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Legislative Assembly for the ACT: 1997 Week 9 Hansard (4 September) . . Page.. 2885 ..

MR KAINE (continuing):

Put very simply, the national electricity market means that there is one central pool for electricity supply. Generators will compete to offer electricity to the pool and retailers will compete to take electricity from it. The power will be transported through a transmission system down to local distribution systems. The prices for transportation will be regulated. The National Electricity Market Management Company, NEMMCO, has been established to operate the pool. I should note that NEMMCO has many other functions, including functions relating to "keeping the lights on" and maintaining a safe national grid. A second company, the National Electricity Code Administrator, NECA, has been set up to administer a National Electricity Code that provides detailed rules for the market as a whole.

The Bill provides for a wholesale market. All jurisdictions, however, are extending competition and choice down to the retail level. Individual customers will eventually be able to choose their own retailer. This will be the subject of separate legislation in the ACT. The national electricity market will bring many benefits. First and foremost, competition and customer choice will replace the former regime of monopolies and central government planning. No longer will there be a parochial, State-based approach to power supply; instead, the focus will be national. That means that ACT industry and customers will no longer be an outsider in the process, excluded from important decisions about the power system. The new arrangements will promote economic efficiency, with benefits for both industry and individual customers. The market will also enhance Australia's economic development and our international competitiveness. The existing high levels of safety and security of electricity supply in the ACT will be maintained and enhanced. Finally, there will be a commercial environment that is far better suited to the introduction of more environmentally-friendly technologies and practices than we have seen in the past.

Several points need to be made about the national electricity market here and now. We are not talking about deregulation of the electricity industry. We are, in fact, talking about a complex scheme of regulation. Regulation is necessary to preserve safety and reliability - keeping the lights on. Regulation is necessary because power from many generators flows through a single grid to millions of customers, and supply and demand must be in balance instant by instant.

The former regime of central control in each State did not serve Australia well, and it certainly worked against the ACT. For years, ACTEW and its predecessors were at the mercy of "take it or leave it" tariffs determined by instrumentalities of other governments. In recent years, the giant supply monopolies in New South Wales and Victoria both built generation plants that were in excess of demand. Going it alone rather than sharing facilities meant that consumers, including consumers in the ACT, paid the costs. It went without saying that these new plants would burn coal. There was little room for environmentally-friendly generation in the investment plans of supply monopolies, and independent generators could get started only on the monopolies' terms.

ACTEW and its predecessors had a fine record of encouraging consumers to use power wisely. They knew that power conservation, especially at peak times, was good business. In other States, where the owners of the retailers and generators were the same government or even the same government authority, the conservation message was

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