Statutes Amendment (National Energy Laws) (Stand-Alone Power Systems) Bill

Second Reading

The Hon. R.I. LUCAS (Treasurer) (16:41): I move:

That this bill be now read a second time.

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

Leave granted.

Over recent years, it has become evident the energy sector is constantly evolving. It is essential the regulatory framework that supports Australia's energy market can adapt and respond to technological advancements to operate in the long-term interests of consumers.

New technologies and the falling costs of renewable generation and batteries have the potential to deliver energy services to customers through alternatives to traditional grid connection, at a lower cost and with improved reliability, and with other benefits such as reduced bushfire risks. One such alternative, is a stand-alone power system—an electricity supply arrangement that is not physically connected to the national grid.

When a distribution network service provider needs to upgrade its distribution network, it may now be more efficient to service a group of customers using a stand-alone power system, rather than undertake the required network upgrade. These cost savings, arising from the use of more efficient stand-alone systems will help lower costs for all users connected to the distribution network through lower network charges.

Currently, the National Energy Laws do not adequately support distribution network service providers to implement a stand-alone power system rather than a network upgrade. This may be inhibiting the use of the most efficient technological solutions to supply some customers.

The Statutes Amendment (National Energy Laws) (Stand-Alone Power Systems) Bill 2020 I present to you today, seeks to implement changes to the National Electricity Law and National Energy Retail Law to facilitate the provision of stand-alone power systems by distribution network service providers, where it will be more efficient than a traditional network solution.

The Bill does not introduce a national regulatory framework for stand-alone power systems owned and operated by parties other than the distribution network service provider. The application of the new framework is expressly limited to stand-alone power systems which include a distribution system owned and operated by a distribution network service provider. The framework is only intended to cover stand-alone power systems used by distribution network service providers as an alternative to grid supply where it is economically efficient to do so.

The regulatory framework applicable to third party stand-alone power systems is being considered separately.

The framework will not apply in a jurisdiction unless that jurisdiction chooses to opt into the new stand-alone power system framework by amending their local Regulations. The Bill provides each jurisdiction discretion in how to apply the framework, for example they may apply it to a specific area within the jurisdiction or by reference to a particular distribution network service provider. A jurisdiction could use this opt-in framework to stagger the implementation of the framework in their jurisdiction.

The framework is only meant to cover stand-alone power systems owned and operated by a distribution network service provider as determined by the application of the framework in that jurisdiction.

A key policy principle associated with the new stand-alone power system framework is that customers are not disadvantaged where a distribution network service provider determines it is more efficient to supply them through a stand-alone power system.

The Bill achieves this principle primarily through definitional changes, which extend the consumer protections in the National Energy Retail Law to customers of a stand-alone power system under this framework.

Definitional changes also ensure that these stand-alone power systems are considered part of the national electricity system, thereby extending the national electricity objective and the National Electricity Market to these systems.

Customers are also protected by the extension of economic regulation by the Australian Energy Regulator to the network component of the stand-alone power systems.

The Australian Energy Market Operator's power system security functions and powers are not, however, extended to the stand-alone power systems by the Bill. This is because no current or future power system security role has been identified for the Australian Energy Market Operator in relation to these systems.

The Bill provides for the South Australian Minister to make the initial detailed rules governing these stand-alone power systems. The Bill provides for any future amendments to these rules to be progressed through the Australian Energy Market Commission (AEMC) rule making framework.

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 Law

4—Amendment of section 2—Definitions

Various amendments are made to definitions for the purposes of the measure.

5—Insertion of section 6B

New section 6B is inserted:

6B—Regulated stand-alone power systems

Regulations under the application Act of a participating jurisdiction may provide that for stand-alone power systems to form part of the national electricity system.

6—Amendment of section 11—Electricity market activities in this jurisdiction

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

These amendments are consequential.

8—Insertion of section 90EB

New section 90EB is inserted:

90EB—South Australian Minister to make initial Rules relating to stand-alone power systems

The South Australian Minister is empowered to make initial Rules relating to stand-alone power systems.

9—Amendment of section 114—AEMO to ensure maintenance of supply of sensitive loads

This amendment is consequential.

Part 3—Amendment of National Energy Retail Law

10—Amendment of section 237—Subject matters of Rules

This amendment is consequential.

11—Insertion of section 238AB

New section 238AB is inserted

238AB—South Australian Minister may make initial Rules relating to stand-alone power systems

The South Australian Minister is empowered to make initial Rules relating to stand-alone power systems.

12—Amendment of Schedule 1—Savings and transitionals

A transitional provision is inserted for the purposes of the measure.

Debate adjourned on motion of Hon. I.K. Hunter.