Wednesday, 19 February 2020
Bills
National Electricity (Victoria) Amendment Bill 2020
Bills
National Electricity (Victoria) Amendment Bill 2020
Statement of compatibility
Ms D’AMBROSIO (Mill Park—Minister for Energy, Environment and Climate Change, Minister for Solar Homes) (10:40): In accordance with the Charter of Human Rights and Responsibilities Act 2006, I table a statement of compatibility in relation to the National Electricity (Victoria) Amendment Bill 2020.
In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006, (the ‘Charter’), I make this Statement of Compatibility with respect to the National Electricity (Victoria) Amendment Bill 2020.
In my opinion, the National Electricity (Victoria) Amendment Bill 2020, as introduced to the Legislative Assembly, is compatible with human rights as set out in the Charter. I base my opinion on the reasons outlined in this statement.
Overview
The Bill amends the National Electricity (Victoria) Act 2005 (NEVA) to facilitate expedited approval of transmission system upgrades. The Bill introduces a head of power for the Minister for Energy, Environment and Climate Change (as Minister responsible for the administration of the NEVA) to make Orders modifying or disapplying provisions of the National Electricity Law and National Electricity Rules in respect of transmission augmentations and related services (for example, modifying or disapplying the regulatory investment test for transmission). The Bill also provides for the Essential Services Commission to amend licences issued to a declared transmission system operator to give effect to any matter in a Ministerial Order.
Human Rights Issues
Human rights protected by the Charter Act that are relevant to the Bill
The Bill does not raise any human rights issues.
Consideration of reasonable limitations—section 7(2)
As the Bill does not raise any human rights issues, it does not limit any human rights and therefore it is not necessary to consider section 7(2) of the Charter Act.
Hon Lily D’Ambrosio MP
Minister for Energy, Environment and Climate Change
Second reading
That this bill be now read a second time.
I ask that my second-reading speech be incorporated into Hansard.
Incorporated speech as follows:
Victoria’s recent, devastating bushfires have reinforced that Victorians need a more secure and reliable energy system.
On the 30th of December 2019, bushfires impacted the transmission lines between NSW and Victoria, shutting down key equipment and preventing Victoria from importing electricity from NSW. At the same time two large coal-powered generating units were off-line. As a result, the Australian Energy Market Operator (AEMO) was forced to deploy just under $3.5 million of emergency demand reduction in Victoria.
More recently, on the 31st of January 2020, Victoria experienced its highest energy demand since 2014. Extreme storms in Western Victoria brought down transmission towers, interrupting supply to customers in that area, including Alcoa’s aluminium smelter in Portland. It also led to the separation of the electricity network between Victoria and South Australia. AEMO deployed emergency reserves to return the network to stable operation without the need for load shedding.
And last year, on the 24th and 25th of January, Victorians faced rolling blackouts at a time of extreme heat, combined with outages of a number of coal-powered generation units.
These events are treated by Australia’s national electricity laws as aberrations, meaning investments to address them are viewed as difficult to justify.
But we know that our summers are getting longer, hotter and more extreme because of climate change. We need urgent upgrades to our energy system to make it resilient to the increasing summer heat events, bushfires and aging coal-powered generators that are becoming less reliable.
Specifically, Victorians require a more resilient transmission network. This will increase the supply to Victorians of low-cost renewables, balance intermittent wind and solar resources, help meet diverse demand peaks and insure against the increasing unreliability of coal-powered generators.
At present, however, investments in Victoria’s transmission network are being held up by a complex national regulatory regime that subjects transmission projects to excessive delays. Victoria currently has no power to expedite or override these tests, or substitute a more appropriate test for whether transmission investments should proceed.
Overview of the Bill
This Bill will support more timely investment in Victoria’s transmission network. The Bill will amend the National Electricity (Victoria) Act 2005 (NEVA), which applies the National Electricity Law (NEL), and the National Electricity Rules (NER), as a law of Victoria.
Ministerial Orders
The Bill will enable the Minister for Energy, Environment and Climate (as Minister responsible for the administration of the NEVA) to make Orders to facilitate urgent transmission projects, under a new Division 7 of Part 3 of the NEVA. A Ministerial Order will be able to regulate specified augmentations of the declared transmission system, the provision of services in respect of such augmentations, and other services that support the transmission network, including modifying or disapplying relevant provisions of the NEL and NER.
For example, an Order may modify or disapply parts of the national regulatory framework that have the potential to delay timely investment in the transmission network, including the regulatory investment test for transmission (RIT-T) and rules relating to contestable procurement for augmentations. The RIT-T can add years to a transmission project, frustrating investment to address Victoria’s urgent reliability needs. If appropriate, an Order may also specify an alternative test in place of the RIT-T.
The Bill will also provide for Ministerial Orders to deal with other relevant matters, such as agreements entered into by AEMO and declared transmission system operators and cost-recovery arrangements.
While the Bill provides for the modification of parts of the national framework that may frustrate needed transmission upgrades, it is important to ensure that any projects that are the subject of an Order deliver good value for Victorian consumers. The Bill therefore provides for certain safeguards before an Order can be made. In particular, the Minister must consult with the transmission planner AEMO, as well as the Premier and the Treasurer, before making an Order. The Minister will also be required to publish the Order, together with reasons for making it, in the Government Gazette and on the Department’s internet site.
Review of the operation of the new Division
This Bill is being introduced as a result of the inability of the current national regulatory framework to effectively address the pressing and unprecedented challenges affecting Victoria’s electricity system. The Victorian Government will continue to advocate for changes to the national framework to ensure that it is effective and fit for purpose.
Accordingly, the Bill requires a review of the operation of the new Division 7 of Part 3 of the NEVA before the end of 2025, having regard to national regulatory settings at that time. It is hoped by this time that more suitable rules for transmission upgrades will be in place at the national level and the need for the new Division can be reconsidered.
Facilitating transmission projects
The powers to make Ministerial Orders under the Bill may be used to fast-track priority transmission projects and network investments to improve the reliability of Victoria’s transmission system. It is important to note that such investments in the transmission system may occur through transmission network infrastructure upgrades or through network support measures which increase the service capability of the transmission network such as a grid-scale battery.
The Bill will provide the Victorian Government with the ability to expedite specified priority transmission projects to support the provision of affordable, clean and reliable electricity to Victorians.
I commend the Bill to the house.
Ms McLEISH (Eildon) (10:40): I move:
That the debate be now adjourned.
Motion agreed to and debate adjourned.
Ordered that debate be adjourned for two weeks. Debate adjourned until Wednesday, 4 March.