Electricity

Reform of the NT Electricity Supply Industry

In April 2000, the Northern Territory government commenced a process of reform of the Territory’s electricity supply industry, whereby the Power and Water Corporation’s (Power and Water's) effective monopoly over the supply of electricity to final consumers is to cease, and competition among generators and retailers is to be phased in:

• by allowing certain customers to choose their power supplier;

• by licensing new suppliers to enter the market; and

• by facilitating third-party access to Power and Water's network infrastructure.

• Overview of Proposed Market and Regulatory Arrangements

Access Regime

Electricity networks, that is the system of poles and wires for the transportation of electricity from generators to end-customers, are considered to be ‘natural monopolies’ in that they involve facilities that cannot be economically duplicated.

For this reason, new players in NT electricity market will be permitted to use Power and Water’s wires once they enter into an access agreement and pay the regulated network charge. Power and Water is obligated to use all reasonable endeavours to accommodate the requirements of those seeking access to the electricity network and to provide access to available spare network capacity and new capacity on a non-discriminatory basis.

Access to Power and Water’s networks is regulated by a formal ‘Access Code’. This Code has been certified as ‘effective’ The Northern Territory Government applied to the National Competition Council to have this access regime certified as ‘effective’. In considering the effectiveness of a State or Territory access regime, the Council must apply the principles set out in the Competition Principles Agreement. Once certified, other pathways to regulated access – such as ‘declaration’ under Part IIIA cannot be invoked.

In March 2002, the NT Access Regime was certified as effective by the designated Commonwealth Minister for a period of 15 years. Information relating to the certification process can be found on the National Competition Council’s website (see our other Links page).

Review of the Electricity Networks (Third Party Access) Code

In December 2002, the Treasurer, as Regulatory Minister, requested the Commission to undertake an Inquiry into the Code's effectiveness to assist the Minister in a review of the Code required under the Act by 30 June 2003. The Terms of Reference for this Inquiry required the Commission to consult with key interest groups and affected parties.

• Inquiry into the NT Electricity Networks Access Code - Final Report - April 2003

• Review of the Electricity Networks (Third Party Access) Code - Draft Report - March 2003

• Review of the Electricity Networks (Third Party Access) Code - Issues Paper - December 2002

The Commission made a number of recommendations for change, with key recommendations relating to:

• the inclusion of a formal Code review process;

• clarification of various pricing issues; and

• provision for the regulator to issue guidelines where a material uncertainty exists regarding the conduct of Code participants.

The Minister has considered those recommendation relating to the pricing regulation provisions of the Code (and associated schedules) and the Code was amended in October 2003 to ensure that no uncertainty would impinge on the 2004 Regulatory Reset (the review of network price regulation methodology required in the lead-up to the commencement of the second regulatory control period).

The Minister has yet to announce the outcome of his review of the non-price related recommendations.