National Electricity (South Australia) (Australian Energy Regulator - Wholesale Market Monitoring) Amendment Bill

Second Reading

The Hon. K.J. MAHER (Minister for Employment, Minister for Aboriginal Affairs and Reconciliation, Minister for Manufacturing and Innovation, Minister for Automotive Transformation, Minister for Science and Information Economy) (18:14): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation and explanation of clauses inserted in Hansard without my reading it.

Leave granted.

The Government is amending the national energy legislation to confer on the Australian Energy Regulator a wholesale market monitoring and reporting function.

In relation to the wholesale electricity market, the presence of barriers to entry or structural factors may raise the possibility there is not effective competition in the wholesale electricity market, which would be detrimental to the long-term interests of consumers. In particular, it would be likely to have an adverse effect on the efficient investment in, and efficient operation of, electricity services in the National Electricity Market.

The National Electricity (South Australia) (Australian Energy Regulator – Wholesale Market Monitoring) Amendment Bill 2016 will confer on the Australian Energy Regulator a wholesale market monitoring and reporting function to ensure Energy Ministers have information and evidence to support legislative, regulatory or other responses where features of the wholesale electricity market are found to be detrimental to effective competition.

The wholesale market monitoring and reporting function will enable the Australian Energy Regulator to regularly and systematically monitor the performance of the wholesale electricity market in relation to effective competition and to perform other monitoring functions that relate to offers and prices within the wholesale electricity market.

The Bill explicitly limits the scope of the monitoring function to entities that supply electricity or services through the electricity wholesale exchange operated by the Australian Energy Market Operator.

In performing these functions, the Australian Energy Regulator must have regard to the matters specified by this Bill in assessing whether there is effective competition but is not limited by the specified criteria. The Australian Energy Regulator may also have regard to other matters as it considers relevant to determine whether there is effective competition. This will ensure the scope of the Australian Energy Regulator's assessment of whether competition is effective in a relevant market is not unduly limited.

Importantly, wholesale market monitoring and reporting will provide greater transparency for stakeholders, including policy and rule makers, regulators and consumers on the operation of the wholesale electricity market. The Australian Energy Regulator will be required to publish on its website a Wholesale Market Monitoring Report at least every 2 years and provide advice to Energy Ministers as it thinks fit.

The report is required to cover a monitoring period of at least 5 years. To ensure that the first two reports can be delivered in the near term, however, the Bill requires the Australian Energy Regulator to prepare the first report based on a 2 year monitoring period and the second report on a 4 year monitoring period.

Clear advice provided by the Australian Energy Regulator to Energy Ministers will include its opinion on whether there are features of the wholesale electricity market that may be detrimental to effective competition or may be impacting detrimentally on the efficient functioning of the market which require a legislative, regulatory or other response.

The Bill also ensures that the report contains sufficient information about the period monitored. The Bill requires the report to contain a discussion and analysis of the results of the performance of the monitoring functions, features observed that impact detrimentally on the efficient functioning of the market and the achievement of the national electricity objective, inefficiencies in the market and their causes and the methodology applied including results of indicators, tests and calculations performed.

To ensure the costs of this function are minimised, the Australian Energy Regulator must use, in the first instance, publicly available information to identify any relevant matter in its analysis of effective competition in the wholesale electricity market.

Recognising the amount of information which is not transparent in the wholesale electricity market and held on a confidential basis by wholesale electricity suppliers, to ensure a robust analysis of effective competition the Australian Energy Regulator can obtain confidential information from a wholesale electricity supplier where it has identified a relevant matter.

To protect the confidential information provided by a wholesale electricity supplier, the Australian Energy Regulator is expressly prohibited from using this information for any purpose other than the performance of the wholesale market monitoring and reporting function. Where it is necessary to disclose the information for the reporting function, the Australian Energy Regulator must combine or arrange the information with other information so it does not reveal any confidential aspects of the information or reveal the wholesale electricity supplier to whom the information relates.

The Bill also provides the Australian Energy Regulator with immunity from liability for breach of confidence in respect of disclosing certain confidential information. No action for breach of confidentiality may be brought against the Australian Energy Regulator for disclosing confidential information where the Australian Energy Regulator reasonably believed that the information was not confidential information or was sufficiently aggregated so as not to disclose confidential aspects of the information.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause is formal.

2—Commencement

The Act is to commence by proclamation. Certain amendments relating to confidential supplier information are related to an amendment that is to be made to the Competition and Consumer Act 2010 of the Commonwealth. As a result, section 7(5) of the Acts Interpretation Act 1915 is disapplied.

3—Amendment provisions

This clause is formal.

Part 2—Amendment of National Electricity Law

4—Amendment of section 2—Definitions

New definitions are inserted for the purposes of the measure.

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

The functions and powers of the AER are amended to reflect its wholesale market monitoring and reporting functions.

6—Insertion of Part 3 Division 1A

New Part 3 Division 1A is inserted:

Division 1A—Wholesale electricity markets—AER monitoring and reporting functions

18A—Definitions

Definitions are inserted for the purposes of the new Division.

18B—Meaning of effective competition

The matters that the AER must have regard to in assessing whether there is effective competition in a market are set out.

18C—AER wholesale market monitoring and reporting functions

The AER wholesale market monitoring and reporting functions are provided for.

18D—Provision, use and disclosure of information

The proposed section sets out procedures and other matters relating to the AER's information gathering and disclosure powers for the purposes of its wholesale market monitoring and reporting functions.

18E—Immunity from liability

Provision is made in relation to immunity from liability for the AER for any action for breach of confidence with respect to the disclosure of confidential supplier information.

7—Amendment of Schedule 3—Savings and transitionals

A transitional provision is inserted:

Part 13—Transitional provision related to AER wholesale market reporting functions

26—Transitional provision related to AER wholesale market reporting functions

The provision provides that the first AER wholesale market report will only relate to the first 2 years of operation of the measure and the second report will only relate to the first 4 years of operation of the measure (under the measure, reports thereafter will relate to the 5 year period immediately preceding the report).

Debate adjourned on motion of Hon. T.J. Stephens.