House of Representatives

Second Reading Speech

Mr MARTIN FERGUSON (Batman-Minister for Resources and Energy and Minister for Tourism

Under the oversight of the Council of Australian Governments, Australia has made significant progress over the last decade towards an efficient and effective national energy market, in particular in the development of uniform national energy laws for electricity and gas.

This bill I am introducing today is part of the current Council of Australian Govern­ments' reform program under which non-economic regulation of the distribution and retail of gas and electricity will also be subject to the national energy institutions and regulatory arrangements.

The Australian Energy Market Amendment (National Energy Retail Law) Bill 2011 sees the Commonwealth take an important role in implementing the cooper­ative legislative regime for regulating retailers and distributors who sell and supply electricity and gas to retail customers. It is the final major component of the national energy market reform program agreed by the Council of Australian Governments in response to their 2002 Energy Market Review, Towards a truly national and efficient energy market, and set out in the Australian Energy Market Agreement.

The South Australian parliament passed the National Energy Retail Law (South Australia) Bill 2010 (SA) on 9 March 2011. That bill received royal assent on 17 March 2011. The National Energy Retail Law (South Australia) Act 2011 (SA) includes as its schedule the National Energy Retail Law, which provides for rules and regulations to be made under that law, called the National Energy Retail Rules and the National Energy Retail Regulations.

The National Energy Retail Law set out in the schedule to the National Energy Retail Law (South Australia) Act 2011 (SA), and the rules and regulations to be made under it, are supported by amendments to the National Electricity Law and the National Gas Law included in the Statutes Amendment (National Energy Retail Law) Act 2011 (SA).

The South Australian minister will also make rules which amend the National Electricity Rules and the National Gas Rules on two related matters. The first set of amendments are national rules which enable retail customers and property developers to seek new (or significant modifications to existing) connections to electricity and gas distribution networks. The second set of amendments are new rules to set out the rights and obligations between distributors and retailers which are necessary to support the retail supply of energy to customers and include a credit support regime.

Together, the National Energy Retail Law set out in the schedule to the National Energy Retail Law (South Australia) Act 2011 (SA), the rules and regulations made under it and the consequential amendments to the national electricity and national gas regimes are known as the National Energy Customer Framework (the customer frame­work).

The customer framework will be applied in all jurisdictions which are part of the National Electricity Market, namely South Australia, Victoria, New South Wales, the Australian Capital Territory, Tasmania and Queensland as well as the Commonwealth, by application acts. The Ministerial Council on Energy has agreed that jurisdictions will aim for a target uniform commencement date for the customer framework of 1 July 2012, noting that transitional legislative arrange­ments will be required to appropriately manage the transition process.

This bill will amend the Australian Energy Market Act 2004 (Cth) to apply the National Energy Retail Law set out in the schedule to the National Energy Retail Law (South Australia) Act 2011 (SA), and the rules and regulations made under it, as a law of the Commonwealth in Australia's offshore area (essentially, the area from three nautical miles offshore to the edge of the continental shelf). This bill will therefore make the Australian Energy Market Act 2004 (Cth) the Commonwealth's 'application act' for the new national energy retail regime.

The National Energy Retail Law will be under the jurisdiction of the Australian Energy Regulator as regulator and enforce­ment body and the Australian Energy Market Commission as rule maker. Its primary aims are to streamline regulatory requirements, increase efficiency through regulatory harmonisation and maintain best practice consumer protection. As a result, the National Energy Retail Law is expected to facilitate an increase in retail competition by reducing regulatory complexity and lowering barriers to entry, as well as by encouraging consumers to participate in this competitive market by providing strong and equitable consumer protections across participating jurisdictions. Other key benefits of the National Energy Retail Law include an increase in efficiency and competition obtained through having national regulatory arrangements, a comprehensive suite of robust energy specific consumer protections, and the establishment of a national retailer-of-last-resort framework.

The National Energy Retail Law incorporates an objective which mirrors the objectives in the National Electricity Law and the National Gas Law. The national energy retail objective is 'to promote efficient investment in, and efficient opera­tion and use of, energy services for the long-term interests of consumers of energy with respect to price, quality, safety, reliability and security of supply of energy'. The alignment between the objectives of the laws governing the various sectors of the energy markets is an important foundation for the regime.

Currently each jurisdictional regime has a different regulator that makes decisions and determinations for that jurisdiction. Under the new National Energy Retail Law, the regulation of all energy retail businesses will be undertaken by a single national regulator, the Australian Energy Regulator-a Comm­onwealth body. This bill provides for the extension of the Australian Energy Regulator's powers to regulate the retail energy market. The National Energy Retail Law therefore brings the whole energy supply chain-wholesale markets, transmiss­ion networks, distribution networks and now retail markets-under national regulation with the Australian Energy Regulator overseeing a robust compliance and enforce­ment regime across all participating jurisdictions. This crucial reform will lead to a more efficient and consistent regulatory decision-making process.

Under the National Energy Retail Law, the Australian Energy Regulator will exercise a range of regulatory functions and powers. These functions include administ­ering a targeted compliance monitoring and enforcement regime. The enforcement regime in the National Energy Retail Law reflects and enhances the current enforce­ment regimes in the National Electricity Law and the National Gas Law to create a harmonised enforcement regime across the national legislative frameworks.

The National Energy Retail Law will give the Australian Energy Regulator a range of new functions and powers, suitable for the regulation of the energy retail regime. These include the power to accept enforceable undertakings from energy market particip­ants for the first time. The national regulator will also have certain new approval functions and undertake performance monitoring and reporting functions specifically targeted to the retail energy market.

The proposed amendments to Common­wealth legislation provided for in this bill will ensure that the Commonwealth bodies that are conferred with functions, powers and duties under the National Energy Retail Law (the Australian Energy Regulator and the Australian Competition Tribunal) are able to perform those functions and duties and exercise those powers from the commence­ment date. Our role in this parliament is to facilitate this.

To this end, this bill amends the Competition and Consumer Act 2010 (Cth) to explicitly allow the National Energy Retail Law, when applied as a law of a state or territory, to confer functions and powers, and impose duties on these two Common­wealth bodies. This includes, in relation to the Australian Energy Regulator, functions, powers or duties conferred or imposed under 'local energy instruments'. These are subord­inate instruments made under a state or territory law that applies the National Energy Retail Law, the National Electricity Law or the National Gas Law in its own jurisdiction.

The bill will also provide that decisions and instruments made by the Australian Energy Regulator for the purposes of the National Energy Retail Law before it commences, such as guidelines made in accordance with the retail consultation procedure set out in the National Energy Retail Rules, will be valid and effective from the commencement of the National Energy Retail Law in this jurisdiction. The amend­ment acts of other jurisdictions will contain similar provisions. It is important to provide the Australian Energy Regulator with this legislative support, so that it can undertake essential activities necessary for the commencement of the new regulatory regime. The involvement of the Australian Energy Regulator and the Australian Competition Tribunal is therefore an essential part of this cooperative scheme, and the Commonwealth must take the lead by legislating to provide for these functions and powers to be exercised. The South Australian parliament, and indeed parliaments in all participating jurisdictions, must see that the Commonwealth is committed to this cooperative scheme.

The amendments to the Administrative Decisions (Judicial Review) Act 1977 contained in this bill will ensure that decisions made by Commonwealth bodies, such as the Australian Energy Regulator and the Australian Competition Tribunal, under the National Energy Retail Law, when applied as state or territory law are subject to judicial review by the Federal Court and Federal Magistrates Court.

In summary, the amendments I am introducing today represent a significant legislative step towards a truly national energy retail regime under a national energy regulator. This cooperative scheme will ensure that Australia enjoys strong energy customer protections and the benefits of competitive and efficient energy retail markets-both electricity and gas-whilst minimising the regulatory burden on industry. This bill has the full support of my state and territory colleagues on the Ministerial Council on Energy. I commend the bill to the House.