Economic Regulation Authority (Electricity Networks Access Funding) Regulations 2012

A covered network is a network that is subject to the Electricity Networks Access Code 2004. Schedule 1 currently lists one network, described in section 3.1 of the ENA Code. The single network is presumably that of the major electricity distributor in Western Australia. A service provider is the person who operates a covered network. For standing charges, the liable service provider is the one in relation to the network during the quarter. The core function costs are the ERA’s costs in performing its functions under the EI Act section 112 and the ENA Code, minus costs recovered through specific charges. The standing charge formula multiplies core function costs by the Schedule 1 percentage (100 per cent for the only listed network) and then by a daily pro rata based on the number of days in the quarter when the network was covered and the person was the service provider. The result is a quarterly levy that recovers the entirety of core function costs not already recovered through specific charges.

Specific charges are payable only when the ERA performs a function listed in Schedule 2. That schedule enumerates 26 items covering different parts of the ENA Code. The person liable is usually the service provider of the covered network, but some items assign liability to an applicant, a party to an access dispute, or the person who submits a proposed access arrangement or applies for an exemption. Where more than one service provider is liable, the apportionment method depends on whether all liable providers are service providers of covered networks listed in Schedule 1. If they are, the charge is apportioned proportionally to the Schedule 1 percentages; if some are not listed, the charge is divided equally. The amount of the specific charge must be equivalent to costs directly attributable to the relevant function, including consultant and contractor costs, accommodation, travel, equipment, photocopying, mailing, publishing, advertising, and costs of public consultation. The ERA must provide an itemised account on request.

The prescribed rate of interest is defined by reference to the Bank Bill Reference Rate (Mid Rate) quoted on Reuters Screen BBSW for a one month bill, plus five percentage points, determined on the day after the allowed period expires. If no quote is available, the ERA determines a rate having regard to comparable indices. This is a penal rate designed to discourage late payment. The allowed period is the standard 30 days after the notice date, or a further period allowed by the ERA. The regulations do not specify any criteria for granting a further period, leaving it to the ERA’s unfettered discretion.

A document fee may be charged for copies of documents prepared by or on behalf of the ERA in performing ENA Code functions. The fee cannot exceed $100 and must be calculated according to the costs incurred in providing the document. The Coordinator of Energy and the Director of Energy Safety are exempt from this fee. The annual report under the Financial Management Act 2006 must disclose the total standing charges and specific charges for each person, providing a degree of public transparency but only aggregated by person, not broken down by function or service.

The primary targets are the service providers of covered networks. Currently only one network is listed, so effectively one business, likely a state owned electricity transmission and distribution company, bears the full burden of standing charges and a substantial portion of specific charges. This entity must pay the quarterly standing charge based on the ERA’s core function costs, whether or not it has caused the ERA to incur any particular cost. It is also liable for many specific charges under Schedule 2, particularly items 2, 3, 4, 5, 7, 8, 10, 11, 13, 15, 16, 21, 22, 23, 24, 25, and 26. For these items, the service provider pays for the ERA’s work on access arrangements, network modifications, ringfencing rules, exemptions, technical rules, and participation in access disputes. The service provider’s financial exposure is uncapped and directly linked to the ERA’s operational decisions.

Other affected parties are applicants and parties who submit proposals or apply for determinations under the ENA Code. For example, a person who proposes a modified test (item 6) must pay the specific charge for the ERA’s functions under section 6.53 of the Code. A person who submits price lists under Chapter 8 of the Code must pay. A person who makes an application under sections 12.40 or 12.45 of the Code pays for the ERA’s functions in relation to that application. Parties to an access dispute (item 11) pay the specific charge in equal shares, which means that even a successful party in a dispute must share the ERA’s costs. This may deter access disputes or encourage settlement, as each party faces a direct charge for the ERA’s involvement.

The ERA itself is affected: it must assess charges, issue notices, provide explanations, and include details in its annual report. Its budget and resources are effectively funded by these charges rather than general appropriation, so it has an incentive to incur costs that are recoverable and to document them carefully. The Chairperson’s certificate is given evidentiary status in debt recovery proceedings, simplifying enforcement.

Indirectly, electricity consumers are affected because network charges are regulated and the service provider’s costs, including these regulatory charges, are passed through into network tariffs. The standing charge and specific charges are recoverable as part of the service provider’s revenue requirement under the access arrangement. Therefore the cost of the ERA’s regulatory work ultimately falls on electricity users in Western Australia. There is no provision for cost pass through to be disallowed or capped, though the ERA itself oversees the access arrangement approval process. This creates a circular funding model: the ERA recovers its costs from the network, and that network then includes those same costs in its proposal for the ERA to approve. There is an obvious risk that the ERA has little incentive to minimise its costs, as they are both recovered from the network and then endorsed by the ERA during the access arrangement review. The single network structure magnifies this risk because there is no alternative network to benchmark costs.

The ERA must assess standing charges as soon as practicable after each quarter ends. The notice of assessment must specify the amount of each charge, the total assessment amount, the core function costs used, and the date of issue. On request, the ERA must give a written explanation of how the core function costs were calculated and reasonable details of the core functions they relate to. For specific charges, the ERA must provide an itemised account of costs on request. The ERA may grant a further period for payment beyond the standard 30 days. The regulations do not prescribe any appeal or review mechanism for disputed charges. The only right is to request an explanation, but there is no right to have the charge varied or set aside. The ERA can issue a certificate as evidence in debt recovery proceedings, which places a heavy evidentiary burden on the person disputing the charge.

The service provider must pay the assessment amount within 30 days after the notice date. If the notice is delayed, the payment period runs from the date specified in the notice, not from when the charge is incurred. The service provider must pay even if it disputes the calculation. Late payment triggers interest at the prescribed rate. The service provider may request an extension of the allowed period, but the ERA has absolute discretion to grant or refuse it. The service provider also may request a written explanation of core function costs (standing charges) or an itemised account (specific charges), but these requests do not extend the payment period unless the ERA allows a further period.

For specific charges, the liable person must pay within 30 days of the notice date. The notice must specify the amount and the issue date. If the person believes the apportionment is incorrect, there is no prescribed dispute process. The only remedy is to refuse to pay and defend a debt recovery action, where the ERA’s certificate is treated as sufficient evidence unless the person can rebut it. The interest rate is high, so non payment is costly. The person may also attempt to negotiate a further period.

The document fee regime gives the ERA the right to demand a fee up to $100 for providing documents created in performing ENA Code functions. The person requesting the document has no right to a fee waiver, except that the Coordinator of Energy and the Director of Energy Safety are exempt. The person has a right to a fee calculated according to the ERA’s costs, not to exceed $100. There is no right to negotiate a lower fee.

The annual report requirement imposes a duty on the ERA to include details of total standing charges and total specific charges per person. This is a transparency measure enabling the public and stakeholders to see how much each entity paid. However, the totals are not broken down by function or by quarter, which limits scrutiny.

There are no criminal penalties for non payment. The enforcement mechanism is civil debt recovery. The ERA may recover any unpaid assessment amount or specific charge, together with accrued interest, in a court of competent jurisdiction. The debt is recoverable as a simple debt, with no requirement to prove that the service provider used the network or received any benefit. A certificate purporting to be signed by the chairperson and stating the amount owed, the person liable, and that the amount is unpaid is sufficient evidence of those matters, without proof of the chairperson’s appointment or signature. This effectively reverses the normal burden: the certificate shifts the evidentiary onus to the person challenging the debt. The person must adduce evidence to rebut the certificate’s contents.

Interest is a significant penalty. The prescribed rate is the one month bank bill swap rate plus five percentage points, calculated daily from the day after the allowed period ends. At current or historical rates this can be 8 to 10 per cent per annum or higher. Interest accrues on the outstanding amount until paid. The ERA does not need to prove any loss; the interest is automatic. The high rate is intended to deter late payment and compensate the ERA for the time value of money and administrative costs, but it also increases the total liability rapidly.

The ERA’s power to grant a further period for payment is unfettered, but if it does not grant one, the interest clock starts. There is no appeal against the ERA’s refusal to extend time. The regulations do not authorise the ERA to waive or reduce interest after it has accrued. In theory a court could vary a debt judgment, but the interest under the regulations continues to accrue unless the court orders otherwise.

The regulations do not impose penalties for the ERA’s failures, such as failing to give a notice of assessment as soon as practicable, failing to provide an explanation, or failing to include required information in the annual report. Those appear to be procedural obligations that the service provider cannot directly enforce by withholding payment. The only remedy would be judicial review or a complaint to the Ombudsman, but that is outside these regulations.

Given that the regulations were made in 2012 and have not been amended, the prescribed rate definition may create difficulties if the Reuters Screen BBSW is discontinued or no longer quoted. The fallback provision allows the ERA to determine a rate having regard to comparable indices, but that introduces subjectivity and potential challenge. The interest rate is set at the time of default, not variable during the default period, so the daily calculation uses a fixed rate determined on the first day after the allowed period.

These regulations are made under the Economic Regulation Authority Act 2003, which establishes the ERA. They specifically implement the funding provisions for electricity network access functions. The primary substantive law is the Electricity Industry Act 2004, particularly section 112 which gives the ERA functions under the Electricity Networks Access Code 2004. The regulations directly reference the ENA Code as establishing the network and defining the functions for which specific charges are payable. The definitions in the regulations incorporate terms from the ENA Code unless a contrary intention appears.

The regulations also interact with the Financial Management Act 2006. Regulation 9 requires the ERA’s annual report prepared under section 61 of that Act to include details of charges per person. This integrates the cost recovery information into the general financial reporting framework of the public sector. The ERA’s overall financial statements are audited, but there is no specific audit of the cost recovery calculations.

The Energy Coordination Act 1994 is mentioned in regulation 7(3), exempting the Coordinator of Energy and the Director of Energy Safety from document fees. These are government officials with functions related to energy regulation. No other party is exempt.

The regulations do not interact with the Competition and Consumer Act 2010 (Cth) or the National Electricity Law, because Western Australia’s electricity network access is governed by a state based code, not the national regime. However, the access arrangements approved under the ENA Code are likely subject to general competition law.

The debt recovery provisions rely on the rules of court in Western Australia for civil proceedings. The certificate provision in regulation 8(2) is a statutory exception to the hearsay rule and the best evidence rule, easing the ERA’s burden of proof.

There is no interaction with privacy laws mentioned. The annual report disclosure of charges per person names service providers, which is likely public information already.

The regulations do not create rights or obligations for third parties such as electricity retailers or end users. They are solely about the relationship between the ERA and the regulated entities.

The only version in the compilation is the original regulations, gazetted on 9 October 2012 and commencing on 10 October 2012 (regulations 1 and 2 commenced on gazettal date). There are no amendments recorded in the compilation table. The regulations have therefore remained unchanged for over a decade. This stability suggests either that the funding model has worked without need for adjustment, or that changes in electricity network regulation have not been reflected in the regulations. The single network in Schedule 1 has not been revised, despite possible changes in network ownership or coverage. The list of functions in Schedule 2 has not been updated to reflect amendments to the ENA Code that may have occurred since 2012. If the ENA Code has been amended to add or remove functions, the references in the schedule may be incorrect, leading to charges being imposed for functions no longer in the Code, or not being recovered for new functions. Users should verify the current version of the ENA Code to ensure the cross references are still valid. The compilation note indicates it is a compilation, but without any amendment details beyond the original, it is essentially the original text.

The source does not mention any litigation or court decisions concerning these regulations. There are no cases referred to in the text. Given the regulations are cost recovery instruments with limited rights of challenge and a high threshold for disputing charges, it is plausible that disputes are rare or are settled before litigation. The certificate of the chairperson as prima facie evidence would make it difficult for a service provider to resist a debt claim without compelling evidence of error. No known published decisions of Western Australian courts specifically interpreting these regulations have been identified from the source. The absence of amendment history also suggests no judicial correction of an error or interpretation has prompted legislative change.

The most significant gotcha is the absence of any legislative cap on total charges. The ERA recovers its actual costs, and those costs are determined by the ERA itself. The circularity noted above means the service provider must pay whatever the ERA spends, and those costs then form part of the regulated revenue requirement. There is no independent check on the reasonableness of core function costs. The only transparency is the right to ask for an explanation and itemised account, but no right to appeal or to withhold payment. A service provider that disagrees with a charge must either pay and seek a refund through other processes (if any), or refuse to pay and defend a debt claim. In the latter case, the service provider faces the evidentiary advantage of the ERA’s certificate.

The interest rate is punitive. BBSW plus five percentage points is well above market rates for short term borrowing. A delay of even a few weeks can generate significant interest, and the rate is fixed at the start of the default period, so if rates rise later the ERA does not benefit, but if rates fall the service provider still pays the higher rate set on the day after the allowed period. The commercial interest rate regime can catch out an unwary service provider that assumes a standard commercial late payment rate.

The apportionment of specific charges when multiple service providers are liable may create disputes. The formula in regulation 6(2) distinguishes between cases where all liable providers operate covered networks listed in Schedule 1, and cases where some do not. Currently only one network is listed, so the first scenario is trivial. But if a new covered network is added to Schedule 1, the proportional apportionment by percentage may produce results that do not reflect the actual cost causation. The equal share division for providers not all listed is blunt and may penalise a larger provider.

The document fee cap of $100 seems low but it is indexed to ERA costs incurred in providing the document, so if the ERA incurs more than $100 the cap prevents full cost recovery. This could lead the ERA to be reluctant to prepare extensive documents on request, or to charge the maximum $100 regardless of actual cost. The exemption for the Coordinator of Energy and Director of Energy Safety is narrow; other government agencies or the public must pay.

There is no provision for refunds if the ERA overestimates costs and later has a surplus. The annual report disclosure provides visibility but no refund mechanism. If core function costs are lower than estimated for a quarter, the standing charge will be based on actual costs after the quarter, so overpayment should not occur. However, if the ERA’s assessment is incorrect, the service provider has no automatic right to a corrected assessment; it must rely on the request for explanation to identify errors.

The regulations refer to “chairman” while modern drafting uses “chairperson”. This is a minor language issue but may be seen as outdated. The term is used in the certificate provision. The certificate is signed by “the chairman” without reference to a deputy or acting chair, which could create a practical problem if the chair is absent.

The definition of “allowed period” includes “or such further period as the ERA may allow”. There are no criteria for when the ERA will allow a further period. This gives the ERA broad discretion, but also creates uncertainty for the service provider that may not know if an extension will be granted. The ERA could use this discretion to pressure payment.

Schedule 2 item 11 imposes specific charges for access dispute functions on the parties in equal shares. This means that even if a party is wholly successful, they must pay half the ERA’s costs. This is unusual in regulatory cost recovery and may discourage access applications. The equal share rule applies regardless of the complexity contributed by each party.

Given the single network currently listed, the standing charge burden falls entirely on one entity. If a new network is added in the future, the apportionment will be by percentage, which may be adjusted by amending Schedule 1. But until then, the incumbent network bears all core function costs, even if it does not benefit from all the ERA’s activities (such as work on a new network that has not yet been covered).

For the service provider of the sole covered network, compliance begins with recognising that standing charges are unavoidable and payable within 30 days of each quarterly assessment notice. The provider should maintain sufficient liquidity to meet these charges, which will vary each quarter depending on the ERA’s core function costs. It should request a written explanation of those costs after each notice to verify that the costs are genuinely incurred and are not recoverable through specific charges. If the provider believes costs are excessive, it may need to engage with the ERA informally, as there is no formal dispute process. The provider should also monitor the ERA’s annual report to see the total charges disclosed, which provides a check on aggregate amounts.

For specific charges, the provider must identify when the ERA performs a function listed in Schedule 2 that triggers liability. The provider should keep records of its dealings with the ERA (access arrangement submissions, applications, dispute notices) to anticipate charges. Upon receiving a notice of specific charge, the provider has 30 days to pay. It should immediately request an itemised account if not already provided, to ensure the costs are directly attributable and not overstated. If the charge is apportioned among multiple providers, the provider should verify the apportionment method: if all liable providers are covered network operators listed in Schedule 1, apportionment is by percentage; otherwise it is equal. Given the single network, most specific charges will fall entirely on the one provider.

The provider should also be aware that engaging in access disputes will trigger specific charges in equal shares with the other party. This cost may influence decisions to pursue or resist disputes. The provider should factor these charges into its access arrangement proposals.

Parties other than the service provider who may be liable under Schedule 2, such as applicants for exemption or persons proposing technical rules, should assess their potential exposure before initiating a process. The ERA has no obligation to advise of potential charges in advance; the notice comes after the function is performed. These parties should budget for possible charges.

For document requests, the requesting party should be prepared to pay up to $100 per document. The fee is not negotiable but capped. The ERA must calculate the fee according to its costs, but the recipient has no right to see that calculation unless they ask.

All liable persons should maintain accurate records of payments and notices, and should pay within the allowed period to avoid the penal interest rate. If a payment cannot be made on time, the person should request a further period from the ERA in writing, though the ERA is not obliged to grant it. The request should be made before the 30 day period expires.

The annual report disclosure is not a compliance obligation for the service provider but provides useful data for benchmarking. The provider can compare its charges year on year and, if multiple networks are listed, compare across networks.

Because the regulations have not been amended since 2012, the provider should cross check the Schedule 2 references against the current version of the ENA Code to ensure that the listed functions still exist and that no new functions have been added that the ERA might try to recover as core function costs rather than specific charges. If the Code has been amended, the provider may need to argue that certain costs are not core function costs because they relate to a specific function that could have been charged but was not listed. This is an ongoing risk.

In the event of a dispute over an assessment, the provider must pay first and then seek redress. Withholding payment triggers interest and debt recovery action. The only way to challenge the charge without immediate payment is to seek an injunction in court, which is costly and uncertain. Practical compliance is therefore to pay under protest, request explanations, and raise concerns through the ERA’s internal processes or through the Minister for Energy.