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2004 - 2005 - 2006
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF REPRESENTATIVES
ENERGY LEGISLATION AMENDMENT BILL 2006
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Industry, Tourism and
Resources, the Hon Ian Macfarlane MP)
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ENERGY LEGISLATION AMENDMENT BILL 2006
GENERAL OUTLINE
1. The purpose of this Bill is to:
a) amend the Gas Pipelines Access (Commonwealth) Act 1998 and the Trade
Practices Act 1974 (the TPA) to address technical issues with the conferral of
functions and powers on the National Competition Council and the
Commonwealth Minister under the cooperative gas access regime;
b) amend Part IIIA of the TPA to accommodate incentives for new pipelines in
the co-operative gas access regime which were introduced into the South
Australian Parliament on 11 May 2006;
c) make minor machinery amendments to the Australian Energy Market Act
2004, the TPA and the Administrative Decisions (Judicial Review) Act 1977
relating to the co-operative electricity regime; and
d) repeal the Pipeline Authority Act 1973.
Nature of the co-operative gas and electricity regimes
2. The appropriate regulation of gas and electricity infrastructure is essential to
efficient infrastructure investment, competitive energy markets and lower
energy prices for consumers. Energy specific regulatory arrangements are
considered necessary to accommodate the technical aspects of service
provision in gas and electricity networks and associated market power issues.
A co-ordinated approach to energy access is also essential to maintaining
consistency with national arrangements for access to essential infrastructure in
the TPA and to promote more competitive energy markets. Accordingly, the
Commonwealth, States and Territories have coordinated their policy oversight
of energy regulation through the Ministerial Council on Energy (MCE) acting
under the Council of Australian Governments as set out in the Australian
Energy Market Agreement signed in 2004.
3. The MCE has already overseen a number of energy reforms relating to
institutional arrangements and electricity which were bought into effect on
1 July 2005. As a consequence of those reforms, the current energy regulation
involves the Commonwealth TPA and co-operative legislative schemes for
both electricity and gas comprising:
· the recently revised National Electricity Law and National Electricity
Rules under the National Electricity (South Australia) Act 1996 (SA),
applied as a law of the jurisdiction by participating States and Territories
and applied to the offshore area by the Commonwealth Australian
Energy Market Act 2004 (the electricity regime);
· the Gas Pipelines Access Law and National Third Party Access Code for
Natural Gas Pipeline Systems under the Gas Pipelines Access (South
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Australia) Act 1997, applied as a law of the jurisdiction by the
participating States and Territories and applied to the offshore area
principally by the Commonwealth Gas Pipelines Access
(Commonwealth) Act 1998 (the gas access regime);
· an industry specific national regulator and enforcement body, the
Australian Energy Regulator established by Part IIIAA of the TPA
currently regulating electricity transmission and soon to regulate other
aspects of gas and electricity distribution;
· a national rule making and market development body, the Australian
Energy Market Commission, established by the Australian Energy
Market Commission Establishment Act 2004 (SA), currently acting in
relation to the National Electricity Rules and soon to take on rule
making in relation to other aspects of gas transmission and distribution
and electricity distribution.
· State and Territory specific regulation of electricity and gas, generally
involving licensing and retail regulation most of which will pass to a
national framework by 1 January 2008.
4. These arrangements are supported by the general competition regulation in the
TPA administered by the Australian Competition and Consumer Commission.
5. The MCE reform program will continue in late 2006 and 2007 to implement
the national institutional framework and regulatory arrangements across the
key aspects of gas and electricity service provision and reduce unnecessary
and duplicative regulatory burdens on business.
Conferral of functions on the National Competition Council and Commonwealth
Minister
6. The Gas Pipelines Access (Commonwealth) Act 1998 and TPA will be
amended to deal with the conferral of functions, powers and duties on the
Commonwealth Minister and the National Competition Council for the current
gas access regime.
7. The gas access regime governs access to services provided by means of
natural gas pipeline infrastructure and, as noted above, operates through a co-
operative legislative scheme involving the Commonwealth and all of the
States and Territories. The 'lead' legislation is the Gas Pipelines Access
(South Australia) Act 1997 of South Australia. Schedules to that Act constitute
the Gas Pipelines Access Law and National Third Party Access Code for
Natural Gas Pipeline Systems (GPAL). This GPAL is applied by each of the
States and Territories, except Western Australia which has enacted a slightly
revised version of the GPAL. The GPAL is also applied by the
Commonwealth, principally by the Gas Pipelines Access (Commonwealth) Act
1998 but also has some application under the Petroleum (Submerged Lands)
Act 1967.
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8. Under this co-operative scheme, State and Territory laws confer functions on a
range of Commonwealth bodies. The Commonwealth needs to set out how
this conferral takes place, and in particular to deal with issues raised by the
High Court decision of R v Hughes (2000) 202 CLR 535.
9. Provisions about how functions are conferred on the Australian Competition
and Consumer Commission and Australian Competition Tribunal are already
in place in sections 44ZZM, 44ZZMA and 44ZMB of the TPA. Provisions
about how functions are conferred on the Australian Energy Regulator,
currently only in relation to electricity, are already in place in sections 44AI,
44AJ and 44AK of the TPA.
10. These amendments set out how functions are conferred on the National
Competition Council by the GPAL, by amending the TPA and inserting new
sections 29BA, 29BB and 29BC. These amendments also set out how
functions are conferred on the Commonwealth Minister by the GPAL by
amending the Gas Pipelines Access (Commonwealth) Act 1998 and inserting
new sections 13, 13A and 13B.
11. These amendments follow the structure of the existing provisions for the
Australian Competition and Consumer Commission and the Australian Energy
Regulator.
Greenfields Amendments to Part IIIA of the Trade Practices Act 1974
12. On 9 May 2006 the MCE released its response to the Productivity
Commission Review of the Gas Access Regime (Report No.31, June 2004).
The Productivity Commission recommended that the gas access regime should
provide greater incentive mechanisms for new pipeline developments
("greenfields pipelines") to meet increasing demands for natural gas.
13. The primary mechanism proposed is an ability to obtain an upfront ruling on
whether the full price regulation in the gas access regime applies to a new
pipeline. If the relevant Minister is satisfied that a pipeline project does not
meet the current criteria (called the coverage criteria) for application of
regulation under the gas access regime, it will be granted a full exemption
from the gas access regime for 15 years (called a binding no-coverage ruling).
14. The second proposal is a mechanism under which new transmission pipelines
that bring foreign natural gas to Australian markets may be determined to be
exempt from price regulation under the gas access regime for 15 years, but
will be subject to a number of other obligations including non-discriminatory
pricing, prohibitions on preventing or hindering access, dispute resolution on
non-price matters and transparency obligations. This is called a 'price
regulation exemption'. Both these mechanisms involve a prior competition and
public interest assessment by the National Competition Council before a final
Ministerial decision.
15. On 11 May 2006, the South Australian government introduced the Gas
Pipelines Access (Greenfields Pipeline Incentives) Amendment Bill into the
South Australian Parliament to implement these proposals in the gas access
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regime. This Bill will insert a new Part 3A in relation to greenfields pipeline
incentives into Schedule 1 (the GPAL) of the Gas Pipelines Access (South
Australia) Act 1997. When made, these amendments will then be applied as a
law of the jurisdiction by the participating States and Territories and applied to
the offshore area principally by the Commonwealth Gas Pipelines Access
(Commonwealth) Act 1998.
16. The amendments to the TPA in this Bill are consequential amendments
necessary to ensure the effective operation of the incentives for greenfields
pipelines agreed by the MCE and introduced into the South Australian
Parliament.
17. To understand why amendments to Part IIIA of the TPA are required, it is first
necessary to have an appreciation of how the access regime established by that
Part of the TPA operates. Part IIIA of the TPA establishes three pathways for
a party to seek access to an infrastructure service. There are two main and
presently relevant pathways.
18. The first is through declaration of the service under Division 2 of Part IIIA of
the TPA.
19. The second is through using a State or Territory access regime which meets
the criteria for an effective access regime in the TPA and Competition
Principles Agreement. The TPA includes a process for having a State or
Territory access regime certified as an effective access regime (certification).
The MCE has recently committed to have both the gas and electricity access
regimes certified as effective access regimes under the TPA. Where there is
an effective access regime (paragraph 44G(2)(e) of the TPA), and in particular
a certified access regime (subsection 44G(4) of the TPA), declaration is not
available; rather the person seeking access needs to use the effective access
regime.
20. Under the declaration pathway, a business wanting access to a particular
infrastructure service applies to the National Competition Council for a
recommendation to have the service declared. The National Competition
Council considers the application before forwarding a recommendation to
(generally) the responsible Commonwealth Minister (the Treasurer) for a
decision.
21. The incentives to encourage investment in new pipeline infrastructure could
be compromised if the National Competition Council was empowered to
recommend that a service provided by such a pipeline and subject to a binding
no-coverage ruling or price regulation exemption be declared. Accordingly,
the amendments to the TPA prohibit the National Competition Council from
recommending, and the Commonwealth Minister making, such a declaration.
22. As noted, declaration is not available for infrastructure services that are
already the subject of an `effective access regime'. Accordingly, the National
Competition Council is required to assess whether an effective access regime
is in place when considering an application to declare a service. A State or
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Territory effective access regime may have been certified in advance of a
declaration application by the responsible Commonwealth Minister (the
Treasurer) on the application of a State or Territory (following a
recommendation by the National Competition Council: see sections 44M and
44N of the TPA).
23. The National Competition Council and the responsible Commonwealth
Minister (the Treasurer) are to apply the relevant principles set out in the
Competition Principles Agreement to recommend and decide respectively, that
a State or Territory regime is as an effective access regime for the purpose of a
declaration application (sections 44G and 44H of the TPA) and in regard to a
decision to certify the regime as effective under sections 44M and 44N of the
TPA. The relevant principles come from clause 6 of that Agreement.
24. The incentives to encourage investment in new pipeline infrastructure could
be compromised if the National Competition Council and the Minister could
find that an access regime was not an effective regime in a declaration process,
or could not be certified as an effective access regime, because they included
the binding no-coverage ruling or price regulation exemption provisions.
25. To ensure that the certification of the State and Territory gas access regimes is
not compromised by their provision for the relevant greenfields pipeline
incentives, the recommendations and decisions of the National Competition
Council and the responsible Commonwealth Minister (the Treasurer)
respectively are made subject to the requirement that they disregard the
application of Part 3A of Schedule 1 of the Gas Pipelines Access (South
Australia) Act 1997. The same is done for recommendations and decisions as
to whether there is an effective access regime in relation to a declaration
decision. In effect, the amendments provide that the new greenfields pipeline
incentives contained in that Act do not prevent the National Competition
Council or the responsible Commonwealth Minister (the Treasurer) from
finding that a gas access regime is an effective access regime.
26. This position is not detrimental to the interests of users because pipelines
granted a binding no-coverage ruling would have already had a prior
assessment of whether regulation would be necessary in the first 15 years of
operation and international pipelines granted a price regulation exemption
would continue to be subject to a significant number of obligations to prevent
the abuse of market power.
27. These incentives are intended to be replicated in the National Gas Law which
will replace the current gas access regime in 2007. Further Commonwealth
legislative amendments dealing with the transfer from the current GPAL
regime to the National Gas Law are intended to be progressed later in 2006.
28. The Bill therefore amends the TPA to overcome the declaration and
certification risks associated with the greenfields pipeline incentives. In
particular:
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· the amendments contained in this Bill will exempt the greenfields
pipelines incentives from consideration of whether a regime is an 'effective
access regime' under sections 44G, 44H, 44M and 44N of the TPA; and
· services provided by pipelines which have been granted a price regulation
exemption or binding no-coverage ruling will not be able to be declared.
Machinery Electricity Amendments
29. The Bill makes minor textual amendments to the Administrative Decisions
(Judicial Review) Act 1997, the Australian Energy Market Act 2004 and the
TPA in relation to the application of the electricity regime. The Bill changes
the current incorrect references to 'Schedule 1' of the National Electricity
(South Australia) Act 1996, to the correct reference to `the Schedule' to that
Act, and the current incorrect reference to the 'National Electricity Code', to
the correct reference to the `National Electricity Rules'.
30. The Bill makes a further technical amendment to the TPA that introduces
provisions, consistent with section 63 of the National Electricity Law, that
allow for the Australian Energy Regulator (AER) to make application to the
Federal Court for a disconnection order.
Pipeline Authority Act 1973 repeal
31. The Bill repeals the Pipeline Authority Act 1973.
FINANCIAL IMPACT STATEMENT
32. The Bill will have no financial impact.
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NOTES ON CLAUSES
Clause 1: Short title
33. This clause provides that the short title by which the Act may be cited is the
Energy Legislation Amendment Act 2006.
Clause 2: Commencement
34. Subclause (1) provides that the commencement date for sections 1 to 3,
Schedule 1 and Schedule 2 Item 14 will commence on the day on which the
Bill receives the Royal Assent.
35. Subclause (1) also provides that the commencement date for Schedule 2, items
1, 12, 13, 15 and 16 will have effect immediately after the commencement of
Schedules 1 and 2 to the Trade Practices Amendment (Australian Energy
Market) Act 2004, that is, from 23 May 2005. These provisions correct minor
inconsistencies between terms employed in the National Electricity (South
Australia) Act 1996 and references to that Act in the Administrative Decisions
(Judicial Review) Act 1977 (the ADJR Act) and the TPA.
36. Subclause (1) also provides that the commencement date for Schedule 2, items
2 to 11 will have effect immediately after the commencement of sections 3 to
14 of the Australian Energy Market Act 2004, that is, from 30 June 2005.
These provisions correct minor inconsistencies between terms employed in the
National Electricity (South Australia) Act 1996 and references to that Act in
the Australian Energy Market Act 2004.
37. It is noted that the amendments in Schedule 2 commence with retrospective
effect. This is because they simply correct references in Commonwealth
legislation to `Schedule 1' of the National Electricity Law and to the `National
Electricity Code' to their current drafting as `the Schedule' and `National
Electricity Rules' respectively. The references have small formal
inconsistencies, though the substance has always been clear. The purpose is
just to make the references in Commonwealth legislation formally correct,
from the date they were originally made. Accordingly, the changes have no
effect on the rights or liabilities of anyone.
Clause 3: Schedule(s)
38. This clause provides that, subject to the commencement provisions above,
each Act, which is specified in a Schedule to the Act, is amended as set out in
the items in the Schedule
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Schedule 1 - Gas Amendments
Gas Pipelines Access (Commonwealth) Act 1998
Item 1 - Section 13
39. This item repeals the existing section 13 of the Gas Pipelines Access
(Commonwealth) Act 1998 and replaces it with new sections 13, 13A and 13B
to clarify, as far as possible, the extent to which the gas pipelines access
legislation of a State or Territory may confer duties, powers and functions on
the Commonwealth Minister. This makes the provisions consistent with the
reasoning of the High Court in R v Hughes.
40. In Hughes, the High Court held that Commonwealth legislation had purported
to impose a duty on the Commonwealth Director of Public Prosecutions (DPP)
to exercise State powers, and that the imposition of that duty generally needed
to be supported by a head of Commonwealth constitutional power, particularly
where the exercise of the power could adversely affect the rights of
individuals. The Court in Hughes left open the question whether there was any
`constitutional imperative' for the Commonwealth law to have imposed the
duty on the DPP - in other words, whether it was necessary for this duty to
have been imposed by Commonwealth rather than by State law.
41. The Hughes decision related to the powers of the DPP within the former
Corporations Law co-operative legislative scheme, but is also potentially
relevant to other Commonwealth-State co-operative schemes such as that for
the gas access regime. In relation to the issues raised by Hughes, these new
sections are designed to ensure, to the greatest extent possible, that the duties,
powers or functions of the Commonwealth, conferred under State or Territory
law, will be able to be interpreted as being conferred by State and Territory
law rather than Commonwealth law, so as to comply with the principles
expressed in the Hughes decision.
42. It is noted that the functions of the Commonwealth Minister, and other
Commonwealth bodies, under the Commonwealth, State and Territory gas
access regime are clearly related to Commonwealth heads of power, in
particular the power in relation to foreign, trading and financial corporations
(section 51(xx) of the Constitution) and international and interstate trade and
commerce (section 51(i)). The price regulation exemption regime will also
clearly relate to the external affairs power (section 51(xxix)) as does the
Commonwealth's application of the law to the offshore area. The
Commonwealth's power with regard to territories (section 120) would also
provide additional support to the functions and powers of Commonwealth
bodies.
New section 13 - Commonwealth consent to conferral of functions etc. on
Commonwealth Minister
43. New subsection 13(1) provides that a State/Territory gas pipelines access law
may confer functions or powers, or impose duties, upon the Commonwealth
Minister for the purposes of that law. However, subsection 13(2) provides
that subsection (1) does not authorise any such conferral by State/Territory gas
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pipelines access legislation where that conferral would contravene any
constitutional doctrine or the authorisation of the conferral would otherwise
exceed the legislative power of the Commonwealth. This is a reading down
provision which will limit the operation of section 13(1) to the extent
necessary to ensure that the authorisation of the conferral of duties, functions
and powers under section 13 is constitutionally valid.
44. New subsection 13(3) also provides that the Commonwealth Minister cannot
perform a duty or function, or exercise a power, under a State/Territory gas
pipelines access law unless it is in accordance with an agreement between the
Commonwealth and the State or Territory concerned. Such an agreement may
be in the form of a formal intergovernmental agreement, such as the Natural
Gas Pipelines Access Agreement 1997 or the Australian Energy Market
Agreement, but could also include other forms of agreement, such as a
resolution of the Ministerial Council on Energy indicating the agreement of
Ministers to the conferral of a function or power, or the imposition of a duty,
on the Commonwealth Minister.
New section 13A - How duty is imposed
45. New subsection 13A(1) provides that section 13A applies if a State/Territory
gas pipelines access law purports to impose a duty on the Commonwealth
Minister.
46. The new subsection 13A(2) provides that the duty is taken not to be imposed
by the amended Gas Pipelines Access (Commonwealth) Act 1998 to the extent
that imposing the duty is within the legislative powers of the State or Territory
concerned and imposing the duty by the law of the State or Territory would be
consistent with constitutional doctrines.
47. However, new subsection 13A(3) provides that if, to ensure the validity of the
purported imposition of the duty, it is necessary that the duty be imposed by a
law of the Commonwealth (rather than by a State or Territory) the duty is
taken to be imposed by the Gas Pipelines Access (Commonwealth) Act 1998 to
the extent necessary.
48. New subsection 13A(4) then provides that if, because of subsection 13A(3),
the Gas Pipelines Access (Commonwealth) Act 1998 is taken to impose the
duty, it is the intention of Parliament to rely on all legislative powers available
to it under the Constitution to support the imposition of the duty under the
amended Gas Pipelines Access (Commonwealth) Act 1998. As noted above,
the Commonwealth Parliament has significant relevant constitutional power,
in particular in relation to foreign, trading and financial corporations,
international and interstate trade and commerce, and external affairs.
49. Subsection 13A(5) provides that a duty is taken to be imposed by the Gas
Pipelines Access (Commonwealth) Act 1998 only to the extent to which
imposing the duty is within the legislative powers of the Commonwealth and
is consistent with constitutional doctrines.
50. Subsections 13A(3) and 13A(4) will apply in a situation where it is necessary
for a constitutional reason for a particular duty, function or power which is
11
purportedly conferred on the Commonwealth Minister to instead be conferred
by this Act. In such a situation, subsection 13A(3) will operate to confer the
duty, function or power on the Commonwealth Minister. New subsections
13A(4) and 13A(5) will ensure that in doing so, subsection 13A(3) operates to
the fullest extent of the Commonwealth's constitutional powers, but is not
taken to exceed those powers.
51. Subsection 13A(6) provides that none of these subsections limit the general
operation of section 13. Subsections 13A(1) to (5) are reading down
provisions which operate only if necessary. Accordingly, there can be no
argument that the general scope of the authorisation of the conferral of duties,
functions and powers under section 13 is otherwise limited by the operation of
section 13A.
New section 13B - When the gas pipelines access legislation of a State or
Territory imposes a duty
52. The new Section 13B is an interpretative provision. This item provides that,
for the purposes of sections 13 and 13A, the gas pipelines access legislation of
a State or Territory imposes a duty on the Commonwealth Minister if the law
confers a function or power on the Commonwealth Minister and the
circumstances of the conferral give rise to an obligation on the
Commonwealth Minister to perform the function or exercise the power.
Trade Practices Act 1974
Item 2 - Before Section 29A
53. This item inserts a new Section 29AA before Section 29A that provides for a
definition for 'State/Territory gas law' which is referred to in Part IIA of the
Act so that it captures all of the State and Territory gas access regime through
the use of definitions for 'Gas Pipelines Access Law' and 'Gas Pipelines
Access (Western Australia) Law'.
Item 3 - After subsection 29B(2A)
54. This item introduces a new subsection 29B(2B) after subsection 29B(2A) that
allows for special provision of conferral of State or Territory power and
functions on the National Competition Council in relation to gas law, covered
in section 29BA. See item 4 below. The limitation in subsection 29B(2A) to
the conferral of functions in accordance with the Competition Principles
Agreement does not apply to the conferral of functions under a State/Territory
gas law.
Item 4 - After section 29B
55. This item introduces new sections 29BA, 29BB and 29BC to clarify, as far as
possible, the extent to which the State/Territory gas law may confer duties,
12
powers and functions on the Council, consistent with the reasoning of the
High Court in R v Hughes (see paragraphs 40, 41, and 42 above).
56. Under the national gas pipelines access regime, the National Competition
Council has important functions conferred on it in relation to the coverage of
pipelines, classification of pipelines and granting of price regulation
exemptions for pipelines. The National Competition Council makes decisions
in the case of classification of pipelines and recommendations for coverage
and in the granting of price regulation exemptions for pipelines. Its role is
essential to the operation of the regime and its decisions are subject to judicial
review and merits review. It is therefore important to clarify the basis of its
activities which are currently only supported by section 29B of the TPA.
New section 29BA - Commonwealth consent to conferral of functions etc. on
National Competition Council
57. New subsection 29BA(1) provides that a State/Territory gas law may confer
functions or powers, or impose duties, upon the National Competition Council
for the purposes of that law. However, subsection 29BA(2) provides that
subsection (1) does not authorise any such conferral by a State/Territory gas
law where that conferral would contravene any constitutional doctrine or the
authorisation of the conferral would otherwise exceed the legislative power of
the Commonwealth. This is a reading down provision which will limit the
operation of section 29BA(1) to the extent necessary to ensure that the
authorisation of the conferral of duties, functions and powers under section
29BA is constitutionally valid.
58. New subsection 29BA(3) also provides that the National Competition Council
cannot perform a duty or function, or exercise a power, under a State/Territory
gas law unless it is in accordance with an agreement between the
Commonwealth and the State or Territory concerned.
New section 29BB - How duty is imposed
59. New subsection 29BB(1) provides that section 29BB applies if a
State/Territory gas law purports to impose a duty on the National Competition
Council.
60. New subsection 29BB(2) provides that the duty is taken not to be imposed by
the Part IIA of the TPA to the extent that imposing the duty is within the
legislative powers of the State or Territory concerned and imposing the duty
by the law of the State or Territory would be consistent with constitutional
doctrines.
61. However, new subsection 29BB(3) provides that if, to ensure the validity of
the purported imposition of the duty, it is necessary that the duty be imposed
by a law of the Commonwealth (rather than by a State or Territory) the duty is
taken to be imposed by Part IIA of the TPA to the extent necessary.
62. New subsection 29BB(4) then provides that if, because of subsection
29BB(3), Part IIA of the TPA is taken to impose the duty, it is the intention of
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Parliament to rely on all legislative powers available to it under the
Constitution to support the imposition of the duty under that Part. As noted
above, the Commonwealth Parliament has significant relevant constitutional
power, in particular in relation to foreign, trading and financial corporations,
international and interstate trade and commerce, and external affairs.
63. New subsection 29BB(5) provides that a duty is taken to be imposed by
Part IIA only to the extent to which imposing the duty is within the legislative
powers of the Commonwealth and is consistent with constitutional doctrines.
64. New subsections 29BB(3) and 29BB(4) will apply in a situation where it is
necessary for a constitutional reason for a particular duty, function or power
which is purportedly conferred on the National Competition Council to instead
be conferred by the TPA. In such a situation, subsection 29BB(3) will operate
to confer the duty, function or power on the National Competition Council.
Subsections 29BB(4) and 29BB(5) will ensure that in doing so, subsection
29BB(3) operates to the fullest extent of the Commonwealth's constitutional
powers, but is not taken to exceed those powers.
65. New subsection 29BB(6) provides that none of these subsections limit the
general operation of section 29BA. Subsections 13A(1) to (5) are reading
down provisions which operate only if necessary. Accordingly, there can be
no argument that the general scope of the authorisation of the conferral of
duties, functions and powers under section 29BA is otherwise limited by the
operation of section 29BB.
New section 29BC - When a State/Territory gas law imposes a duty
66. New section 29BC is an interpretative provision. This section provides that,
for the purposes of sections 29BA and 29BB, the gas law of a State or
Territory imposes a duty on the National Competition Council if the law
confers a function or power on the National Competition Council and the
circumstances of the conferral give rise to an obligation on the National
Competition Council to perform the function or exercise the power.
Item 5 - Paragraph 44G(3)(a)
67. Subsection 44G currently provides that in determining, for the purpose of
making a declaration recommendation, whether there is an effective access
regime the National Competition Council must apply the relevant principles
set out in the Competition Principles Agreement. This item amends paragraph
44G(3)(a) to read 'must, subject to subsection (5), apply the relevant principles
set out in that agreement'. This amendment, together with items 6 through to
item 13 below inclusive, is necessary to ensure greenfields pipelines
incentives are effective, and do not prevent the gas access regime being an
effective access regime.
Item 6 - At the end of section 44G
68. This item introduces new subsections 44G(5), (6) and (7) after section 44G.
Section 44G sets out the matters which the National Competition Council
14
must take into consideration in recommending whether a service should be
declared. As noted above, declaration results in access to that service by other
businesses under the provisions of Part IIIA of the TPA. The Council can
only recommend that a service be declared if, amongst other things, it is
satisfied `that access to the service is not already the subject of an effective
access regime' (section 44G(2)(e)). New subsection 44G(5) deals with this
aspect of the National Competition Council's recommendation making
process, that is its recommendation as to whether a regime established by a
State or Territory or the Commonwealth is an effective access regime. The
effect of subsection 5(a) will be that the gas access regime may be effective
even though it includes the provision for greenfields pipeline incentives under
Part 3A of Schedule 1 to the Gas Pipelines Access (South Australia) Act 1997.
That is in making a recommendation as to whether gas pipelines access regime
is effective for the purposes of considering declaration, the Council must
disregard the binding no coverage provisions, and the price regulation
exemption provisions.
69. Subsection (5)(b) provides that where other Commonwealth, State or Territory
Acts apply Part 3A of Schedule 1 of the South Australian Act, those
provisions are also to be disregarded for the purposes of recommending
whether those regimes are effective access regimes. If those Acts modify the
application of Part 3A of Schedule 1, those modified provisions would not be
disregarded for the purposes of the decision.
70. New subsection 44G(6) provides that the National Competition Council
cannot recommend declaration of a service provided by a pipeline that is
covered by the greenfields pipeline incentive scheme under the Gas Pipelines
Access (South Australia) Act 1997.
71. New subsection 44G(7) provides that the protection in subsection 44G(6)
applies to a service covered by the GPAL as applied by the Commonwealth
and other States and Territories. It is noted that the Commonwealth applies
the GPAL by the Gas Pipelines Access (Commonwealth) Act 1998 and the
Petroleum (Submerged Lands) Act 1967.
Item 7 - Subsection 44H(5)
72. This amendment gives consistency in wording with the rest of the section, so
the reference is changed to the 'designated Minister', rather than 'Minister'.
Item 8 - Paragraph 44H(5)(a)
73. Subsection 44H currently provides that in determining, for the purpose of
making a declaration, whether there is an effective access regime the Minister
must apply the relevant principles set out in the Competition Principles
Agreement. This item amends paragraph 44H(5)(a) to read 'must, subject to
subsection (5), apply the relevant principles set out in that agreement'. This
amendment, together with items 9 through to 14 below inclusive, is necessary
to ensure greenfields pipelines incentives are effective, and do not prevent the
gas access regime being an effective access regime.
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Item 9 - After subsection 44H(6)
74. This item introduces new subsections 44H(6A), (6B) and (6C). The purpose of
the addition of these subsections is similar to the purpose of the insertion of
subsections 44G(5) -(7) (refer to Item 6 above). In this case, however, the
designated Minister is considering whether to make a declaration, which
follows after the National Competition Council considering whether to make a
recommendation for declaration.
Item 10 - Paragraph 44M(4)(a)
75. Subsection 44M(4) currently provides that in recommending whether an
access regime is an effective access regime and should be certified, the
National Competition Council must apply the relevant principles set out in the
Competition Principles Agreement. This item amends paragraph 44M(4)(a) to
read 'must, subject to subsection (4A), assess whether the access regime is an
effective access regime by applying the relevant principles set out in the
Competition Principles Agreement'. This amendment, together with items 11-
13 below, is necessary to ensure greenfields pipelines incentives are effective,
and do not prevent the gas access regime being certified as an effective access
regime.
Item 11 - After subsection 44M(4)
76. This item introduces a new subsection 44M(4A) that together with item 10
above and items 12 and 13 below ensure that the certification by the
responsible Commonwealth Minister (the Treasurer) of the State and Territory
gas access regimes is not compromised by the provision for greenfields
pipeline incentives under Part 3A of Schedule 1 to the Gas Pipelines Access
(South Australia) Act 1997. Paragraph 44M(4A)(b) provides that where other
State or Territory Acts apply Part 3A of Schedule 1 of the South Australian
Act, those provisions are also to be disregarded for the purposes of certifying
those regimes. If those Acts modify the application of Part 3A of Schedule 1,
those modified provisions would not be disregarded for the purposes of
certification.
Item 12 - Paragraph 44N(2)(a)
77. Subsection 44N(2) currently provides that in determining whether an access
regime is an effective access regime and should be certified, the
Commonwealth must apply the relevant principles set out in the Competition
Principles Agreement. This item amends paragraph 44N(2) (a) to read 'must,
subject to subsection (2A), apply the relevant principles set out in the
Competition Principles Agreement'. This amendment, together with item 13
below, is necessary to ensure greenfields pipelines incentives are effective,
and do not prevent the gas access regime being certified as an effective access
regime.
Item 13 - After subsection 44N(2)
16
78. This item introduces a new subsection 44N(2A) that together with items 10 to
12 above ensure that the certification by the responsible Commonwealth
Minister (the Treasurer) of the State and Territory gas access regimes is not
compromised by the provision of greenfields pipeline incentives under
Part 3A of Schedule 1 to the Gas Pipelines Access (South Australia) Act 1997.
Paragraph 44N(2A)(b) provides that where other State or Territory Acts apply
Part 3A of Schedule 1 to the South Australian Act, those provisions are also to
be disregarded. If those Acts modify the application of Part 3A, the provisions
would not be disregarded for the purpose of certifying those regimes. Services
provided by pipelines that are the subject of a certified effective access regime
containing provision for greenfields pipeline incentives will not be at risk of
declaration under the TPA.
17
Schedule 2 - Electricity amendments
Administrative Decisions (Judicial Review) Act 1977
Item 1 - Paragraph 2(da) of Schedule 3
79. The current reference in the Commonwealth legislation to 'Schedule 1' to the
National Electricity (South Australia) Act 1996 is corrected to 'the Schedule'
of that Act by this item.
Australian Energy Market Act 2004
80. Since the Australian Energy Market Act 2004 was passed, the structure of the
new National Electricity Law and National Electricity Rules has been
developed by the Commonwealth, States and Territories in consultation. The
Australian Energy Market Act 2004 refers to the new National Electricity Law
as 'Schedule 1' to the South Australian Act. It is clear that this refers to the
whole of `the Schedule' to the South Australian Act, which contains the new
National Electricity Law. To avoid any confusion however, these amendments
change the references in the Australian Energy Market Act 2004 to the
National Electricity Law from a reference to 'Schedule 1' of the South
Australian Act, to a reference to 'the Schedule' of the South Australian Act.
Similarly, references to the National Electricity Rules under the new National
Electricity Law are clarified.
Item 2 - Subsection 3(1) (paragraph (a) of the definition of South
Australian Electricity Legislation)
81. This item amends the reference in the subsection from 'Schedule 1' to 'the
Schedule' (see Item 1 above).
Item 3 - Subsection 3(1) (paragraph (c) of the definition of South
Australian Electricity Legislation)
82. This item amends the reference to 'rules (including the National Electricity
Code)' in the definition to 'Rules', following the repeal of the National
Electricity Code (which was remade as the National Electricity Rules). This
item clarifies in effect that the reference to the 'National Electricity Code' is a
reference to the 'National Electricity Rules'.
Item 4 - Subsection 3(2)
83. This item amends the reference in the subsection from 'Schedule 1' to 'the
Schedule' (see Item 1 above).
Item 5 - Subsection 6
84. This item amends the reference in the subsection from 'Schedule 1' to 'the
Schedule' (see Item 1 above).
18
Item 6 - Subsection 8
85. This item deletes the reference to the 'National Electricity Code' (see Item 3
above).
Item 7 - Section 8
86. This item amends the reference in the subsection from 'Schedule 1' to 'the
Schedule' (see Item 1 above).
Item 8 - Paragraph 8(a)
87. This item makes a minor amendment to correct referencing to the 'Rules'.
Item 9 - Paragraph 11(2)(a)
88. This item amends the reference in the subsection from 'Schedule 1' to 'the
Schedule' (see Item 1 above).
Item 10 - Paragraph 11(2)(c)
89. This item amends the reference to 'rules (including the National Electricity
Code)' in the paragraph to 'Rules', following the repeal of the National
Electricity Code (which was remade as the National Electricity Rules).
Item 11 - Paragraph 11(2)(c)
90. This item makes a minor amendment to correct referencing to 'as Rules'.
Trade Practices Act 1974
Item 12 - Section 44AB (paragraph (a) of the definition of South Australian
Electricity Legislation)
91. As noted in Item 1 above, the National Electricity Law is contained in the
Schedule to the South Australian Act. By virtue of the Trade Practices
Amendment (Australian Energy Market) Act 2004, the TPA now also refers to
'Schedule 1' rather than 'the Schedule'. It is clear that this refers to the whole
Schedule, but to avoid confusion, these amendments will change the references
in the TPA to the National Electricity Law from references to 'Schedule 1' of the
South Australian Act, to references to 'the Schedule' of the Act.
Item 13 - Section 44AB (paragraph (c) of the definition of South Australian
Electricity Legislation)
92. Similarly, as a result of the Trade Practices Amendment (Australian Energy
Market) Act 2004, the TPA refers to the National Electricity Code. As noted
above, under the new scheme, the National Electricity Code has become the
National Electricity Rules. Therefore, to avoid confusion, these amendments
change references in the TPA to the 'National Electricity Code' or 'Code' to
references to the 'National Electricity Rules' or 'Rules'.
19
Item 14 - After section 44AAG
93. This item introduces a new section 44AAGA following section 44AAG of the
TPA, and is the equivalent of section 63 of the new National Electricity Law.
Section 44AAG was inserted into the TPA by the Trade Practices Amendment
(Australian Energy Market) Act 2004. Section 44AAG gave to the Federal
Court general jurisdiction in relation to enforcement of the National Electricity
Law and Rules by the Australian Energy Regulator. It was the equivalent of
section 61 of the National Electricity Law, which gave jurisdiction to the
relevant State and Territory Supreme Courts, and the Federal Court in relation
to the application by the Commonwealth of the National Electricity Law and
Rules offshore by the Australian Energy Market Act 2004.
94. However, section 63 of the new National Electricity Law was not foreseen at
the time of the drafting of the Trade Practices Amendment (Australian Energy
Market) Act 2004.
95. Section 63 of the new National Electricity Law provides for `the Court', on
application by the Australian Energy Regulator, to make an order that directs
that a registered participant's loads be disconnected if a relevant disconnection
event occurs. A 'relevant disconnection event' is defined in section 63 of the
new National Electricity Law as an event specified in the Rules.
96. Section 63 of the new National Electricity Law is in addition to section 62,
which allows the Court to make an order where there has been a breach.
Sections 62 and 63 respectively apply in relation to relevant State and
Territory Supreme Courts, and the Federal Court in relation to the application
by the Commonwealth of the National Electricity Law and Rules offshore by
the Australian Energy Market Act 2004. The Commonwealth equivalent of
section 62 of the National Electricity Law is section 44AAG of the TPA
combined with regulation 6AA of the Trade Practices Regulations 1974.
97. This item inserts a new section 44AAGA into the TPA, as the equivalent of
section 63 of the new National Electricity Law, to provide general jurisdiction
to the Federal Court in relation to such disconnection events.
98. For consistency, the new section 44AAGA inserted in the TPA by this item
follows the form of section 63 of the new National Electricity Law as closely
as possible.
99. The orders that can be made under section 44AAGA are to direct that a
registered participant's loads be disconnected if a relevant disconnection event
occurs. The term 'Registered participant' is defined in section 44AAGA to
have the meaning it has in the new National Electricity Law. A relevant
disconnection event is as specified in the Rules.
20
Item 15 - Subsection 90B(1)
100. This item amends the reference to 'Code' to 'Rules' following the repeal of the
National Electricity Code (which was remade as the National Electricity
Rules). The effect of this amendment is to change references in the TPA to
the 'National Electricity Code' to references to the 'National Electricity Rules'.
Item 16 - Subsection 90B(3)
101. This item replaces the definition of 'National Electricity Code' with a
definition of the 'National Electricity Rules'.
Schedule 3 - Repeal of the Pipeline Authority Act 1973
Pipeline Authority Act 1973
102. The Pipeline Authority Act 1973 is a spent Act and is repealed by this item.
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