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Explanatory note
This explanatory note relates to this Bill as introduced into Parliament.*
This Bill is cognate with the Appropriation Bill 1997.
(a)
to impose an annual levy on electricity distributors from 1 July 1997,
and
(b)
to increase the price of electricity payable by non-franchise customers
of electricity distributors, and
(c)
to ensure that the increased price is not passed on to franchise
customers by electricity distributors.
In general terms, franchise customers are smaller customers of electricity
distributors, while non-franchise customers are larger customers.
* Amended in committee--see table at end of volume.
For the purposes of this explanatory note, the expression "non-franchise
customers" is to be read as including franchise customers who are
determined to be non-franchise customers but whose determination has not
yet come into effect. Correspondingly, the expression "franchise customers"
is to be read as excluding these customers. This reflects the definition of
eligible customer proposed to be inserted in the Dictionary by the proposed
Act.
Clause 2 provides for the proposed Act to commence on the date of assent.
Clause 3 is a formal provision giving effect to the Schedule of amendments.
Schedule 1 [ l ] inserts a new Division into Part 3 of the Act.
Proposed section 32A contains definitions used in the new Division.
Proposed section 32B imposes a levy on each licensed electricity distributor
in each financial year, based on profit from "network income". That income
is derived from the component of the price charged for electricity that is
based on the use of the distributor's network, but not the supply component
of the price charged for electricity. The actual amount of the levy is as
determined by the Governor on the recommendation of the Treasurer in
accordance with the principles set out in the proposed section.
Proposed section 32C permits the amount of the levy to be varied in respect
of the financial year to which it relates.
Proposed sections 32D and 32E make provision for the levy in the case of
persons who become licensees during a financial year or cease to be licensees
during a financial year.
Proposed section 32F makes provision for the payment and recovery of the
levy.
Proposed section 32G makes it a condition of an electricity distributor's
licence that the licensee has to comply with the obligations under the new
Division. The proposed section also makes it clear that the new Division does
not affect the provisions of the Public Finance and Audit Act 1983 relating to
payment of dividends.
Schedule l [2] inserts a new Division into Part 4 of the Act.
Proposed section 43A contains definitions used in the new Division.
Explanatory note page 2
Proposed section 43B increases the price of electricity supplied to
non-franchise customers by electricity distributors. The increase is 0.550
cents per kilowatt hour, and is applied to the network component of the price
of electricity. The increase is factored into the determination made by the
Independent Pricing and Regulatory Tribunal, and accordingly the increase
has to be passed on to non-franchise customers by electricity distributors
unless the Treasurer otherwise approves under the Independent Pricing and
Regulatory Tribunal Act 1992. Provision is made to prevent the supply
component of the price of electricity being reduced to offset the increase in
the network component.
Proposed section 43C prevents the price of electricity supplied to franchise
customers being increased so as to subsidise the increased price paid by
non-franchise customers.
Proposed section 43D requires electricity distributors to furnish returns to
the Treasurer.
Proposed section 43E makes it a condition of an electricity distributor's
licence that the licensee has to comply with the obligations under the new
Division. Proposed subsection (2) also makes it clear that the new Division
applies to a non-franchise customer even if the customer is still being
supplied electricity under a standard form contract. Proposed subsection (3)
enables regulations to be made of a transitional nature, where it is not
practicable to ascertain the amount of electricity used in the first period after
the commencement of the proposed section. Proposed subsections (4)-(6)
enable exemptions from the new Division to be made where appropriate.
Proposed subsection (7) provides that the new Division does not provide
grounds for customers to challenge electricity accounts.
Schedule 1 [3] amends section 87 so that conditions of licences imposed by
proposed sections 32G and 43E are excluded from the monitoring role of the
Licence Compliance Advisory Board.
Schedule l [4] inserts two new sections into the Act.
Proposed section 99A requires determinations to be made under the
Independent Pricing and Regulatory Tribunal Act 1992 as if the provisions
relating to the levy and pricing of electricity under the proposed Act had not
been made.
Proposed section 99B enables the Treasurer to enter into agreements with
electricity distributors in connection with the levy and other matters as
determined by the Treasurer.
Schedule 1 [5] amends the Dictionary in the Act to include definitions of
expressions used in the provisions being inserted into the Act.
Explanatory note page 3