Tasmanian Electricity Code - 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), 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. 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 (NEC) 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 NEC when Tasmania joined the NEM.

The different operating structure of the Tasmanian electricity supply industry means that there were some significant differences from the NEC. 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 NEC 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.
Thus, the Code did not include the market rules contained in the NEC. It did include:
  • provision for distribution system operation;
  • a framework for the management of vegetation around distribution power lines;
  • tariff customer protection;
  • 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).

In 1999, legislation was passed to apply National Electricity Law (NEL) in Tasmania, effective from the commencement of the Electricity - National Scheme (Tasmania) Act 1999. This in turn gives effect to the National Electricity Rules (NER) in Tasmania, subject to those derogations specifically applicable to Tasmania and authorised by the Australian Competition and Consumer Commission (ACCC).

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.

The Code provides the detail of the technical and economic regulation of the Tasmanian electricity supply industry. It includes considerable detail on customer protection arrangements as a complement to the relevant legislation.

The NER displaces much of the technical regulation contained in the Code, although as noted distribution remains largely a jurisdictional responsibility. The NER also provides for economic regulation of transmission and distribution networks, although the implementation of economic regulation for distribution remains with the jurisdictional regulator.

The review of this overall regulatory scheme has unfolded over some time. The jurisdictional derogations to the NER were settled in 2001, transfer of responsibility for economic regulation to the Australian Energy Regulator (AER) was implemented with the transmission revenue determination effective 1 January 2004 and the jurisdictional consultation on contestability commenced in March 2004.

The Minister under section 49B(4) of the ESI Act, may advise of changes to the Code such as may be required for transitional purposes for Tasmanian participation in the NEM. Changes have been progressively made under section 49B(4), eg recognising the role of the AER in transmission revenue determination, and made further changes with effect from NEM entry to eliminate the possibility of inconsistency between the Code and the NER.

The Code has been further reviewed to ensure that it matches the NEM regulatory environment. The process for reviewing the Code was presided over by the Code Change Panel (which was later dissolved in 2009 following further review of the Code). This process has been completed and this revised Code gives effect to the outcomes of that Code change procedure as well as reflecting the changes made to the Code under section 49B(4) with effect from NEM entry.

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