Tasmanian Electricity Code - Energy Futures Australia

1 Tasmanian Electricity code VERSION: REVISED 3 NOVEMBER 2010 Tasmanian Electricity code MAY 2005 Contact details: Office of the Tasmanian Economic Regulator GPO Box 770, Hobart Tas 7001 Phone: (03) 6233 6323 Fax: (03) 6233 5666 Email: Internet: First printed February 1999 Re-printed September 2002 Re-printed May 2005 ISBN 0 7246 5039 3 Copyright Office of the Tasmanian Economic Regulator 2010 Tasmanian Electricity code AMENDED NOVEMBER 2010 TABLE OF CONTENTS* PREAMBLE BACKGROUND EXPLANATORY NOTES TO THE CHAPTERS code UPDATES (SINCE MAY 2005) CHAPTER 1 INTRODUCTION AND code SUPERVISION CHAPTER 2 LICENSEES AND FEES CHAPTER 3 Deleted by Ministerial Notice CHAPTER 4 Deleted by Ministerial Notice CHAPTER 5 Deleted by Ministerial Notice CHAPTER 6 NETWORK PRICING FOR DISTRIBUTION SYSTEMS Schedules to Chapter 6 CHAPTER 7 Deleted by Ministerial Notice CHAPTER 8 DISTRIBUTION SYSTEM OPERATION Schedule to Chapter 8 CHAPTER 8A DISTRIBUTION POWERLINE VEGETATION MANAGEMENT CHAPTER 9 RETAILING Schedule to Chapter 9 CHAPTER 9A RETAILING - PREPAYMENT METERS CHAPTER 10 Deleted by Ministerial Notice CHAPTER 11 Deleted by Ministerial Notice CHAPTER 12 ADMINISTRATIVE FUNCTIONS CHAPTER 13 Deleted by Ministerial Notice CHAPTER 14 Tasmanian Electricity code GLOSSARY * A more detailed Table of Contents for

2 Each Chapter is contained at the start of the relevant Chapter. INTRODUCTION 1 Tasmanian Electricity code AMENDED NOVEMBER 2010 BACKGROUND The Regulator publishes and maintains the Tasmanian Electricity code (the code ), the first version of which was issued on 1 July 1998. The code sets out the detailed arrangements for the regulation of the Tasmanian Electricity supply industry and is provided for and enforceable under the Electricity Supply Industry Act 1995 (ESI Act),1 which is the principal Act governing the operation of the Electricity supply industry in Tasmania. The code was initially developed by the Regulator's Office in consultation with government and stakeholders in the Electricity supply industry.

3 This was consistent with the establishment of an independent industry regulator in accordance with the National Competition Policy Agreement and the disaggregation of the formerly vertically integrated monopoly of the Hydro-Electric Corporation (HEC). The code was modelled on the National Electricity code (referred to as the National Electricity Rules from 1 July 2005) with amendments made to reflect the differences between the Tasmanian industry and the National Electricity Market (NEM). This approach provided the flexibility to move towards compliance with the NEM and the identification of derogations or changes to the National Electricity Rules (NER) when Tasmania joined the NEM.

4 The different operating structure of the Tasmanian Electricity supply industry means that there were some significant differences from the NER. The code provided a transparent regulatory framework and: detailed technical specifications and procedures which complement the ESI Act; adjusted the regulatory environment to accommodate the statutory disaggregation of the HEC into three separate bodies under the Electricity Companies Act 1997; set a technical and operational base-line from which compliance with the NER could be achieved when Tasmania joined the NEM; and addressed the technical, economic regulation, and customer protection aspects of the Tasmanian Electricity supply industry which were not covered by NEM arrangements.

5 Thus, the code did not include the market rules contained in the NER. It did include: provision for distribution system operation; a framework for the management of vegetation around distribution power lines; tariff customer protection; 1 Refer to section 6(ca) of the Electricity Supply Industry Act 1995. INTRODUCTION 2 Tasmanian Electricity code AMENDED NOVEMBER 2010 retail metering for tariff customers; and provision for ring fencing of certain operations in recognition of the continued integration of some functions which will be separated in the NEM (eg system control).

6 Tasmanian Electricity SUPPLY INDUSTRY The Tasmanian Electricity supply industry as presently structured reflects its history as emerging from the vertically integrated Hydro-Electric Commission. There was progressive reform and restructuring of the Electricity supply industry, culminating in the disaggregation of the HEC, effective 1 July 1998, into: Hydro-Electric Corporation (Hydro Tasmania) which retained the generation assets and as such was (and remains) responsible for approximately 98 per cent of the Tasmanian Electricity output. These generation assets have continued to be developed with wind power added to the portfolio. It is to be noted that Hydro Tasmania has continuing responsibility for Electricity operations and supply on King Island and Flinders Island.

7 These continue as vertically integrated operations and are not be included in the national market arrangements on NEM entry as they are not part of the inter-connected Tasmanian power system. The scale of these operations is such that it is unlikely that there would be efficiency gains from disaggregation. Transend Networks Pty Ltd (Transend) which was vested with the extra high voltage (88 kV and above) assets of the HEC. As the transmission entity, it delivers Energy from generation to the distribution network and major customers. The economic regulation of transmission entities in the NEM was the responsibility of the Australian Competition and Consumer Commission (now the Australian Energy Regulator).

8 This responsibility in Tasmania passed to the Australian Competition and Consumer Commission prior to NEM entry and to the Australian Energy Regulator (AER) on 1 July 2005. Aurora Energy Pty Ltd (Aurora Energy ) which is licensed as a retailer and as a distributor. Distribution the high voltage network below 88 kV which delivers Electricity to the vast majority of customers. retail this activity contracts with customers for Energy supply. Retailers arrange connections, undertake billing and provide other Energy services to customers. Aurora has an exclusive retail franchise for non-contestable customers. There has been continuing restructuring and development of the Electricity supply industry.

9 Hydro Tasmania has separated Bell Bay Power Station into a subsidiary which has converted to gas generation. The wind power assets of Hydro Tasmania are also being developed through subsidiary entities. INTRODUCTION 3 Tasmanian Electricity code AMENDED NOVEMBER 2010 Basslink Pty Ltd is the proponent of the inter-connector between the Tasmanian and Victorian regions of the NEM. This will significantly affect the competitive structure of the Tasmanian Electricity supply industry by allowing trading between regions and facilitating new entry retailing to support contestability.

10 There have been other smaller generation proposals but none have as yet got as far as a connection application. In this regard and for an overview of the industry generally, refer to the Tasmanian Planning Statement published by Transend Networks in its capacity as System Tasmanian ENTRY TO THE NATIONAL Electricity MARKET The Tasmanian Government passed legislation to apply National Electricity Law (NEL) in Tasmania with effect from 29 May This gave effect to the NER in Tasmania, subject to those derogations specifically applicable to Tasmania and authorised by the The technical and economic regulation of the industry is at this time provided for by the ESI Act and its subordinate instruments. These subordinate instruments include tariff customer and price control regulations, and the code .