Energy Legislation (Amendment) Bill
Circulation Print
EXPLANATORY MEMORANDUM
551228
BILL LA CIRCULATION 5/11/2004
General
The Bill makes amendments to the Electricity Industry Act 2000, the Gas Industry Act 2001 and the Essential Services Commission Act 2001, to extend the operation of the existing electricity and gas industry consumer safety net arrangements, and to make further provision to protect customers of electricity and gas retailers.
Clause Notes
PART 1—PRELIMINARY
Clause 1sets out the main purposes of the Bill, which are to make amendments to the Electricity Industry Act 2000, the Gas Industry Act 2001, and the Essential Services Commission Act 2001.
Paragraph (a) provides that the main purposes of amending the Electricity Industry Act 2000, are to extend the operation of the customer safety net provisions and to make further provision to protect customers of electricity retailers.
Paragraph (b) provides that the main purposes of amending the Gas Industry Act 2001 are to extend the operation of the customer safety net provisions and to make further provision to protect customers of gas retailers.
Paragraph (c) provides that the main purpose of amending the Essential Services Commission Act 2001 is to extend the period before Part 6 of that Act expires. Part 6 of the Essential Services Commission Act 2001 allows the relevant Minister to direct the Essential Services Commission to conduct an investigation into any matter relating to the electricity industry or gas industry.
Clause 2provides for the commencement of the Act.
Sub-clause (1) provides for the commencement of all sections of the Act, with the exception of section 9 and 20, on the day after Royal Assent.
Sub-clause (2) provides that sections 9 and 20 come into operation on 1 March 2005. Sections 9 and 20 (respectively) amend the Electricity Industry Act 2000 and the Gas Industry Act 2001, to place an obligation on specified electricity and gas retailers to publish on their websites, details of their market tariffs and terms and conditions, in accordance with guidelines published by the Commission. These sections will commence on 1 March 2005 to enable the Commission time to develop relevant guidelines.
PART 2—AMENDMENTS TO ELECTRICITY INDUSTRY ACT 2000
Clause 3inserts two new definitions into section 3 of the Electricity Industry Act 2000, a definition of "electricity bill" and a definition of "small retail customer".
Clause 4inserts a new section 7AA into the Electricity Industry Act 2000.
New section 7AA will empower the Governor in Council to declare a class or classes of persons to be small retail customers for the purposes of section 36A, 40C, 40D or 40E, and to declarea licensee to be a specified retailer for the purposes of section 36A. Different classes of persons may be declared for each of those sections. An Order may define a class of persons byreference to the person authorised to sell the electricity, the purpose for which the electricity is used, the quantity of electricity used, the period of use, the place of supply, the nature of the contract for supply of electricity, financial circumstances and any other specified factor of any kind.
Clause 5amends section 13(7) of the Electricity Industry Act 2000 to extend the expiry date of section 13 from 31 December 2004 to 31 December 2007. Section 13 grants to the Governor in Council power to make an Order regulating tariffs for the supply of electricity to a prescribed customer or class of prescribed customers.
Clause 6amends section 23(4) of the Electricity Industry Act 2000 to extend the expiry date of section 23 from 31 December 2004 to 31 December 2007. Section 23 grants to the Governor in Council power to make an Order restricting the sale of electricity to certain customers. This section will continue in operation to enable the ongoing regulation of unmetered electricity supplies, which will remain non-contestable, subject to further review by the Essential Services Commission.
Clause 7amends section 35 of the Electricity Industry Act 2000. Section35 requires electricity retailers to offer to supply electricity to domestic and small business customers at tariffs, and on terms and conditions, published in the Government Gazette.
Sub-clause (1) inserts a new section 35(4A) to provide that a person who is a domestic or small business customer may accept an offer made by an electricity retailer under this section even if the person was previously a party to a contract for the supply or sale of electricity on different terms and conditions with the same licensee or another licensee. The purpose of the provision is to make clear that domestic or small business customers may always have access to the safety net electricity supply contract offered by retailers in accordance with section 35.
Sub-clause (2) amends section 35(9) to extend the expiry date of section 35 from 31 December 2004 to 31 December 2007.
Clause 8amends section 36 of the Electricity Industry Act 2000. Section36 empowers the Essential Services Commission to issue terms and conditions relating to the sale of electricity. Offers made by electricity retailers under section 35 are void to the extent they are inconsistent with these terms and conditions.
Sub-clause (1) new section 36(1A) places an obligation on the Essential Services Commission to have regard to specified criteria in deciding terms and conditions that specify the circumstances in which the supply of electricity may be disconnected. These criteria are the essential nature of the electricity supply, community expectations regarding ongoing access to electricity supply and the principle that electricity supply to premises should only be disconnected as a last resort.
Sub-clause (2) amends section 36(7) to extend the expiry date of section 36 from 31December 2004 to 31 December 2007.
Clause 9inserts a new section 36A into the Electricity Industry Act 2000. Section 36A will require specified electricity retailers to publish on their Internet sites, details of their market tariffs and terms and conditions for electricity supply to small retail customers, in accordance with guidelines published by the Commission. The retailers required to comply with this obligation will be defined by Order in Council. Small retail customer will also be defined by Order in Council.
Clause 10substitutes a new provision for section 37 of the Electricity Industry Act 2000.
New section 37 deems there to be a contract between a relevant retailer and former franchise customer of that retailer, until the contract is terminated or a new contract is entered into.
New section 37 provides that the tariffs and terms and conditions of the deemed contract will be the same as those published by the relevant retailer under section 35 of the Electricity Industry Act 2000. This reflects current practice.
The expiry date of new section 37 is also extended from 31December 2004 to 31 December 2007.
Clause 11repeals section 38 of the Electricity Industry Act 2000, which regulates variations to tariffs and terms and conditions of deemed contracts under section 37. This repeal is consequential to the enactment of new section 37.
Clause 12amends section 39 of the Electricity Industry Act 2000.
Section 39 deems there to be a contract between a relevant licensee and a relevant customer, where that customer moves into premises without formally entering into an electricity supply contract.
Sub-clauses (1) and (2) of clause 12 of the Bill amend section 39 to provide that the tariffs and terms and conditions of the deemed contract will be the same as those published by the relevant licensee under section 35 of the Electricity Industry Act 2000. This reflects current practice.
Sub-clause (3) provides that a person who is a relevant customer may be a party to a deemed contract under this section even if the person was previously a party to a contract for the supply or sale of electricity on different terms and conditions with the same licensee or another licensee. The purpose of the provision is to make clear that relevant customers may always have access to this deemed safety net electricity supply contract.
Sub-clause (4) amends section 39(11) to extend the operation of section 39 from 31December 2004 to 31 December 2007.
Clause 13 inserts new sections 40B, 40C, 40D and 40E into the Electricity Industry Act 2000.
Section 40B will require electricity retailers to make payment of a prescribed amount to a relevant customer if the retailer disconnects the supply of electricity to the premises of that customer without complying with the terms and conditions of their contract relating to disconnection. The amount to be paid will be prescribed by regulations, or if no amount is prescribed the amount payable by a retailer will be $250.00 per day of disconnection (or a pro rata amount where the customer is disconnected for part of a day). "Relevant customer" has the same meaning as that in section 36 of the Electricity Industry Act 2000.
Section 40C will deem void a condition in any contract between an electricity retailer and small retail customer, requiring the small retail customer to pay a fee or charge for late payment of an electricity bill. Small retail customer will be defined by Order in Council made pursuant to section 7AA. This prohibition on late payment fees will not prevent an electricity retailer from offering an incentive or rebate for timely payment of bills.
Section 40D will empower the Governor in Council to publish an Order in the Government Gazette prohibiting, or otherwise regulating, the imposition by an electricity retailer of a fee or charge for termination of a supply contract. Again, this provision will apply to contracts between an electricity retailer and a small retail customer, to be defined by Order in Council. The Essential Services Commission will be able to issue enforcement orders in accordance with the Essential Services Commission Act 2001, to ensure compliance with any such Order.
Section 40E will empower the Governor in Council to publish anOrder in the Government Gazette prohibiting, or otherwise regulating, the implementation of pre-payment meters. Aprepayment meter is a meter that allows electricity to be soldor supplied under an arrangement that allows the customer to make full payment for the electricity before it is consumed. The Essential Services Commission will be able to issue enforcement orders in accordance with the Essential Services Commission Act 2001, to ensure compliance with any such Order. In addition, following issue of an initial Order under this section, any subsequent variation Order will be required to be laid before each House of Parliament and is made subject to disallowance.
PART 3—AMENDMENTS TO GAS INDUSTRY ACT 2001
Clause 14inserts two new definitions into section 3 of the Gas Industry Act 2001, a definition of "gas bill" and a definition of "small retail customer.
Clause 15inserts a new Division 1A into Part 2 of the Gas Industry Act 2001.
This Division will empower the Governor in Council to declare a class or classes of persons to be small retail customers for the purposes of section 43A, 48B, 48C or 48D, and to declare a licensee to be a specified retailer for the purposes of section 43A. An Order may define a class of persons by reference to the person authorised to sell the gas, the purpose for which the gas is used, the quantity of gas used, the period of use, the place of supply, the nature of the contract for supply of gas, financial circumstances and any other specified factor of any kind.
Clause 16substitutes section 21(7) of the Gas Industry Act 2001 to extend the expiry date of section 21 from 31 December 2004 to 31December 2007. Section 21 grants to the Governor in Council power to make an Order regulating tariffs for the supply of gas to a prescribed customer or a class of prescribed customers.
Clause 17inserts a new section 29(ma) to the Gas Industry Act 2001, to clarify that the Essential Services Commission may issue an industry licence to a gas retailer, with a condition regulating the methods and principles to be applied by the retailer in determining prices and charges for the supply of gas to bulk hot water systems and requiring the retailer to publish those prices or charges.
Clause 18amends section 42 of the Gas Industry Act 2001. Section 42 requires gas retailers to offer to supply gas to domestic or small business customers at tariffs, and on terms and conditions, published in the Government Gazette.
Sub-clause (1) inserts a new section 42(4A) to provide that a person who is a domestic or small business customer may accept an offer made by a gas retailer under this section even if the person was previously a party to a contract for the supply or sale of gas on different terms and conditions with the same licensee or another licensee. The purpose of the provision is to make clear that domestic or small business customers may always have access to the safety net gas supply contract offered by retailers in accordance with section 42.
Sub-clause (2) amends section 42(9) to extend the expiry date of section 42 from 31 December 2004 to 31 December 2007.
Clause 19amends section 43 of the Gas Industry Act 2001. Section 43 empowers the Essential Services Commission to issue terms and conditions relating to the sale of gas. Offers made by gas retailers under section 42 are void to the extent they are inconsistent with these terms and conditions.
Sub-clause (1) inserts section 43(1A) to place an obligation on the Essential Services Commission to have regard to specified criteria in deciding terms and conditions that specify the circumstances in which the supply of gas may be disconnected. These criteria are the essential nature of the gas supply, community expectations regarding ongoing access to gas supply and the principle that gas supply to premises should only be disconnected as a last resort.
Sub-clause (2) extends the expiry date of section 43 from 31December 2004 to 31 December 2007.
Clause 20inserts a new section 43A to the Gas Industry Act 2001. Section 43A will require specified gas retailers to publish on theirInternet sites, details of their market tariffs and terms and conditions for gas supply to small retail customers, in accordance with guidelines published by the Commission. The retailers required to comply with this obligation will be defined by Order in Council. Small retail customer will also be defined by Order in Council.
Clause 21amends section 44 of the Gas Industry Act 2001.
Sub-clause (1) substitutes a new provision for section 44(1).
New section 44(1) deems there to be a contract between a relevant retailer and former franchise customer of that retailer, until the contract is terminated or a new contract is entered into.
New section 44(1) provides that the tariffs and terms and conditions of the deemed contract, will be the same as those published by the relevant retailer under section 42 of the Gas Industry Act 2001. This reflects current practice.
Sub-clause (2) amends section 44(3) to extend the expiry date of section 44 from 31 December 2004 to 31 December 2007.
Clause 22repeals section 45 of the Gas Industry Act 2001, which regulates variations to tariffs and terms and conditions of deemed contracts under section 44. This repeal is consequential to the amendments made to section 44.
Clause 23amends section 46 of the Gas Industry Act 2001.
Section 46 deems there to be a contract between a relevant retailer and a relevant customer, where that customer moves into premises without formally entering into a gas supply contract.
Sub-clauses (1) and (2) of clause 23 of the Bill amend section 46 to provide that the tariffs and terms and conditions of the deemed contract will be the same as those published by the relevant retailer under section 42 of the Gas Industry Act 2001. Thisreflects current practice.
Sub-clause (3) provides that a person who is a relevant customer may be a party to a deemed contract under this section even if the person was previously a party to a contract for the supply or sale of gas on different terms and conditions with the same licensee or another licensee. The purpose of the provision is to make clear that relevant customers may always have access to this deemed safety net gas supply contract.
Sub-clause (4) extends the operation of section 46 from 31December 2004 to 31 December 2007.
Clause 24 inserts new sections 48A, 48B, 48C and 48D into the Gas Industry Act 2001.
Section 48A will require gas retailers to make payment of a prescribed amount to a relevant customer if the retailer disconnects the supply of gas to the premises of that customer without complying with the terms and conditions of their contract relating to disconnection. The amount to be paid will be prescribed by regulations, or if no amount is prescribed the amount payable by a retailer will be $250.00 per day of disconnection (or a pro rata amount where the customer is disconnected for part of a day). Relevant customer will have the same meaning as in section 43 of the Gas Industry Act 2001.
Section 48B will deem void a condition in any contract between agas retailer and small retail customer, requiring the small retail customer to pay a fee or charge for late payment of a gas bill. Small retail customer will be defined by Order in Council made under new Division 1A of Part 2. This prohibition will not prevent a gas retailer from offering an incentive or rebate for timely payment of bills.
Section 48C will empower the Governor in Council to publish anOrder in the Government Gazette prohibiting, or otherwise regulating, the imposition by a gas retailer of a fee or charge for termination of a supply contract. Again, this provision will apply to contracts between a gas retailer and a small retail customer, to be defined by Order in Council. The Essential Services Commission will be able to issue enforcement orders in accordance with the Essential Services Commission Act 2001, to ensure compliance with any such Order.
Section 48D will empower the Governor in Council to publish anOrder in the Government Gazette prohibiting, or otherwise regulating, the implementation of pre-payment meters. Aprepayment meter is a meter that allows gas to be sold or supplied under an arrangement that allows the customer to make full payment for the gas before it is consumed. The Essential Services Commission will be able to issue enforcement orders in accordance with the Essential Services Commission Act 2001, to ensure compliance with any such Order. In addition, following the issue of an initial Order under this section, any subsequent variation Order will be required to be laid before each House of Parliament and is made subject to disallowance.
Clause 25amends section 128 of the Gas Industry Act 2001, to clarify thecircumstances in which a significant producer, or person controlling a significant producer, may also have an interest in agas retailer, without directly breaching the cross-ownership restrictions of the Gas Industry Act 2001. A significant producer, or person controlling a significant producer, may not have a relevant interest in a gas retailer who sells gas to customers other than customers who purchase not less than 500000GJ per annum, unless otherwise authorised by Part 6 ofthe Gas Industry Act 2001.
PART 4—AMENDMENTS TO ESSENTIAL SERVICES COMMISSION ACT 2001