Express law No. 23

7 July 2005

Commencement of new national electricity legislation

The new National Electricity Law, Rules and Regulations
commenced on 1 July 2005.

This legislation amends the cooperative
scheme for electricity which establishes a wholesale exchange
for participants
in the National Electricity Market and an open access regime
for transmission and distribution networks.

The old scheme

The old scheme for electricity market regulation
came into operation in December 1998.

  • The lead legislation is the National Electricity
    (South Australia) Act 1996 of South Australia.
  • The old National Electricity Law (NEL) was a schedule
    to that Act.
  • The old National Electricity
    Code was in force under the NEL, and provided the detail
    of the regulatory regime.
  • The NEL
    was picked up and applied by Application Acts in each
    of the other participating jurisdictions, namely New
    South Wales, Victoria, Queensland, and the Australian
    Capital Territory.

The new scheme

A new NEL, which commenced operation on
1 July 2005, replaces the old NEL. The new NEL has been
substantially revised
in this process. New
National Electricity Rules
replace
the old Code, though the new Rules are in much the same
form as the old Code. The new NEL and Rules confer functions
on two new statutory bodies, the Australian Energy Market
Commission and the Australian Energy Regulator.

Australian
Energy Market Commission (AEMC)

  • The AEMC is established by the Australian Energy
    Market Commission Establishment Act 2004
    of South Australia.
  • The
    AEMC will be responsible for making and amending the
    National Electricity Rules, taking over the role previously
    exercised by the National Electricity Code Administrator.
  • The inaugural Chair of the AEMC is Dr John Tamblyn
    and the two other commissioners are Ms Liza Carver and
    Mr Ian
    Woodward.

Australian Energy Regulator (AER)

  • The AER is a Commonwealth
    regulator established by amendments to the Trade
    Practices Act 1974
    .
  • The AER will take over the economic regulatory
    functions previously exercised by the Australian Competition
    and
    Consumer Commission and the market rule enforcement
    functions previously exercised by the National Electricity
    Code
    Administrator, under the old NEL and Code.
  • The inaugural Chair of the AER is
    Mr Steve Edwell and the two other members are Mr Geoffrey
    Swier and Mr Edward
    Willett.

Commonwealth will be a participating jurisdiction

Also
for the first time, the Commonwealth will be a participating
jurisdiction in the National Electricity Market. The
Commonwealth will pick up and apply the new NEL, Rules
and Regulations
as laws of the Commonwealth in the offshore 'adjacent
areas'. Tasmania has also joined the scheme.

Associated
regulations for existing access undertakings

To coincide
with these changes to national electricity legislation,
the Australian
Energy Market Regulations 2005
have also been made under the Commonwealth Australian
Energy
Market Act 2004. These Regulations confirm the continued
operation of existing access undertakings given by electricity
network service providers under section 44ZZA of the
Trade Practices Act 1974.

More reforms to come

These reforms are part of broader
reforms being made to national energy regulation as set
out in the Council
of
Australian Governments' Australian Energy Market
Agreement 2004 (AEMA). In due course, the reforms will
also confer functions on the AER and AEMC in relation
to gas, and make changes to electricity retail regulation.
You can obtain a copy of the AEMA or further information
about energy reform (and subscribe to regulator email
bulletins
on energy reform) at the Ministerial
Council on Energy website
.

AGS was closely involved in advising the Department
of Industry, Tourism and Resources on formulating the
new
national electricity legislation, and continues to
advise on energy reform.

For further information please
contact:

Robert Orr QC
Deputy General Counsel
T 02 6253 7129 F 02 6253 7304
robert.orr@ags.gov.au

Tim Gordon
Lawyer
T 02 6276 1009 F 02 6276 7110
tim.gordon@ags.gov.au

Graeme Hill
Senior Lawyer
T 02 6253 7080 F 02 6253 7303
graeme.hill@ags.gov.au

Important: The material in Express
law is provided to clients as an early, interim
view for general information only, and further analysis
on the matter may be prepared by AGS. The material
should not be relied upon for the purpose of a particular
matter. Please contact AGS before any action or decision
is taken on the basis of any of the material in this
message.