On 6 May 2010, the Australian Energy Market Commission (Commission) gave notice under sections 102 and 103 of the National Electricity Law (NEL) of the making of the final Rule determination and final Rule (Rule as Made) for the South Australian jurisdictional derogation (connections charging) Rule change request.

The Rule as Made provides a jurisdictional derogation that continues the current arrangements in South Australia for charging for connections requiring distribution network extensions, modifications or augmentations.  It will commence on 1 July 2010 and will expire on the earlier of 30 June 2015 and the date notified by the South Australian Minister in the South Australian Government Gazette as the date on which the National Energy Customer Framework (NECF) rules relating to customer connections will apply in South Australia.

The Rule as Made requires:

• the arrangements for connection charges requiring distribution network extensions, modifications or augmentations in South Australia to continue to be made in accordance with certain Electricity Distribution Code (EDC) provisions. These include clauses 3.3 to 3.11 of Chapter 3 of the EDC, the provisions of Guideline No. 13, and the relevant definitions in Schedule 1 to the EDC (collectively defined in the Rule as Made as "the Electricity Distribution Code Provisions");
• the Australian Energy Regulator (AER) to perform and exercise the functions and powers of Essential Services Commission of South Australia (ESCOSA) under the Electricity Distribution Code Provisions; and
• ETSA Utilities to comply with the Electricity Distribution Code Provisions.

The Commission is satisfied that the Rule as Made will, or is likely to, contribute to the achievement of the National Electricity Objective (NEO) because it promotes efficiency and certainty in the long term interests of consumers with respect to the price of supply of electricity:

• by maintaining an established process in South Australia with the exception that the AER, rather than ESCOSA, will be responsible and avoiding the need for the AER and ETSA Utilities to develop a new interim process for a limited period until the NECF rules relating to customer connections are introduced. Developing a new interim process would require additional costs and effort in administration and operation on the part of ETSA Utilities and the AER. It would therefore be administratively and operationally more efficient to maintain the existing arrangements in South Australia rather than establishing a new process knowing that it would be in place for a limited period; and
• by maintaining prescription in an established process, which includes the calculation of charges for connections requiring distribution network extensions, modifications or augmentations as part of the terms and conditions for charging for such connections. As ETSA Utilities and South Australian customers are familiar with this existing approach, maintaining the same level of prescription will provide certainty to them. Without this level of prescription, South Australian customers may defer connections until the NECF rules relating to customer connections are introduced. This may lead to inefficient investment and inefficient use of the network.

Background

On 8 January 2010, the Acting South Australian Minister for Energy (Proponent) submitted a Rule change request to the Commission in relation to connection arrangements. The Rule change request was a request for a jurisdictional derogation which sought to maintain the current arrangements in South Australia for charging of connections requiring distribution network extensions, modifications or augmentations as contained relevant provisions of the EDC and Guideline No. 13.

The Proponent stated that if the existing arrangements are not maintained in South Australia, the AER would regulate connection service charges in accordance to the relevant provisions under chapters 5 and 6 of the National Electricity Rules (NER). It considered that these provisions lacked a number of mechanisms to protect the interests of customers and facilitate their connections to distribution networks which would be provided for in the current arrangements in South Australia.

The Rule change request sought to require the AER to maintain the current arrangements in South Australia for charging for connections requiring distribution network extensions, modifications or augmentations.  The Proponent considered that these were set out in clauses 3.3.5 to 3.11 of Chapter 3 of the EDC and the accompanying Guideline No. 13.

On 18 March 2010, the Commission gave notice under section 95 of the NEL commencing consultation on the Rule change request. The Commission considered that the Rule change request was a request for a non-controversial Rule in accordance to section 96 of the NEL. The Rule change request was assessed under the expedited Rule making process set out in section 96 of the NEL, subject to written objections. No written objections to the Rule change request being treated as non-controversial were received by 1 April 2010.

Two submissions on the Rule change request were received from the National Generators Forum (NGF) and Origin Energy by 15 April 2010. Both submissions supported the Rule change request.

On 15 April 2010, the Commission gave notice under section 107 of the NEL to extend the publication date of the final Rule determination to 6 May 2010. The Commission considered that an extension of time was necessary due to a material change of circumstances which affected the Rule change request.