Legislative Council Fifty-Fourth Parliament, First Session (54-1) 54 1 Parliament of South Australia Legislative Council published Bills Statutes Amendment (National Energy Laws) (Rules) Bill Statutes Amendment (National Energy Laws) (Rules) Bill Statutes Amendment (National Energy Laws) (Rules) Bill Second Reading Second Reading The Hon. D.W. RIDGWAY Legislative Council Minister for Trade, Tourism and Investment The Hon. D.W. RIDGWAY (Minister for Trade, Tourism and Investment) (17:29): 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 them. Leave granted. 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 good 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, comprised of the AEMC, AEMO and AER, with an independent Chair and Deputy Chair. This 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 Rule being proposed by the ESB must meet. Firstly, the Rule must be in connection with energy security and reliability or long-term planning of the NEM, or in the case of 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 Rule meets the relevant legislative objective. This ensures 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 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 Rule must receive the unanimous support of Ministers, then the MCE can recommend that the same 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 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. This Bill also makes two further amendments across each of the Energy Laws, unrelated to the Energy Security Board. For timeliness, they have 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 process 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 timeline 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 in inherent in every decision we make. The Energy 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 a 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 has met the statutory requirements 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. Explanation of Clauses Explanation of Clauses Part 1—Preliminary 1—Short title 2—Commencement 3—Amendment provisions These clauses are formal. Part 2—Amendment of National Electricity Law 4—Amendment of section 2—Definitions Definitions are inserted for the purposes of the measure, including a definition of the Energy Security Board. 5—Insertion of section 28YA New section 28YA is inserted: 28YA—Disclosure of information to Energy Security Board The AER is authorised to disclose information to the Energy Security Board. 6—Amendment of section 54C—Disclosure required or permitted by law etc The Energy Security Board is added to the list of bodies that AEMO is authorised to disclose information to. 7—Insertion of heading to Part 7 Division 2 Subdivision 1 This amendment is consequential. 8—Insertion of Part 7 Division 2 Subdivision 2 A new Subdivision 2 is inserted into Part 7 Division 2: Subdivision 2—Rules made by Minister from time to time 90F—South Australian Minister may make Rules on recommendation MCE and Energy Security Board The South Australian Minister is authorised to make Rules on the recommendation of the MCE and the Energy Security Board. The Rules must be in connection with energy security and reliability of the NEM or long-term planning for the NEM and consistent with the national electricity objective. The Energy Security Board is required to conduct public consultation on any Rules. 9—Amendment of section 96—Publication of non-controversial or urgent final Rule determination The period within which a final Rule determination in respect of a Rule made under this section (being a non controversial or urgent Rule) must be published (by the AEMC) is lengthened to 8 weeks (from 6 weeks). 10—Insertion of section 108B New section 108B is inserted: 108B—Subsequent rule making by AEMC New section 108B clarifies that the new Ministerial Rule making power does not affect the power of the AEMC to make Rules for the purposes of the National Electricity Law. 11—Amendment of Schedule 3—Savings and transitional A transitional provision is inserted in connection with the amendment to section 96. Part 3—Amendment of National Energy Retail Law 12—Amendment of section 2—Interpretation Except where otherwise stated below, the amendments to the National Energy Retail Law set out in the measure are substantially the same as the amendments to the National Electricity Law under the measure (with modifications where necessary in the context of the National Energy Retail Law). 13—Insertion of section 8A The National Energy Retail Law does not currently have a Schedule of 'savings and transitional' provisions. This clause reflects the proposed insertion of the new Schedule. 14—Insertion of section 210A 15—Amendment of heading to Part 10 Division 3 16—Insertion of heading to Part 10 Division 3 Subdivision 1 17—Insertion of Part 10 Division 3 Subdivision 2 Subdivision 2—Rules made by Minister from time to time 238B—South Australian Minister may make Rules on recommendation of MCE and Energy Security Board The Minister's power to make Rules under this section differs from the equivalent provision in the National Electricity Law in that the Minister can only make Rules for any purpose that is necessary or consequential as a result of the making of a National Electricity Rule by the Minister under section 90F of the National Electricity Law or a National Gas Rule by the Minister under section 294G of the National Gas Law. 18—Amendment of section 239—Subsequent rule making by AEMC 19—Amendment of section 252—Publication of non-controversial or urgent final Rule determination 20—Insertion of Schedule 1 Part 4—Amendment of National Gas Law 21—Amendment of section 2—Definitions Except where otherwise stated below, the amendments to the National Gas Law set out in the measure are substantially the same as the amendments to the National Electricity Law under the measure (with modifications where necessary in the context of the National Gas Law). 22—Amendment of section 91GC—Disclosure required or permitted by law etc 23—Amendment of heading to Chapter 9 Part 2 24—Insertion of heading to Chapter 9 Part 2 Division 1 25—Insertion of Chapter 9 Part 2 Division 2 Division 2—Rules made by Minister from time to time 294G—South Australian Minister may make Rules on recommendation of MCE and Energy Security Board The Minister's power to make Rules under this section differs from the equivalent provision in the National Electricity Law in that the Energy Security Board can recommended that the Minister make Rules in connection with long term planning in relation to investment in, and operation and use of, natural gas services (in addition to Rules in connection with energy security and reliability of the NEM or long-term planning for the NEM). 26—Amendment of section 304—Publication of non-controversial or urgent final Rule determination 27—Insertion of section 320A 28—Insertion of section 326A 29—Amendment of Schedule 3—Savings and transitional Debate adjourned on motion of Hon. J.E. Hanson.