Bills

Emergency Management (Electricity Supply Emergencies) Amendment Bill

Second Reading

The Hon. R.I. LUCAS (Treasurer) (18:24): 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.

The national energy market is transforming. With this transformation, it is essential that last resort powers exist to ensure a timely and efficient response to an electricity supply emergency.

Currently the powers to manage an electricity supply emergency straddle two legislative instruments, the Emergency Management Act 2004 and the Essential Services Act 1981.

A more efficient and timely process for declaring an electricity supply emergency is contained in the Emergency Management Act. Electricity supply emergencies can be sudden and can rapidly evolve. The Emergency Management Act is therefore the preferrable Act for last resort powers to manage an electricity supply emergency.

The Emergency Management (Electricity Supply Emergencies) Amendment Bill 2021 provides a timely and efficient framework to ensure that, in times of electricity supply emergency, the minister responsible for energy has appropriate powers of direction to protect the needs of the South Australian community.

Unlike the Essential Services Act, which allows directions to be given to a specified person, class of person or members of the public generally in a period of emergency, under the Emergency Management Act there is currently a limited list of market participants that can be directed in an electricity supply emergency.

The Bill refers to the parties that can be directed as designated persons. This replaces the previously used term, market participant, to overcome stakeholder confusion. The market participant term has a defined meaning in the National Electricity Rules which differs from the definition and use of this term under the Emergency Management Act.

The transformation of the national energy market has resulted in the introduction of new roles and responsibilities associated with the supply and use of electricity. An important feature of the Bill is that it provides for an expanded list of persons the minister can direct under the Act in an electricity supply emergency so as to capture all persons associated with the national energy market.

To ensure persons in traditional national energy market roles are directable, the Bill prescribes a person who engages in the transmission or distribution of electricity and an end user as designated persons. The Bill also adds a metering coordinator and third party service provider to the list of designated persons that can be directed in an electricity supply emergency.

During the introduction of competition in metering, the new role of metering coordinator evolved and was defined in the national energy frameworks. The metering coordinator has overall responsibility for metering services at a customer’s connection point.

The role of a third party energy service provider is a new and evolving role. As technology becomes smarter, third party energy service providers are helping consumers to make use of smart controls to manage when their devices use electricity and reduce consumer costs. Customers are increasingly trusting these providers to remotely control their devices to maximise value and return from the customers investment in this technology.

In some circumstances, part of the activities conducted by a business will cause it to come within the designated person definition. The intention of the framework is that the minister can direct a designated person in relation to the activities which cause the person to come within the designated person definition.

During an electricity supply emergency, the minister may need to issue a direction to a class of designated persons to ensure a timely response to the emergency. The Bill clarifies that a direction to a class of designated persons may be made by the Minister and the process for notifying such a direction.

The Bill seeks to clarify the nature of directions that can be made by the minister. To ensure the efficient coordination of emergency response, the Bill makes clear that the minister can direct a designated person to direct another person it has lawful authority to direct. A designated person may also choose to fulfil a direction by directing another person it has lawful authority to direct.

The emergency framework includes provisions to mitigate the potential of conflicting directions to a person. Directions to designated persons must be limited to directions the minister thinks are reasonably necessary to respond to the electricity supply emergency, the minister is required to consult prior to issuing directions (to the extent that it is reasonably practicable in the circumstances) and the minister is required to take reasonable steps to avoid unduly interfering with the operation of the national electricity market, National Electricity Law and National Electricity Rules.

There is an urgent need to enact these powers. During the first waves of COVID-19 internationally it was identified that restrictions associated with managing the pandemic can significantly reduce demand on the power system. World-leading modelling by the Australian Energy Market Operator exposed that under extreme conditions low demand conditions pose a risk to the security of electricity supply.

Temporary powers, due to expire on 31 May 2021, were enacted in the COVID-19 Emergency Response Act 2020 to provide appropriate last resort powers to manage this risk. The Bill contemplates the passage of the amendments to the Emergency Management Act prior to the expiry of the temporary powers, expiring the relevant provisions if they are not previously expired.

The Bill represents essential last resort powers for a modern energy system which is balancing bulk and distributed clean electricity supplies with consumer’s electricity needs. Timely last resort emergency powers will assist mitigate disruption of electricity supply to customers in an electricity supply emergency.

I commend this Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Amendment provisions

These clauses are formal.

Part 2—Amendment of Emergency Management Act 2004

3—Amendment of section 27A—Interpretation

Certain definitions are inserted for the purposes of the measure. The definition of market participant is deleted and a definition of designated person is inserted instead for the purposes of the measure.

4—Amendment of section 27C—Minister's power to give directions

The amendment to section 27(1) is partly consequential and partly to clarify that directions may be given to a class of designated persons (not just particular designated persons).

Section 27(2)(b) is substituted so that it provides that the Minister is authorised to give directions that require a designated person to give any directions of a kind that the designated person may lawfully give (which may include, for example, requiring a designated person to give directions to, or to exercise authority over, another person or body, whether or not that other person or body is also a designated person).

A subsection (2a) is inserted to specify certain requirements that may be contained in a direction to a market participant.

A subsection (2b) is inserted to clarify certain matters relating to the Minister's power to give directions for the avoidance of doubt.

Substituted subsection (4) clarifies that consultation on a proposed direction only relates to directions proposed to be given to particular designated persons (and not classes of designated persons).

A capacity to exempt persons from a direction given to a class of designated persons is inserted.

5—Amendment of section 27E—Obligation to preserve confidentiality

This amendment is consequential.

6—Amendment of section 27F—Manner of giving directions or requirements

Proposed subsection (1) provides that a direction under section 27C relating to a class of designated persons must be given by notice published on a website determined by the Minister.

The other amendment is consequential.

Schedule 1—Expiry of provisions of COVID-19 Emergency Response Act 2020

Schedule 1 provides that certain provisions of the COVID-19 Emergency Response Act 2020 expire on the commencement of Part 2 of the measure.

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