Interim authorisation for the transitional Queensland electricity market has been granted by the Australian Competition and Consumer Commission.
The interim authorisation will apply to allow a more detailed examination of the new arrangements through public consultations and completion of the full authorisation process.
The interim authorisation protects the parties from prosecution under the Trade Practices Act. The ACCC can revoke the interim authorisation at any time.
The ACCC's decision allows the Queensland market to begin on 1 October 1997, as planned, and continue into 1998 until the national market arrangements commence. At that time the Queensland market will adopt much of the National Electricity Code in line with other jurisdictions.
These arrangements represent a major transitional shift in Queensland which is designed to achieve consistency with the national electricity arrangements and the reforms that have occurred in other States, ACCC Chairman Professor Allan Fels, said today. These steps will enable Queensland to introduce competitive trading arrangements based on a local spot market, increased customer choice and the entry of new retailers, all of which will ultimately converge with the national electricity market.
Another key factor in the ACCC's assessment of the public benefits from these arrangements is the substantial progress made during 1997 in implementing significant reforms in Queensland.
The ACCC's examination of the Queensland reforms is consistent with its approach to the national electricity market. The ACCC noted several important reforms such as: the restructuring of the generation and retail sectors to enable competition; the entry of new generators over the 1998-2000 period; the creation of a 'ring-fenced' Queensland System Operator to manage the spot market; the gradual removal of customer franchise restrictions; the proposed mutual recognition of interstate retailers; and the role of the Queensland Competition Authority as an independent regulator.
At the same time, the ACCC recorded its concerns about several features of the Queensland arrangements. In particular the ACCC is seeking further clarification on, and/or justification of:
- long-term generator agreements which allow for variations from the market procedures and technical standards of the national code;
- the status of customer agreements and retail licensing which may impede the full delivery of customer contestability and entry by new retailers by January 1998;
- the basis for setting regions and network losses initially by a government body; the extent to which system interventions distort the market-based dispatch process, particularly in regard to the dispatch of ancillary services and the management of frequency bands;
- the duration and interstate effects of a number of the derogations from the national code; and
- vesting contracts and network pricing arrangements to be decided later this year.
Additionally, the ACCC said the Queensland electricity arrangements should be amended, to the extent it is practicably possible during the interim period, to reflect the conditions on the ACCC's authorisation decision for the National Electricity Code (to be finalised in October).
The ACCC emphasised that a range of concerns common to all the States would be addressed in its final decisions on the National Electricity Code (due in October), including the proposed Queensland / New South Wales interconnector.
Uniformity will be a major test of the national market so it is appropriate both the Queensland and national arrangements coordinate their efforts to achieve those additional benefits the Commission is seeking, Professor Fels said.
The ACCC will continue its public consultations on the Queensland interim arrangements. In particular, it will re-examine the implementation of the new market in November when an application will be made to incorporate the Queensland arrangements, including network access and pricing, into the longer term national scheme.
Further information on this media release Professor Allan Fels, Chairman, (03) 9290 1812 or pager (016) 373 536 Ms Lin Enright, Director, Public Relations, (02) 6264 2808