Tasmanian Bills Fact Sheets Tasmanian Bills Fact Sheets[Index] [Search] [Download] [Bill] [Help]
FACT SHEET
Electricity Supply Industry Amendment (Pricing) Bill 2017
The Electricity Supply Industry Act 1995 (ESI Act) provides the legislative basis for the
Tasmanian Economic Regulator (the Regulator) to determine maximum prices that may be
charged by a regulated offer electricity retailer in Tasmania. Aurora Energy is the only
regulated offer retailer in the State.
The determination of maximum prices involves a building block approach that includes
taking into account generation, transmission, distribution, retail and other expenditure
related to the provision of electricity to regulated customers. Over recent months the
market based cost of electricity generation also known as the wholesale electricity price
(WEP) has increased in Tasmania above and beyond the actual cost of generation due to
the State’s physical and market linkage to the National Electricity Market (NEM).
The NEM is undergoing a transition away from older coal fired generation to greater
penetration of renewable generation sources. Along with uncertainty in national energy
and climate change policy, the transition has resulted in volatility in wholesale energy prices
across NEM jurisdictions.
The current market based WEP used within the determination of maximum prices charged
by regulated retailers is an output from the Wholesale Contract Regulatory Instrument
(WCRI) that has been in place since 1 January 2014. The WCRI uses Victorian wholesale
contract prices as the base for its calculations then adjusts these to take account of
Tasmanian supply and demand conditions. This linkage to mainland wholesale electricity
prices is allowing mainland volatility to impact Tasmanian prices and impacts the calculated
outputs from the WCRI.
The intent of the proposed legislation is to amend the ESI Act to provide a mechanism
whereby the Treasurer can issue a Ministerial Order to declare an alternative Wholesale
Electricity Price (WEP) to that calculated under the WCRI.
This legislative change will allow a more reasonable WEP to be used to calculate maximum
electricity costs for 2017-18. This will result in more reasonable electricity pricing for
Tasmanian customers compared to expected market based outcomes.
The legislative change will reduce the cost of electricity for residential and small business
customers that access regulated electricity tariffs.
The legislative amendments will also require that Hydro Tasmania and Aurora Energy
contract the regulated electricity load at the price declared within the Ministerial Order.
This will ensure that neither business will be detrimentally affected by the issuing of a WEP
Order.
Page 1 of 1