers will be provided for by State and Territory laws. In relation to electricity, the National Electricity Law, Regulations and National Electricity Code will be amended to give functions to the AER, and these laws will be applied, in their respective jurisdictions by:
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- the National Electricity (New South Wales) Act 1997;
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- the National Electricity (Victoria) Act 1997;
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- the Electricity-National Scheme (Queensland) Act 1997;
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- the National Electricity (South Australia) Act 1996;
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- the Electricity (National Scheme) Act 1997 of the ACT; and
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- the Electricity-National Scheme (Tasmania) Act 1999.
6.4 As the significant functions and powers of the AER will be provided for by State and Territory laws, new sections 44AI and 44AJ will regulate the extent to which the State and Territory energy laws may confer duties, powers and functions upon the AER in light of the decision of the High Court in R v Hughes
(2000) 202 CLR 535.
6.5 In Hughes, the High Court held that Commonwealth legislation had purported to impose a duty on the Commonwealth Director of Public Prosecutions (DPP) to exercise State powers, and that the imposition of that duty needed to be firmly supported by a head of Commonwealth constitutional power, particularly where the exercise of the power could adversely affect the rights of individuals. The Court in Hughes left open the question whether there was any 'constitutional imperative' for the Commonwealth law to have imposed the duty on the DPP - in other words, whether it was necessary for this duty to have been imposed by Commonwealth rather than by State law.
6.6 The Hughes decision related to the powers of the DPP within the former Corporations Law cooperative legislative scheme, but is also potentially relevant to other Commonwealth-State cooperative schemes such as that for the Australian Energy Market cooperative legislative scheme. In relation to the issues raised by Hughes, these new sections are designed to ensure, to the greatest extent possible, that the duties, powers or functions of the AER, conferred under State or Territory law, will be able to be interpreted as being conferred by State and Territory law rather than Commonwealth law, so as to comply with the principles expressed in the Hughes decision.
6.7 New subsection 44AI(1) provides that a State/Territory energy law may confer functions or powers, or impose duties, upon the AER for the purposes of that law. However, new subsection 44AI(2) provides that subsection (1) does not authorise any such conferral by a State/Territory energy law where that conferral would contravene any constitutional doctrine or otherwise exceed the legislative power of the Commonwealth. This is a reading down provision which will limit the operation of new section 44AI(1) to the extent necessary to ensure that the authorisation of the conferral of duties, functions and powers under new section 44AI is constitutionally valid.
6.8 New subsection 44AI(3) also provides that the AER cannot perform a duty or function, or exercise a power, under a State/Territory energy law unless it is in accordance with the Australian National Energy Market Agreement or any other relevant agreement between the Commonwealth and the State or Territory concerned.
6.9 New subsection 44AJ(1) provides that new section 44AJ applies if a State/Territory energy law purports to impose a duty on the AER.
6.10 New subsection 44AJ(2) provides that the duty is taken not to be imposed by new Part IIIAA of the TPA to the extent that imposing the duty is within the legislative powers of the State or Territory concerned and imposing the duty by the law of the State or Territory would be consistent with constitutional doctrines.
6.11 However, subsection 44AJ(3) provides that if, to ensure the validity of the purported imposition of the duty, it is necessary that the duty be imposed by a law of the Commonwealth (rather than by a State or Territory) the duty is taken to be imposed by new Part IIIAA to the extent necessary.
6.12 New subsection 44AJ(4) then provides that if, because of new subsection 44AJ(3), new Part IIIAA is taken to impose the duty, it is the intention of Parliament to rely on all legislative powers available to it under the Constitution to support the imposition of the duty under new Part IIIAA.
6.13 New subsection 44AJ(5) provides that a duty is taken to be imposed by new Part IIIAA only to the extent to which imposing the duty is within the legislative powers of the Commonwealth and is consistent with constitutional doctrines.
6.14 New subsections 44AJ(3) and 44AJ(4) will apply in a situation where it is necessary for a constitutional reason for a particular duty, function or power which is purportedly conferred on the AER to instead be conferred by the TPA. In such a situation, new subsection 44AJ(3) will operate to confer the duty, function or power on the AER. New subsections 44AJ(4) and 44AJ(5) will ensure that in doing so, new subsection 44AJ(3) operates to the fullest extent of the Commonwealth's constitutional powers, but is not taken to exceed those powers.
6.15 New subsection 44AJ(6) provides that none of these subsections limit new section 44AI. Accordingly, there can be no argument that the scope of the authorisation of the conferral of duties, functions and powers under new section 44AI is limited by the operation of new section 44AJ.
6.16 New section 44AK is an interpretative provision. This new section provides that, for the purposes of new sections 44AI and 44AJ, a State/Territory energy law imposes a duty on the AER if the law confers a function or power on the AER and the circumstances of the conferral give rise to an obligation on the AER to perform the function or exercise the power.
New Section 44AL (Powers of the AER)
6.17 This new section provides that the AER can do all things necessary or convenient to be done in connection with the performance of its functions.
Division 4 - Administrative provisions relating to the AER
Subdivision A - Appointment etc. of members
New Section 44AM (Appointment of Commonwealth AER member)
8.1 This new section provides for the appointment of the Commonwealth AER Member for a period of up to 5 years. It provides that the Commonwealth AER Member must be a person who is a Member of the Commission. If it was desired to appoint a person who was not a member of the Commission as the Commonwealth AER Member, that person could be appointed as a Member of the Commission and a member of the AER. The person could effectively be appointed to the Commission, then immediately after appointed to the AER.
8.2 Should the Commonwealth AER Member for whatever reason stop being a Member of the Commission, they will cease to be an AER Member.
8.3 Appointment as a Commonwealth AER Member must be in accordance with the terms set out in the Australian Energy Market Agreement. The initial terms of the Agreement will allow the Chairperson of the Commission to nominate a person as the AER Member, and allow the Minister to appoint a person after considering that nomination. Unlike State/Territory appointees, there is no need to specify qualifications, as Members of the Commission will already meet these requirements under the TPA.
New Section 44AN (Membership of AER and Commission)
8.4 The Commonwealth AER Member will remain a full time Member of the Commission, and will be taken to be a full time member of the AER. To accommodate this dual role, his or her responsibilities for both the Commission and the AER will be linked.
8.5 Consequently, section 13(2)(c) of the TPA, which relates to termination from the Commission because of unauthorised outside employment, will not apply to this person in their role as an AER Member.
8.6 Similarly, the associated provisions of this Bill that relate to outside employment (s.44AX) and termination (s.44AAB) for full time AER Members will not apply to this person in their role as a Member of the Commission.
New Section 44AO (Acting appointment of Commonwealth AER member)
8.7 This new section establishes the arrangements for acting Commonwealth appointments to the AER. The Chairperson of the Commission may appoint an acting Commonwealth AER Member, who must also be a Member of the Commission. The new section allows for standing acting arrangements as well as ad hoc appointments.
8.8 Anything done by an acting AER Member will not be invalidated by a defect in the appointment process.
New Section 44AP (Appointment of State/Territory AER Members)
8.9 This new section outlines the appointment processes for the State/Territory AER Members. These Members are also appointed as Associate Members of the Commission to enhance the cooperative working arrangements between the Commission and the AER.
8.10 The method of appointment and period of appointment are consistent with the Commonwealth AER Member. State/Territory AER Members may be appointed on a part time or full time basis, depending on the requirements of the AER.
8.11 State/Territory AER Members, to be eligible for appointment, must have knowledge of, or experience in, industry, commerce, economics, law, consumer protection or public administration. These qualifications are consistent with other appointments under the TPA. They must also be nominated by the States and Territories in accordance with the Australian Energy Market Agreement.
New Section 44AQ (Acting appointment of State/Territory AER Member)
8.12 This new section stipulates that acting State/Territory AER Member appointments are made by the Minister. Aside from this, such acting appointments must also meet the same qualifying criteria as substantive State/Territory appointments. The new section allows for standing acting arrangements as well as ad hoc appointments.
8.13 This new section outlines the arrangements for appointing one of the AER Members as Chair of the AER. The appointment of Chair may be simultaneous with the appointment of the relevant Member to the AER, or it may occur later. Such an appointment must be in accordance with the Australian Energy Market Agreement. The period of appointment is up to 5 years.
8.14 Should the AER Chair cease to be an AER Member, then he or she is unable to remain as AER Chair. However, a person may cease to be the AER Chair without ceasing to be an AER Member.
8.15 Processes relating to the selection of the AER Chair are addressed in the Australian Energy Market Agreement, which is consistent with the policy agreement of the MCE of December 2003.
New Section 44AS (Acting AER Chair)
8.16 The Acting AER Chair is appointed by the Minister as the need arises.
8.17 Should the Acting AER Chair cease to be an AER Member, then he or she also ceases to be the acting AER Chair.
8.18 The Acts Interpretation Act 1901 enables an acting appointment to operate for up to 12 months. Further, if an Acting Chair appointment is to extend beyond 6 months, the parties to the Australian Energy Market Agreement have agreed that there will be a consultative process with respect to the acting appointment.
New Section 44AT (Remuneration of AER Members)
8.19 This new section sets out the arrangements by which an AER Member is to be remunerated and paid additional allowances. The Commonwealth AER Member, as a Member of the Commission, is already remunerated and therefore cannot be paid additionally (except as AER Chair). The remuneration afforded to State/Territory AER Members will be determined by the Remuneration Tribunal, or failing that, as prescribed by regulations. Allowances will be prescribed by regulations.
New Section 44AU (Additional remuneration of AER Chair)
8.20 Regardless of whether the AER Chair is a Commonwealth or State/Territory AER Member, he or she is entitled to additional remuneration and allowances for the performance of that function.
8.21 This is subject to the determination of the Remuneration Tribunal. However, section 7(11) of the Remuneration Tribunal Act 1973 will not apply, to allow the additional remuneration of a part time AER Member who also holds a full time Commonwealth or Territory position.
8.22 These new sections outline the leave entitlements and other terms and conditions that are afforded AER Members, including provision for the Governor-General to determine any additional terms and conditions for AER Members that should arise and are not covered by this Bill.
New Section 44AX (Outside employment)
8.23 AER members must not engage in outside employment that is inconsistent with their appointment to the AER. Full time Members must have the permission of the Minister before engaging in outside employment. Part time Members must not engage in outside employment that could conflict with their duties to the AER.
New Section 44AY (Disclosure of interests)
8.24 If an AER Member has a conflict of interest in a matter being considered, then the Member must disclose that conflict as soon as practicable in a meeting of the AER. That disclosure, and any decision in relation to the disclosure, must be recorded in the meeting minutes.
8.25 This will allow the meeting to proceed and does not prevent the Member from participating in the matter. Nor does it allow the Chair to direct the Member not to participate. The Member may abstain from participating in the discussion and voting. Any automatic disqualification could cause practical problems, due to the quorum and voting rules and the relatively small membership of the AER.
8.26 These new sections specify the resignation and termination provisions for AER Members. Resignation must be in writing. Termination is on standard grounds, and includes misbehaviour, physical or mental incapacity, bankruptcy, and failure to disclose interests. As per new section 44AR, should a Member's appointment be terminated, then that Member can no longer perform the function of the AER Chair.
Subdivision B - Staff etc. to assist the AER
New Section 44AAC (Staff etc. to assist the AER)
9.1 This new section specifies that staff (employed under the Public Service Act 1999) and consultants must be made available to the AER by the Chairperson of the Commission to assist the AER to perform its functions. This gives effect to the policy agreement that the AER is to be a constituent part of the Commission.
9.2 Beyond this legislative provision, the Australian Energy Market Agreement also provides further clarification of agreed policy arrangements in respect of AER staffing, noting in particular that the senior AER staff position (CEO) will be appointed following agreement between the AER Members and the Commission, and that staffing arrangements will be agreed between the AER and the Commission.
9.3 On broader staffing arrangements, the Commission and the AER will work together to ensure that the AER has sufficient staff and consultants with appropriate skills and expertise to enable the AER to effectively perform its own functions while also enabling those staff and consultants to assist the Commission in energy sector issues. Elaboration of the arrangements will be included in a Memorandum of Understanding between the AER, the Commission and the AEMC.
Subdivision C - Meetings of the AER etc.
10.1 This new section outlines the arrangements for the conduct of meetings of the AER. The AER Chair must convene such meetings as he or she thinks necessary for the efficient performance of the AER's functions. Further:
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- at a meeting, a quorum is two Members but must include the AER Chair and AER Commonwealth Member (where the Chair is not the Commonwealth Member). This ensures both Commonwealth and State/Territory representation at every meeting;
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- questions arising at a meeting must be determined by unanimous vote of the Members present and voting; and
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- the Chair must preside at all meetings.
10.2 The unanimous voting requirement reflects the policy objective of delivering a national perspective in the decisions of the AER. However, once the AER assumes responsibility for the national regulation of distribution and retail (except retail pricing) - functions presently with a range of State/Territory regulators that are to be subsumed by the AER by no later than end 2006 - it is intended that the AER voting arrangements will be changed to majority voting.
New Section 44AAE (Resolutions without meetings)
10.3 This new section outlines that, provided all three Members sign the same document, or a document in the same terms, then a resolution can be passed without the need to formally hold a meeting.
10.4 To resolve a matter without a meeting, all three Members must vote. If for any reason a Member does not sign the document then the matter cannot be decided without a meeting.
Subdivision D - Miscellaneous
New Section 44AAF (Confidentiality)
11.1 This new section establishes confidentiality and information-sharing arrangements for the AER.
11.2 The new section provides that the AER must take all reasonable measures to protect from unauthorised use or disclosure information given to it in confidence, or in connection with, the performance of its functions or the exercise of its powers; or that is obtained by compulsion in the exercise of its powers. This new section will therefore apply to any information the AER obtains pursuant to its functions under the Commonwealth, State and Territory energy laws. It also makes clear that, for its purposes, the disclosure of information as required or permitted by a Commonwealth, State or Territory law is taken to be authorised use and disclosure of the information. This means, for example, that the disclosure of information as required or permitted under the National Electricity Law, Regulations and Rules, as applied by a Commonwealth, State or Territory law, will be taken to be authorised use and disclosure of the information.
11.3 In order to facilitate the efficient and effective regulatory oversight of the Australian energy market, the new section also expressly authorises, for its purposes, the sharing of information with a number of relevant bodies, specifically:
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- the Commission;
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- the Australian Energy Market Commission;
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- the National Electricity Market Management Company;
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- any staff or consultant employed by (a), (b) or (c); and
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- any other person or body prescribed by regulation.
11.4 A person or body to whom information is disclosed under this new section may use the information for the performance of their functions, or the exercise of their powers and the AER may also impose conditions upon information disclosed to persons or bodies under this new section. The use or disclosure of information by AER members, staff and other AER authorised persons in the course of performing their functions or powers is also authorised. Regulations may also be made for the purposes of this new section specifying the uses and disclosures of information that are authorised for its purposes.
11.5 This new section is also intended to operate concurrently with any relevant confidentiality and information-sharing provisions contained in the Commonwealth, State and Territory energy laws. This new section is therefore not intended to limit what may otherwise, for its purposes be authorised use or disclosure of information. It is also intended to operate consistently with the requirements of the Privacy Act 1988.
New Section 44AAG (Federal Court may make certain orders)
11.6 The Federal Court will have jurisdiction in relation to proceedings brought by the AER in enforcement of the uniform energy laws as applied as a law of the Commonwealth, or applied as a law of a State or Territory. That is the AER will be able to bring proceedings in the Federal Court to obtain pecuniary penalties in relation to breaches by market participants of the National Electricity Law, Regulations and Rules, including the National Electricity Code. This penalty regime will be set out in the National Electricity Law, Regulations, and Rules. At a later date, the AER will also be able to bring proceedings in the Federal Court to obtain pecuniary penalties in relation to breaches by market participants of the Gas Pipelines Access Law. The Federal Court will also have jurisdiction in relation to proceedings by the AER exercising powers under specific State laws. The AER will do so as a statutory authority established by the Commonwealth, and on behalf of the Commonwealth.
11.7 The Federal Court will also have the power to provide an injunction to prevent a person from breaching the uniform energy laws as applied as a law of the Commonwealth or a law of a State or Territory.
New Section 44AAH (Delegation by the AER)
11.8 The new section provides the AER with the power to delegate any or all of its functions as needed to an AER Members or SES or acting SES staff.
11.9 The AER is permitted to charge a fee for service (including from the industry) in the performance of its functions. However, for constitutional reasons, this fee must not amount to a tax.
11.10 This is simply an enabling provision. While the Australian Energy Market Agreement notes the intent that the AER will be funded by an industry levy, policy decisions relating to exactly how the industry levy will be undertaken have not yet been taken. Further legislation may be required to impose a levy.
New Section 44AAJ (Annual report)
11.11 The AER must provide a report on its operations to the Minister within 60 days after the end of each financial year. A copy of the report must also be provided to the relevant Ministers of the States and Territories.
11.12 It is intended that the annual report will include separate financial accounts for the AER.
New Section 44AAK (Regulations may deal with transitional matters)
11.13 The Governor-General will have the power to make regulations to provide for effective transitional arrangements for the AER, in particular in the event there are residual market activities, processes or determinations already underway by other bodies (such as the Commission, or NECA) that the AER would need to subsume in carrying out its role.
11.14 This power is conditional on the AER being established, and Members appointed, before it can exercise powers and functions or take on responsibility for unresolved matters.
11.15 These items insert notes in section 44AAZZ indicating that the Commission will be able to rely on industry body consultations for access codes under new section 44ZZAB, rather than undertake its own consultations.
11.16 This item confirms that an "industry body" can include a body established under laws of the States or Territories (such as the AEMC) as well as bodies established by industry participants.
Item 13 (new section 44ZZAB 'Commission may rely on industry body consultations')
11.17 This new section will provide the Commission with the option of relying on consultations undertaken by an industry body in relation to an access code, rather than undertaking the consultations normally required under section 44ZZAA. The industry body must have indicated when it called for submissions that the submissions it receives may be used by the Commission for the purposes of section 44ZZAA. This will prevent duplication by, for example, allowing the Commission to rely on consultations undertaken by the AEMC for the AEMC's purposes. The streamlined process can also apply to variations or withdrawals of a code (there is no express requirement for consultation for these under section 44ZZAA, but often general law procedural fairness rules require consultation).
Items 14, 15 and 16 (including new section 90B 'Commission may rely on consultations undertaken by the AEMC')
11.18 These items insert a new section 90B and cross-reference notes to that new section. Section 90B provides that the Commission, in considering an authorisation application with respect to the National Electricity Code, can rely on consultations that have been separately undertaken by the AEMC in a code change process. This provision is similar to the new provision relating to access codes (new section 44ZZAB), but unlike that provision, is specific to the National Electricity Code.
11.19 The purpose of this provision is to address concerns about the duplication of assessment procedures that has applied to changes to the National Electricity Code in the past. This new process does not prevent the Commission from undertaking further consultation, but provides it with a discretion not to where certain conditions have been met. It is intended that a Memorandum of Understanding between the AEMC, the AER and the Commission will provide for cooperation between the bodies in relation to the assessment of code changes.
Item 17 (new section 157A 'Disclosure of information by Commission')
11.20 This item allows for information sharing between the Commission, the AER and the AEMC to allow each body to appropriately and effectively perform their functions and exercise their powers.
11.21 These items amend existing offence provisions (sections 162 and 162A) to protect an AER Member from contempt and intimidation in a similar manner to a Member of the Commission or of the Australian Competition Tribunal.
11.22 This item excludes the new Part IIIAA, relating to the AER, from the operation of section 163A of the TPA that enables a person to seek a certain declarations or other court orders relating to the operation or effect of the Act or actions under the Act. The AER will be subject to judicial review in the Federal Court under the Administrative Decisions (Judicial Review) Act 1977. Further the National Electricity Law and National Electricity Code does, and will continue to, provide dispute resolution mechanisms.
11.23 These items amend section 167 to provide for judicial notice to be taken of the official signature of the AER Chair or AER Members, and of the official seal of the AER.
11.24 This item amends section 172, the regulation-making power, so that the Governor-General has the power to make regulations relating to the procedure of the AER.
Schedule 2 - Amendment of the Administrative Decisions (Judicial Review) Act 1977
12.1 This item amends Schedule 3 of the Administrative Decisions (Judicial Review) Act 1977 (the ADJR Act) by inserting a reference to the National Electricity (South Australia) Act 1996 of South Australia. The effect of this amendment is that decisions of Commonwealth officers or authorities (such as the AER) under the National Electricity Law, Regulations and Rules, including the National Electricity Code, will be subject to judicial review by the Federal Court under the ADJR Act.