Bills

Statutes Amendment (National Energy Laws) (Rules) Bill

Introduction and First Reading

The Hon. D.C. VAN HOLST PELLEKAAN (Stuart—Minister for Energy and Mining) (11:53): Obtained leave and introduced a bill for an act to amend the National Electricity (South Australia) Act 1996, the National Energy Retail Law (South Australia) Act 2011 and the National Gas (South Australia) Act 2008. Read a first time.

Second Reading

The Hon. D.C. VAN HOLST PELLEKAAN (Stuart—Minister for Energy and Mining) (11:53): I move:

That this bill be now read a second time.

Today's electricity market is quite different from the one that operated when Australia's National Electricity Market was established in 1998. The government recognises the need for a National Electricity Market that can adapt and respond to challenges in the face of evolving technologies and the need to meet our climate change objectives whilst ensuring the affordability, security and reliability of the system.

At an extraordinary meeting of COAG energy ministers on 7 October 2016, ministers agreed to an independent review of the National Electricity Market to take stock of the national electricity system, its security and reliability, and to provide advice on a coordinated national reform blueprint. Dr Alan Finkel AO, Australian Chief Scientist, was appointed to lead the review.

In delivering his final report in July last year, Dr Finkel emphasised the importance of strong governance and ensuring there is a coordinated approach from energy market bodies to the rapidly changing National Electricity Market. A key recommendation of the review was the establishment of the Energy Security Board, comprising the AEMC, AEMO and AER, with an independent chair and deputy chair.

The board is responsible for the implementation of the national reform blueprint, as articulated in the final report, as well as providing whole-of-system oversight of the security and reliability of the NEM. It will be integral to improving long-term planning with clear strategic direction provided by the COAG Energy Council, referred to in the energy laws as the Ministerial Council on Energy (MCE).

Importantly, the board is able to draw on the expertise and experience of each of the market bodies, as well as those of the chair and deputy chair, providing for a strategic, collaborative and coordinated approach to issues as they arise. In recognition of the need for the board to commence its role as soon as practicable, it was established as a non-statutory authority. Importantly, its role will be reviewed after three years.

At the COAG Energy Council meeting in Brisbane on 14 July 2017, ministers agreed that there was a need to provide a mechanism to allow for the timely implementation of the board's recommendations. The Statutes Amendment (National Energy Laws) (Rules) Bill 2018 establishes a mechanism by which a recommendation of the Energy Security Board to make a rule, once it has the unanimous support of the MCE, can be made by the South Australian minister under the National Electricity Law, National Gas Law, or National Energy Retail Law, as appropriate.

In order for the minister to make such a rule, the bill prescribes several statutory requirements, which any proposed rule must meet. Firstly, the proposed rule must be in connection with energy security and reliability, or long-term planning of the NEM, or, in the case of the rules under the National Gas Law, may also be in relation to investment in, and operation and use of, natural gas services.

Secondly, the board must be satisfied that the proposed rule meets the relevant legislative objective. This ensures that the same rule-making test, which the AEMC applies in its making of rules, is applied to a rule made by the minister through this process. Finally, the proposed rule must have been the subject of consultation, in accordance with any MCE requirements. The process for undertaking consultation will be outlined in the ministerial rule-making consultation guide issued to the Energy Security Board by the MCE and made public, which forms part of the Energy Security Board's operating protocols.

Once recommended by the Energy Security Board, a proposed rule must receive the unanimous support of ministers, then the MCE can recommend that the same proposed rule be made by the South Australian minister. Once made by the minister, the rule becomes indistinguishable from all other rules over which the AEMC has jurisdiction. For the avoidance of doubt, this is expressly allowed for by the bill. The rule-making power can be used by the minister or on multiple occasions but only for as long as the Energy Security Board is in existence. Should the decision be made at the three-year review to abolish the board, the minister's power to make rules, as provided for by this bill, would also cease to exist.

The bill also makes two further amendments across each of the energy laws, unrelated to the Energy Security Board. For timeliness, they have not been included here. The first of these is in response to a recommendation of the Finkel review, that the recommendations of the Review of Governance Arrangements for Australian Energy Markets—known as the Vertigan review—to expedite the current rule-making processes be implemented by the end of this year.

As part of the Vertigan review, the Australian Energy Market Commission acknowledged it would be more likely to utilise the expedited rule change process were the publication time line to be increased from six to eight weeks. This bill makes that change where rule change requests are considered to be non-controversial. A minor amendment to the definition of National Gas Rules under the National Gas Law is also contained in this bill to correct a minor drafting issue.

The COAG Energy Council remains committed to ensuring the focus remains the security and reliability of the national energy system and that this is inherent in every decision we make. A national security board has been established to ensure a collaborative and coordinated approach to governance by drawing on the expertise of each of the market bodies under the leadership of the independent chair and deputy chair enabling the board to provide whole-of-system strategic advice, including where appropriate the recommendation to implement that advice through a rule change.

By providing the South Australian minister with the rule-making power under each of the energy laws, this ensures that should a rule change be recommended by the Energy Security Board and approved by the MCE, it will be made in a timely manner but only if it is has met the statutory requirement contained in this bill. We look forward to reviewing the Energy Security Board in three years' time and, to quote the words of Dr Finkel, 'We will know that we have been successful if, in three years from now, electricity is no longer a topic of discussion in the general community.' I commend this bill to members. I table the explanation of clauses.

Mr WEATHERILL (Cheltenham) (12:01): I rise to speak briefly on this matter. The opposition, after a period of adjournment, will consider its position in relation to this bill. But I want to make some observations about the National Electricity Market and the circumstances that have brought us to this moment.

The DEPUTY SPEAKER: Member for Cheltenham, I understand that all you can do at this point is adjourn the debate. It is not possible to make a second reading speech, given that it has just been introduced. That is the advice I am getting.

Mr WEATHERILL: I think I am in order.

Members interjecting:

Mr WEATHERILL: But I am in order to speak.

The Hon. S.K. Knoll interjecting:

Mr WEATHERILL: Yes, we can do that at some stage. I am in order.

The DEPUTY SPEAKER: My advice is that it needs to be adjourned at this point in the debate.

Debate adjourned on motion of Ms Cook.