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Power-full reform Bill to ignite energy investment.



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25 June 2004 04/176

POWER-FULL REFORM BILL TO IGNITE ENERGY INVESTMENT

Two years of negotiation between Federal Industry Minister, Ian Macfarlane, and his state ministerial counterparts were formalised today with the historic passing of the Australian Energy Market Reform Legislation through the Australian Parliament.

The bills overhaul the structure of the national electricity market, defining a new energy market governance and legislative structure which includes two new bodies - a single, national regulator and new market planning body.

“The Australian Energy Regulator (AER) will become the peak regulatory body for an electricity market which is currently torn in all directions by a labyrinth of 13 different but over-lapping regulatory bodies,” said Mr Macfarlane.

The AER, which will operate as a separate entity under the umbrella of the ACCC, is to be based in Melbourne and is now advertising for a Chairman.

“The second body, the Australian Energy Markets Commission, will become an Australia-wide market development body. This nationally-focused structure is pivotal to making sure we lure more, much-needed energy investment.”

“We need an investment of $37 billion in base-load power over the next decade if Australians are to be guaranteed that the lights will come on whenever they flick the switch. But a convoluted regulatory system has been scaring investors away.”

“This new framework, as announced in the government’s Energy White Paper, will streamline the process of investing in Australia’s energy sector and make it a truly national market. Australia will become a more enticing investment option with easier access to a broader and simply administered market,” said Mr Macfarlane.

“It’s been a colourful journey, with the States, to the finalisation of this reform package. But we’ve established a good working relationship and I hope that will flow through to a national workshop I’ve asked Invest Australia to co-ordinate.”

“In Australia we take a cheap, low-cost and reliable energy supply for granted, it’s one of the foundation blocks to our continued economic growth. But our children won’t have that luxury if we don’t do the work now to keep investment abreast of our growing use of electricity,” said Mr Macfarlane.

According to the International Energy Agency, in 2002, Australia had one of the lowest business electricity prices at US 3.6 cents a kilowatt hour followed by France (US 3.7 cents), Canada (3.9), USA (4.7) and the UK (5.4 cents/kwh). CMR04-194