Information for participants in the Tribunal's community consultation process

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1 Introduction

The Australian Competition Tribunal (the Tribunal) was established under the Trade Practices Act 1965 (Cth) and continues under the Competition and Consumer Act 2010 (Cth). One of the functions of the Tribunal is to review decisions made by the AER about electricity and gas distributors and transmitters (regulated businesses).

Several regulated businesses in NSW and the ACT have made an application seeking review of the AER's determinations about the revenue they can recover from consumers through network charges. The Public Interest Advocacy Centre Ltd (PIAC) has also sought review of the AER's decisions about some of the regulated businesses in NSW.

The Tribunal will hear the applications for review in September 2015. Prior to this, the Tribunal will hold a public forum with current and prospective electricity and gas network service users, user and consumer organisations or user or consumer interest groups (participants).

The purpose of the public forum is to consult with those who may be affected by the Tribunal's decisions. The Tribunal invites you to participate in this process.

2 Appeals

The table below sets out each of the regulated distribution businesses who have lodged applications for review, together with links to the AER's decisions and the relevant applications by the regulated businesses and PIAC to the Tribunal.

Regulated Distribution Business	State/ Territory	Service	AER Decision (including proposals and other material)	Applications for Review
ActewAGL Distribution	ACT and parts of NSW	Electricity	Link	ActewAGL Distribution
Essential Energy	NSW	Electricity	Link	Essential Energy PIAC
Endeavour Energy	NSW	Electricity	Link	Endeavour Energy PIAC
Ausgrid	NSW	Electricity	Link	Ausgrid PIAC
Jemena Gas	NSW	Gas	Link	Jemena

3 Regulated Businesses

The first four regulated businesses own and operate distribution networks that transfer electricity from one point to another. These are the ‘poles and wires’ that transport electricity to businesses and residential customers. The fifth provides natural gas transportation and associated services to users via a gas distribution network. The regulated distribution businesses are different from energy retailers, who compete with one another. Instead, regulated businesses recover revenue from consumers through network charges. These network charges are levied on customers that use these networks. Because regulated businesses do not compete with one another, the amount they recover is limited by a regulatory process under:

• for electricity: the National Electricity Law (NEL) and National Electricity Rules. and
• for gas: the National Gas Law (NGL) and the National Gas Rules.

4 Electricity and gas determinations

Periodically, a process is conducted which determines how much revenue regulated businesses can recover from consumers in the next five year period.

After several preliminary steps, regulated businesses submit final revenue proposals which are assessed by the Australian Energy Regulator (AER). If the AER disagrees with the proposal, it can make its own decision. However, if the regulated business does not agree with the AER's decision, it can make an application to the Tribunal for review of the AER's decision. Other people affected by the AER's decision can also make an application for review.

5 The NEO and NGO

In considering an application for review of a decision of the AER, the overarching task for the Tribunal is to come to a decision which:

• for electricity: promotes the National Electricity Objective (the NEO), which is to:

promote efficient investment in, and efficient operation and use of, electricity services for the long term interests of consumers of electricity with respect to—

(a) price, quality, safety, reliability and security of supply of electricity; and

(b) the reliability, safety and security of the national electricity system.[1]

• for gas: promotes the National Gas Objective, which is to:

to promote efficient investment in, and efficient operation and use of, natural gas services for the long term interests of consumers of natural gas with respect to price, quality, safety, reliability and security of supply of natural gas.[2]

In reaching a decision which promotes the NEO or the NGO, the Tribunal can:

• affirm the AER's decision (leave the decision unchanged);
• vary the AER's decision (change the decision); or
• remit the AER's decision (send the decision back to the AER to make again).[3]

However, the Tribunal can only vary or remit the AER's decision if it is satisfied that to do so will, or is likely to, result in a decision that is a materially preferable decision in making a contribution to the achievement of the NEO or the NGO.[4]

6 Information for participants to consider

Community consultation is a new aspect of the Tribunal's processes. It is intended to remove some of the barriers to participation by consumers in appeals.[5] The Tribunal must now consult with participants as part of its review process.[6]

In making this change, the Standing Council on Energy and Resources (SCER) recognised that, in interpreting the NEO and NGO, the long-term interests of consumers (with respect to price, quality, safety, reliability and security of supply) are paramount.[7] SCER considered that consulting with participants would assist the Tribunal, in particular, in establishing what constitutes the "long term interests of consumers".[8]

At the public forum, participants will be able to make oral submissions to the Tribunal about the appeals.

Participants may raise any matter that is relevant to the Tribunal's function in determining the applications.

Participants may wish to consider the following matters in their submissions:

• The Tribunal can only vary the AER's decision if it decides there is a different, materially preferable NEO or NGO decision.
• The AER's decision, although made up of constituent parts, allows a regulated business to recover a single overall sum of money each year (called an annual revenue requirement);
• In deciding whether there is a materially preferable NEO or NGO decision, the Tribunal must consider:
  • the AER's decision in determining the annual revenue allowance as a whole;
  • how individual sections of the AER's decision relate to one another;
  • the Tribunal must take into account the revenue and pricing principles in the NEL and NEGL (in the same way the AER does when making its decision);[9]
• The Tribunal cannot decide whether or not a materially preferable NEO or NGO decision exists solely on the basis of impacts on the revenue that a regulated business can recover from consumers.[10]
• The AER and the regulated businesses have been discussing the matters which led to the decision for several years. A large amount of relevant material is collated and available on the AER's website.
• The basis on which the regulated businesses and PIAC say the AER's decision is in error (for different reasons) are set out in their applications.
• The basis on which the AER says its decisions are correct is set out in its decisions.

 

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