Western Australia: National Regulation Delayed

by Vivid User | Dec 02, 2016
The Western Australian Government’s plan to transfer the regulation of Western Power’s network to the national electricity regulatory framework by late November 2016 allowing Western Power to commence the regulatory process under the national regulatory framework from December 2016, looks unlikely to be achieved.

As advised in an earlier edition of EMU, the introduction into the WA Parliament of a package of legislation to adopt the national regulatory framework in WA was expected to receive Royal Assent in November 2016. However the Public Utilities Office has confirmed recent speculation that the reforms, including transferring regulatory determinations to the Australian Energy Regulator, are now unlikely to be enacted prior to the WA election in March 2017.

One of the principal objectives of the legislation package was to adopt the National Electricity Law regulatory scheme in Western Australia.

Specifically, the legislative reforms relating to the electricity sector included:

     •     Transferring regulation of Western Power’s transmission and distribution networks from the Economic Regulation Authority (a Western Australian body) to the National Electricity Law and National Electricity Rules, with regulatory responsibility assigned to the Australian Energy Regulator (AER); and

     •     Implementing a constrained network access framework in the South West Interconnected System.

The AER was scheduled to take over approving Western Power's access arrangements (which sets revenue and access terms) from 1 July 2018 with transitional arrangements applying from 31 December 2016.

However as a result of the delay, Western Power will continue to be subject to the current State-based regulatory framework in accordance with the Electricity Networks Access Code 2004, including obligations to have its next access arrangement approved by the Economic Regulation Authority.

In a practical sense, the delay means that for the time being at least there will be virtually no change to regulated network companies, who will continue to be regulated by the Economic Regulation Authority, or the Wholesale Electricity Market (WEM), which will continue to operate under the current WEM Rules.  Ascertaining what the impact and cost of new regulatory processes and trading systems (if any) will now have to wait until after WA goes to the polls next March.

In other news from WA, the government announced last week it is aiming to pay down debt through the privatisation of Western Power.

In a plan outlined publicly for the first time on 30 November 2016, Premier Colin Barnett said 51 per cent of Western Power would be sold, the majority of which would be to Australian super funds, and the rest via a public float on the stock exchange.

The sale, anticipated to go ahead in late in 2017 or early 2018, is expected to generate $11 billion, with $8 billion earmarked to pay down Western Power’s debt and the rest to go into a "next generation account".

What this means to the reforms to transfer regulation of Western Power’s networks the AER remains to be seen as the privatisation of Western Power is expected to be a significant election issue.