COAG releases consultation paper

Minister for the Environment and Energy Josh Frydenberg.

Minister for the Environment and Energy Josh Frydenberg.

The Council of Australian Governments (COAG) Energy Council has released a consultation paper as part of a review announced by federal and state ministers last month.

On 19 August 2016 the Council of Australian Governments Energy Council (the Energy Council) tasked its Senior Committee of Officials (SCO) with completing a review by December 2016 of the limited merits review (LMR) regime set out in the National Electricity Law (NEL) and National Gas Law (NGL).

The Review will assess the effectiveness of the LMR regime, including the role of the Australian Competition Tribunal (the Tribunal), under the NEL and the NGL.

There are a small number of decisions that are also subject to merits review, including:

  • Ministerial decisions relating to the coverage of gas pipelines;
  • Decisions by the NCC in relation to the application of light regulation to gas pipelines;
  • Certain AER decisions relating to the making of a gas access arrangement;
  • AER ring fencing determinations;
  • AER decision to given an exemption from minimum ring fencing requirements; and,
  • Certain decisions of the AER under the Rules to approve or not approve an associate contract.

The review of the limited merits regime is designed to ensure customers are not paying more than necessary for their electricity and gas bills.

Under the limited merits regime, decisions by the Australian Energy Regulator regarding the allowable revenue of networks can be reviewed.

Since the most recent reforms to the regime in 2013, 12 network businesses have appealed the regulator’s determination to the Australian Competition Tribunal.

Determinations cap the revenue that energy networks can recover from their consumers.

Energy networks who have appealed determinations stand to earn an extra $7 billion over the next five years if their appeals are upheld.

“When I chaired the COAG Energy Council meeting last month we agreed to conduct a review of the regime,” said Minister for the Environment and Energy Josh Frydenberg.

“Ensuring the energy system remains affordable and reliable is a key focus of the COAG Energy Council.”

Network costs contribute up to 50 per cent of a typical household’s energy bill.

Reining in network costs will mean households only pay what’s needed for safe, reliable and secure electricity and gas.

Feedback is being sought on the effectiveness of possible reform options, including amendments to the existing regime as well as removing access to it altogether.

Submissions will be carefully considered before the review team prepares advice for all energy ministers by December 2016. There will also be a public consultation session later this month.

Feedback on the consultation paper and the operation of the limited merits review regime will be received until 3 October 2016.

 

More information on the consultation paper and the review can be found here.

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