Attachment A - Electricity Industry Reform
Council of Australian Governments Communiqué
8-9 June 1993
In relation to reform of the electricity industry relevant Heads of Government:
- Announced a firm commitment to have the necessary structural changes in place to allow implementation of a competitive electricity market from 1 July 1995.
- Confirmed their commitment to the establishment of an interstate
transmission network, separate from generation and distribution
interests, noting that the achievement of this will require the
settling of important and sensitive issues, including:
- market trading, grid pricing and regulatory arrangements;
- the budgetary impact on the States;
- the resolution of tax compensation issues; and
- resolution of reform arrangements for the Snowy Mountains
Scheme.
- Agreed that establishment of the interstate transmission network be through adoption of the Multiple Network Corporation model outlined in the NGMC report.
- Agreed that jurisdictions in southern and eastern Australia
will work to have the Multiple Network Corporation structure in
place by 1 July 1995, consistent with the NGMC timetable for the
introduction of a competitive electricity market
(in relation to 1, 3 and 4 Tasmania indicated that it is reviewing the appropriate structure of its electricity supply industry and will report to COAG once a decision has been made).
(in relation to 3 and 4, South Australia indicated it is considering the use of a subsidiary structure pending the resolution of cost issues associated with separating transmission from its vertically integrated authority. Resolution of those issues would enable the adoption of the Multiple Network Corporation model.).
- Committed to further examine, during the course of the establishment of the Multiple Network Corporation structure, of whether the network structure for Governments to work toward should be a National Network Corporation or another option.
- Reconfirmed the objective of competitive generation as envisaged in the National Grid Protocol, noting that this will involve merit order despatch of individual generators to ensure that the most cost-effective generation is despatched and to enable private sector generation to compete on equal terms.
- Called for a report from the NGMC at the next meeting of the
Council of Australian Governments on the following major issues
associated with implementation of electricity reform:
- the implementation of network pricing and market trading arrangements to underpin competition in electricity trading;
- appropriate regulatory arrangements, noting that the Hilmer inquiry into competition policy will report during this period;
- progress in the establishment of a high-voltage transmission link between NSW and Queensland (Northlink); and
- demand management opportunities.
- Asked the NGMC to address further major issues, including:
- methodologies to ensure a consistent and commercial approach to the valuation of transmission assets; and
- the implementation of effective system control arrangements
for the integrated network, independent of the generation
sector,
that meet the needs of generators, distributors and major customers.
- Noted that the NGMC will need to further consult widely and visibly with major stakeholders.
- Agreed that the parameters for the 1994 review of the NGMC be agreed at the next meeting of the Council of Australian Governments.
- Requested the senior officials’ working group to report
back to the next meeting of the Council of Australian Governments
on:
- whether a Memorandum of Understanding is required between Heads of Government to advance the establishment of an interstate transmission network and, if so, what it should contain;
- progress in the resolution of the tax compensation matter;
- progress in resolution of reform arrangements for the Snowy Mountains Scheme; and
- reform actions taken within the States to facilitate the introduction
of a competitive electricity market.
Return to COAG Communiqué - 8 - 9 June 1993