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Policy and Governance

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Introduction

In June 2012, the Government established the Electricity Reform Project within the Department of Treasury and Finance to implement its electricity reforms. This team is governed by the Electricity Reform Oversight Committee which comprises the Secretaries of the Departments of Treasury and Finance, Premier and Cabinet and Infrastructure, Energy and Resources. The Committee’s status reports can be viewed by clicking on the links below:

The Terms of Reference for the project team and governing Committee are contained in the Electricity Reform Project – Governance Arrangements.

Detailed work has been undertaken by this project group since its inception in June 2012 and a framework for the electricity industry in Tasmania has now been developed. Details are contained in the Market and Regulatory Framework Position Paper.

Background

In 2010, the Parliament established an independent Expert Panel to review the Tasmanian electricity supply industry (Expert Panel). The Panel provided its final report to the Treasurer and Minister for Energy and Resources on 29 March 2012. The final report was tabled in Parliament by the Treasurer on the same day.

The Government announced its response to the Panel’s report on 15 May 2012, agreeing with almost all of the Panel’s conclusions relating to issues in the industry and the areas that require reform. A copy of the Minister’s Statement is available here. The Government also released a detailed explanation of the reforms and the reasons why it is implementing these measures, which are contained in the report Energy for the Future.

Objectives

The Government has adopted four objectives for electricity policy in Tasmania, which the reform package will meet:

  1. lowest sustainable electricity bills;
  2. long-term safe, secure and reliable supplies of electricity;
  3. maximise the value of Tasmania’s low carbon advantage and the brand benefits of clean Tasmanian electricity; and
  4. financially viable state-owned electricity businesses that run efficiently and effectively and maximise the overall economic benefit to Tasmania.

Key features

The Key features of the reform package are:

  • full retail competition will be introduced from 1 January 2014;
  • the Government will sell and transfer Aurora’s retail customers in blocks to new, competing private sector retailers, from the start of full retail competition on 1 January 2014;
  • Aurora’s distribution system and Transend’s transmission network will be integrated to form a single combined network business. The businesses will be merged from 1 July 2014; and
  • independent regulation of Hydro Tasmania’s wholesale market activities by the Tasmanian Economic Regulator from 1 July 2013.

See the fact sheets below for further details on the key features of the reform package:

Overview Fact Sheet (May 2012)

Electricity pricing and you Fact Sheet (May 2012)

Retail Competition Fact Sheet (May 2012)

Network Integration Fact Sheet (May 2012)

Wholesale Reform Fact Sheet (May 2012)

Supporting features

To support the rollout of full retail competition and enable the networks to be integrated, the following actions will be taken:

  • Hydro Tasmania will retain its mainland retail business Momentum, subject to relevant approvals and ongoing shareholder oversight;
  • Aurora’s retail services functions will be merged with Momentum’s functions, once the transition of retail customers to new retailers is complete; and
  • an independent assessment of the Tamar Valley Power Station assets will be obtained and unless a sale value of the assets, or parts of the assets, exceed the value under state ownership, those assets will be transferred to Hydro Tasmania.

See the fact sheets below for further information on the supporting features of the reform package:

Energy Security Fact Sheet (May 2012)

Maximising Tasmania’s Clean Energy Advantage Fact Sheet (May 2012)

Support for vulnerable Tasmanians Fact Sheet (May 2012)

Actions already taken

To provide relief to customers from 1 July 2012, the Government has:

  • changed the way the Tasmanian Economic Regulator calculates prices for households and small businesses which reduced price increases by seven per cent in 2012-13. See Immediate Price Relief Fact Sheet (May 2012) for further information on actions to reduce 2012-13 electricity prices;
  • Aurora asked the Australian Energy Regulator to smooth the under-recovery of its distribution services revenues from previous years, reducing the price increase by almost 2 per cent on average; and
  • Transend has elected not to increase revenues by the extent allowed by the Australian Energy Regulator which reduced price increases by more than 3 per cent on average.

Legislative and regulatory arrangements implemented in 2012

Electricity Reform Act 2012

The Electricity Reform Act 2012 was passed by both Houses of Parliament to facilitate the implementation of the energy reforms. The Act:

  • defines the objectives of the reforms;
  • determines measures that may be taken to implement the reforms; and
  • establishes the necessary functions and powers to ensure the reforms are implemented in a timely manner.

More information on the Act is available in a fact sheet and question and answer sheet.

Electricity Supply Industry (Price Control and Related Matters) Amendment Regulations 2012

To ensure a smooth transition to full retail competition on 1 January 2014, a supporting feature of the Government’s electricity reform package is that the current retail price determination has been rolled forward for the period 1 July 2013 to 31 December 2013.

The Electricity Supply Industry (Price Control and Related Matters) Amendment Regulations 2012 gives effect to the roll forward. The regulations establish the parameters by which the current determination is extended.