Bills

Statutes Amendment (National Energy Laws) (Regulatory Sandboxing) Bill

Introduction and First Reading

The Hon. A. KOUTSANTONIS (West Torrens—Minister for Infrastructure and Transport, Minister for Energy and Mining) (15:45): 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. A. KOUTSANTONIS (West Torrens—Minister for Infrastructure and Transport, Minister for Energy and Mining) (15:46): I move:

That this bill be now read a second time.

The government is amending the national energy legislation to introduce a regulatory sandbox framework, a regulatory sandbox framework within which participants can trial innovative concepts in the market under relaxed regulatory requirements, on a time-limited basis with appropriate safeguards in place.

Such a framework is especially important in the energy sector to facilitate the sector's timely transition to a low carbon future. The future will look very different to what we have seen previously and will require a regulatory framework that is more flexible to support the introduction of new technologies and business models that enable this transition to occur.

The government has previously shown its commitment to this future by investing in new technology, such as grid-scale storage and facilitating the growth of renewable energy generation in the state. We are continuing this leadership by incentivising the next generation of innovative energy storage. I seek leave to insert the remainder of my second reading explanation and explanation of clauses into Hansard without my reading them.

Leave granted.

The Government is therefore supportive of the changes required to introduce this framework. The framework can provide significant benefits to consumers including better services and lower costs through innovation, as well contributing to climate change action.

The National Energy Laws (Regulatory Sandboxing) Bill 2022, seeks to implement changes to the National Electricity Law, National Gas Law and National Energy Retail Law to introduce a regulatory sandbox toolkit.

The regulatory sandbox toolkit will consist of three tools, coordinated feedback and guidance on regulatory issues, a regulatory waiver power and a new rule change process for proof-of-concept trials.

Some proof-of-concept trials may be able to rely on existing regulatory arrangements, and not need any of the sandbox tools being proposed in order to proceed. For other trials, it is possible that some might require more than one of the regulatory sandbox tools to proceed.

The existing regulatory framework does not need to be amended to facilitate the coordinated feedback and guidance sandbox tool. The Australian Energy Regulator (AER) will coordinate an innovation enquiry service, with a clear process for trial proponents to seek feedback and guidance on regulatory issues and regulatory options from the AER, as well as the Australian Energy Market Commission (AEMC) or other market bodies. By establishing this service, it is expected that unnecessary delays and costs for innovative trials will be avoided. The AER will be responsible for the implementation of this service, including determining when it will be launched.

The Bill deals with the regulatory waiver power tool and the new rule change process tool.

The Bill introduces a new AER regulatory waiver power that can provide time-limited regulatory relief to eligible trials. The AER is the appropriate body for this role given their role as the Regulator of the national frameworks.

This tool could be used if an eligible trial required an exemption from a specific rule (or rules) in the National Electricity Rules, National Energy Retail Rules or the National Gas Rules.

It can also be used to provide an exemption to registration requirements, as set out in the national energy laws. This very limited power has been included due to registration requirements being identified as a potential barrier to trial projects proceeding.

Whilst the national energy laws currently include powers to provide an exemption to registration requirements, the responsible body differs between the Australian Energy Market Operator (AEMO) and the AER. The Bill therefore provides for the AER to be the body that provides any necessary exemption from registration requirements for innovative trial projects.

The Bill provides for the AER to have regard to the innovative trial principles and any other matter required by the rules when making a decision to grant specific exemptions and waivers to facilitate the conduct of proof-of-concept trials.

The innovative trial principles are provided for in the Bill and help decisions makers to determine whether a trial project is genuinely innovative.

The AER would also be required to develop 'trial projects guidelines' in consultation with market bodies and relevant stakeholders. The exemptions and waivers that it grants to specific proof-of-concept trials would be subject to these guidelines.

The Bill also introduces a new power for the AEMC to make a trial rule. This would be used if an innovative trial required new rules or the alteration of existing rules for a limited time to be conducted.

A new rule change process is included in the Bill for the making of a trial rule.

The inclusion of this process is necessary due to the current rule making process being lengthy and representing a high barrier for the purposes of a limited trial rule.

Under this rule-making power the AEMC must comply with the existing rule making tests set out in the Laws, as well as take into account the innovative trial principles. The process will process will be conducted by the AEMC in under 10 weeks.

The rule-making power encompasses the National Electricity Rules, National Energy Retail Rules and the National Gas Rules.

The Bill also provides for proponents of a trial waiver or trial Rule to be made subject to associated conditions or requirements. Reporting on the trial project is an example of a condition or requirement that may be imposed. The Bill provides for the revocation of a trial waiver or trial rule should a proponent breach any conditions or requirements.

The AER also has responsibility under the Bill to monitor and enforce trial waivers, and associated conditions, and trial Rules and any requirements as set by the AEMC.

The South Australian Minister responsible for administering the relevant laws will be able to make an initial set of National Electricity Rules, National Energy Retail Rules and National Gas Rules associated with the amendments on regulatory sandboxing under provisions included in the Bill. Significant public consultation on the sets of initial rules has already been undertaken.

It is important to note that the objective of the regulatory sandbox toolkit is to encourage innovation, which has the potential to contribute to the long-term interests of consumers, rather than simply to facilitate an increased number of trials.

By introducing this reform, we are providing for a regulatory framework that is better equipped to respond to the rapid changes occurring in the energy sector and deliver benefits for customers.

I note that the Opposition previously supported the introduction of a regulatory sandboxing framework into national energy laws, and I look forward to receiving their support in progressing this Bill through the parliament.

I commend the bill to the Chamber.

EXPLANATION OF CLAUSES

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of National Electricity (South Australia) Act 1996

4—Amendment of section 2—Definitions

Certain definitions are inserted for the purposes of the measure, including trial project, trial Rule and trial waiver.

5—Insertion of section 7B

The innovative trial principles are inserted as section 7B:

7B—Innovative trial principles

The innovative trial principles are set out.

6—Amendment of section 15—Functions and powers of AER

An additional function is conferred on the AER relating to monitoring and investigating the conduct and outcomes of a trial project undertaken under a trial Rule or trial waiver.

7—Insertion of Part 3 Division 1D

New Division 1D is inserted into Part 3:

Division 1D—AER trial waiver functions

18ZJ—Definitions

A definition of proponent is inserted.

18ZK—Interpretative matters

Certain interpretative matters are provided for.

18ZL—Trial waiver

The AER may grant a trial waiver, being an exemption from section 12 of the Law or the Rules, or a provision of the Rules.

18ZM—Conditions of trial waiver

A trial waiver must be subject to any conditions required by the Rules and may be subject to any conditions the AER considers appropriate.

18ZN—Consultation on trial waiver

Consultation requirement that the AER must comply with before granting a trial waiver are provided for.

18ZO—Publication etc of trial waiver

A copy of a trial waiver must be published on the AER's website.

18ZP—Duration of trial waiver

A trial waiver has effect from the day specified in the trial waiver and for the period (not exceeding 5 years) specified in the trial waiver.

18ZQ—Extension of trial waiver

Provision is made for the AER to extend a trial waiver by a specified period.

18ZR—Compliance with trial waiver

A proponent is required to comply with the conditions of a trial waiver.

18ZS—Revocation of trial waiver

The AER is authorised to revoke a trial waiver.

18ZT—Other matters

Certain other matters relating to the granting of a trial waiver are set out.

8—Amendment of section 34—Rule making powers

The powers to make Rules in the Law are expanded to include any matter or thing related to, or necessary or expedient for, the purposes of a trial Rule, trial project or a trial waiver.

9—Amendment of section 87—Definitions

A definition of trial Rule is inserted. A trial Rule is included in the definition of market initiated proposed Rule. Other amendments are consequential.

10—Insertion of section 88C

New section 88C is inserted:

88C—AEMC must take into account innovative trial principles in certain cases

A requirement to take into account the innovative trial principles in making a trial Rule is provided for.

11—Insertion of section 90DA

New section 90DA is inserted:

90DA—South Australian Minister to make initial Rules relating to regulatory sandboxing

The South Australian Minister is empowered to make initial Rules relating to regulatory sandboxing. Certain requirements relating to the making of such Rules are imposed, including publication requirements.

12—Amendment of section 92—Contents of requests for Rules

In addition to the Regulations, provision is made for the Rules to prescribe requirements relating to requests for Rules.

13—Amendment of section 94—Initial consideration of request for Rule

In addition to the Regulations, provision is made for the Rules to prescribe requirements relating to requests for Rules.

The other amendments are consequential.

14—Insertion of section 96AA

New section 96AA is inserted:

96AA—Publication of final Rule determination for trial Rule

Provision is made in relation to the time within which a final Rule determination for request for a Rule that is a trial Rule must be made. Sections 96 and 96A are disapplied in relation to a request for a trial Rule.

15—Amendment of section 102—Final Rule determination

A requirement for the AEMC to give its reasons relating to a final Rule determination taking into account the innovative trial principles is inserted.

16—Amendment of section 103—Making of Rule

The AEMC is required to specify an expiry date for a trial Rule (which must be no more than 5 years after the date on which the trial Rule commences operation).

17—Insertion of sections 104A to 104D

New sections 104A to 104D are inserted:

104A—Extension of trial Rule

Provision is made for the AEMC to extend a trial Rule by a specified period.

104B—AEMC may impose requirements on proponent of trial project on making trial Rule

The AEMC must give consideration to revoking the trial Rule on the recommendation of the AER.

104C—AEMC may revoke trial Rule on recommendation of AER

Provision is made for the AEMC to impose requirements on proponent of trial project on making trial Rule.

104D—Special provision for revocation of trial Rule

Certain Divisions of the Part are disapplied in relation to the making of a Rule that revokes a trial Rule and certain requirements are imposed on such a revocation.

Part 3—Amendment of National Energy Retail Law (South Australia) Act 2011

18—Amendment of section 2—Definitions

Amendments that are substantially similar to the amendments to the National Electricity Law are made to the National Energy Retail Law.

19—Insertion of section 13A

13A—Innovative trial principles

20—Insertion of Part 5A

Part 5A—AER trial waiver functions

121A—Definitions

121B—Interpretative matters

121C—Trial waiver

121D—Conditions of trial waiver

121E—Consultation on trial waiver

121F—Publication etc of trial waiver

121G—Duration of trial waiver

121H—Extension of trial waiver

121I—Compliance with trial waiver

121J—Revocation of trial waiver

121K—Other matters

21—Amendment of section 204—Functions and powers of AER (including delegations)

22—Amendment of section 235—Definitions

23—Insertion of section 236A

236A—AEMC must take into account innovative trial principles in certain cases

24—Amendment of section 237—Subject matters of Rules

25—Insertion of section 238AA

238AA—South Australian Minister to make initial Rules relating to regulatory sandboxing

26—Amendment of section 246—Contents of requests for Rules

27—Amendment of section 249—Initial consideration of request for Rule

28—Insertion of section 252A

252A—Publication of final Rule determination for trial Rule

29—Amendment of section 259—Final Rule determination

30—Amendment of section 261—Making of Rule

31—Insertion of sections 262A to 262D

262A—Extension of trial Rule

262B—AEMC may impose requirements on proponent of trial project on making trial Rule

262C—AEMC may revoke trial Rule on recommendation of AER

262D—Special provision for revocation of trial Rule

Part 4—Amendment of National Gas (South Australia) Act 2008

32—Amendment of section 2—Definitions

Amendments that are substantially similar to the amendments to the National Electricity Law are made to the National Gas Law.

33—Insertion of Chapter 1 Part 3 Division 2A

Division 2A—Innovative trial principles

24A—Innovative trial principles

34—Amendment of section 27—Functions and powers of the AER

35—Insertion of Chapter 2 Part 1 Division 1B

Division 1B—AER trial waiver functions

30U—Definitions

30V—Interpretative matters

30W—Trial waiver

30X—Conditions of trial waiver

30Y—Consultation on trial waiver

30Z—Publication etc of trial waiver

30ZA—Duration of trial waiver

30ZB—Extension of trial waiver

30ZC—Compliance with trial waiver

30ZD—Revocation of trial waiver

30ZE—Other matters

36—Amendment of section 74—Subject matter for National Gas Rules

37—Amendment of section 290—Definitions

38—Insertion of section 293A

293A—AEMC must take into account innovative trial principles in certain cases

39—Insertion of section 294EA

294EA—South Australian Minister to make initial Rules relating to regulatory sandboxing

40—Amendment of section 298—Content of requests for a Rule 41—Amendment of section 301—Initial consideration of request for Rule

42—Insertion of section 304A

304A—Publication of final Rule determination for trial Rule

43—Amendment of section 311—Final Rule determination

44—Amendment of section 313—Making of Rule 45—Insertion of sections 314A to 314C

314A—Extension of trial Rule

314B—AEMC may impose requirements on proponent of trial project on making trial Rule

314C—AEMC may revoke trial Rule on recommendation of AER

314D—Special provision for revocation of trial Rule

Debate adjourned on motion of Mr Patterson.

Mr ODENWALDER: I draw your attention to the state of the house.

A quorum having been formed: