Electricity Industry (Arbitrator and Board Funding) Regulations 2009

The central concept is the standing charge. It is a quarterly charge payable by the service provider of a covered network listed in Schedule 1. The formula is S = C × P × (DQ / DP), where S is the standing charge, C is the core function costs for the quarter, P is the percentage specified for the network in Schedule 1, DQ is the number of days in the quarter, and DP is the number of days in the quarter that the network was covered and the person was the service provider. The formula prorates the charge for partial quarters. Currently only one network is listed with P=100%, so Western Power pays the full core function costs for the quarter (subject to the day adjustment). Core function costs are costs incurred by the arbitrator and Board performing their functions under the Act and Part 6 of the Energy Arbitration and Review Act 1998, but only those that cannot be recovered under regulation 6 (cost orders for proceedings) and are not incurred in relation to hearing and determining a Pilbara matter. This means that if the Board recovers costs from a party for a proceeding, those costs are deducted from the pool of costs that would otherwise be funded by standing charges. So the standing charge is a residual, not a primary charging mechanism for proceeding costs.

A Pilbara matter is a matter arising under the Act in relation to a Pilbara network. Pilbara networks are not listed in Schedule 1, so they are not subject to standing charges. Instead, they have their own cost recovery regime under regulations 7A and 7B. Regulation 7A allows the Board to fix an amount for the cost and expenses of hearing and determining a Pilbara matter in a proceeding, including remuneration and facility costs, and to determine which party is liable and the manner and time for payment. If a party does not pay within the time fixed, interest accrues at the prescribed rate. Regulation 7B allows the arbitrator to fix a general quarterly amount representing the Board's cost and expenses for all Pilbara matters (excluding amounts already fixed under regulation 7A) and issue a notice to the Regional Power Corporation. The Corporation must pay within 30 days, and interest applies on late payment. The prescribed rate is defined as an interest rate 5 percentage points higher than the one-month BBSW rate at 10am Sydney time on the first day after the allowed period (or a comparable index if BBSW is unavailable). This is a relatively high penalty rate designed to encourage prompt payment.

The term proceedings includes proceedings that are commenced but discontinued or otherwise not brought to finality. So even if a party initiates a proceeding and then withdraws, the Board may still fix costs for that proceeding. This creates a disincentive to commence frivolous or weak matters. Determined costs are amounts the Board determines under regulation 6 to be payable by a party to proceedings (non-Pilbara). The Board has broad discretion to decide which party pays, and the manner and time for payment. There is no appeal mechanism specified in the regulations, leaving parties to potentially challenge cost orders through judicial review or other common law avenues. The allowed period is 30 days from the date of the assessment notice (or such further period as the arbitrator allows). The assessment notice must specify the amount of each charge, the total amount payable, the core function costs used, and the issue date.

The primary payer of standing charges is Western Power, as the service provider of the Western Power Network, the only network listed in Schedule 1. This is a fixed regulatory cost for Western Power that will be passed through to electricity consumers in the South West Interconnected System (SWIS) through network tariffs. The effect is that all SWIS electricity users indirectly fund the arbitrator and Board, regardless of whether they ever use the dispute resolution functions. For customers, this is a diffuse cost embedded in network charges, whereas the benefit of having a regulator with stable funding is a public good. The standing charge is not competitively neutral if there were multiple covered networks, but currently there is only one, so the entire funding burden falls on a single entity.

The second group affected are parties to proceedings before the Board. These may include network operators (such as Western Power for non-Pilbara matters), electricity retailers, generators, and possibly large customers or developers seeking access to networks. The Board may order any party to pay the costs of a proceeding. This creates a direct financial risk for any entity that initiates or responds to a dispute. The cost could be substantial, as it includes the Board's remuneration and facility costs. This may deter smaller participants from bringing legitimate disputes if they fear a large costs order. On the other hand, it encourages parties to conduct proceedings efficiently and to settle early. The regulations do not specify criteria for awarding costs, so the Board has broad discretion. This uncertainty raises compliance and litigation risk.

The Regional Power Corporation (Horizon Power) is directly affected by regulation 7B, which allows the arbitrator to impose a general quarterly charge for the Board's cost and expenses in Pilbara matters not already allocated to specific parties. This is a levy on Horizon Power for the entire cost of the Board's Pilbara workload, minus amounts recovered from parties under regulation 7A. Horizon Power is a government-owned corporation, so this charge is ultimately funded by taxpayers and Pilbara electricity customers. The charge is not tied to any particular dispute but covers all Pilbara proceedings in the quarter. This gives Horizon Power a strong incentive to encourage efficient handling of Pilbara matters and to limit the number of proceedings. However, it also means that if a third party (such as a miner or generator) initiates a dispute, Horizon Power may bear the general cost even if it is not a party or if it successfully defends. The cost allocation between parties under regulation 7A can mitigate that to some extent, but the general charge under 7B covers residual costs.

The arbitrator and the Board are affected as the recipients of the funding. The regulations ensure they have a stable revenue stream independent of annual appropriations, which may enhance their operational independence. However, the standing charge is based on actual core function costs incurred, so there is no incentive for cost control unless the Board exercises its power to recover costs from parties under regulation 6, which reduces the core function costs pool. The annual reporting requirement under regulation 8 provides transparency but also public scrutiny of cost levels.

The arbitrator has a duty to assess standing charges as soon as practicable after each quarter and to give a notice of assessment to the service provider. The notice must specify the amount of each charge, the total amount payable, the core function costs used in the calculation, and the issue date. The arbitrator also has the power to allow a further period for payment beyond the default 30 days. This discretion can provide relief if the service provider faces cash flow issues, but it is not automatic.

The service provider (currently Western Power) has the duty to pay the assessment amount within 30 days after the issue date specified in the notice. If it does not pay in full within the allowed period, it must pay interest on the outstanding amount at the prescribed rate calculated daily. The service provider has no express right to dispute the assessment within the regulations; any challenge would likely need to be brought through judicial review or under the principal Act. This lack of an internal review mechanism increases legal risk.

The Board has a power, not a duty, to fix costs for particular proceedings under regulation 6 (non-Pilbara) and regulation 7A (Pilbara). It may determine which party is liable for the whole or part of the amount fixed, and the manner and time for payment. The Board is not required to fix costs in every case; it has discretion. This can be used to penalise parties who act unreasonably or to encourage settlement. Parties have no express right to be heard before the Board fixes costs, though the Board would likely follow procedural fairness under the Act and general law.

Parties to proceedings have the duty to pay any determined costs in the manner and time determined by the Board. If they fail to pay, they owe interest at the prescribed rate from the due date. There is no express provision for the Board to remit interest; the regulations make it mandatory if payment is late.

The Regional Power Corporation has the duty to pay any amount specified in a notice under regulation 7B(3) within 30 days after the notice date. Again, interest applies on late payment. The Corporation has no express right to challenge the amount, though it could potentially seek reasons or judicial review.

The arbitrator has the right to recover any unpaid assessment amount, interest, or determined costs as a debt due in a court of competent jurisdiction. A certificate signed by the arbitrator specifying the amounts and the liable person is sufficient evidence of those matters, without proof of the arbitrator's appointment or signature. This is a strong evidentiary provision that lowers the bar for recovery proceedings.

The annual report requirement under regulation 8 imposes a duty on the arbitrator to include details of total standing charges per person, total determined costs, and total amounts fixed under regulations 7A(1) and 7B(2). This is a transparency obligation that allows the public and stakeholders to see the funding flows.

The only monetary penalty for non-payment is interest at the prescribed rate, which is BBSW plus 5 percentage points. This is a significant penalty in a low interest rate environment but may be less severe when BBSW is low. For example, if BBSW is 2%, the prescribed rate is 7% per annum, calculated daily. The interest applies from the day after the allowed period ends (or from the due date for determined costs and Pilbara charges). There are no criminal penalties or administrative fines; the enforcement mechanism is entirely civil. This is consistent with the regulatory nature of the charges.

The primary enforcement tool is a court action for debt recovery. The arbitrator may sue the liable person in a court of competent jurisdiction to recover the unpaid amount and any accrued interest. The regulations do not specify which court; presumably it could be the Magistrates Court or the District Court depending on the amount. The arbitrator is given a procedural advantage: a certificate signed by the arbitrator specifying the amount as being an assessment amount or determined costs, interest, the liable person, and that the amounts are unpaid, is sufficient evidence of those matters without proof of the arbitrator's appointment or signature. This shifts the evidentiary burden to the defendant, who would have to rebut the certificate. This makes debt recovery litigation cheaper and faster for the arbitrator.

The interest continues to accrue daily on the outstanding amount even after court proceedings commence, until the debt is paid. There is no provision for the arbitrator to waive interest or accept payment in instalments, though the arbitrator could presumably agree to a payment plan under its general administrative powers.

For determined costs under regulation 6, if a party does not pay in the manner and time determined by the Board, the Board does not appear to have a direct power to enforce; instead the arbitrator can recover the unpaid determined costs as a debt due. The same applies to amounts under regulation 7A (Pilbara costs fixed by the Board) and regulation 7B (general Pilbara charge fixed by the arbitrator). In all cases, recovery is by the arbitrator, not the Board. This centralises enforcement.

There is no provision for penalising late payment of the general Pilbara charge by the Regional Power Corporation; it simply incurs interest. Since Horizon Power is a government corporation, the effectiveness of court recovery may be limited, but the financial interest liability is still enforceable.

The regulations are made under the Electricity Industry Act 2004. They rely on definitions from the Act and the Code (the WA Electricity Industry Code as defined in section 103 of the Act). The term "covered network" is defined in the Code, and the regulations apply only to networks that are both covered and listed in Schedule 1. This cross-reference means that changes to the Code's definition of covered network could expand or contract the standing charge base without amending these regulations, except for the Schedule 1 listing. The regulations also reference Part 6 of the Energy Arbitration and Review Act 1998, which sets out the functions of the Electricity Industry Arbitrator and the Board. The costs of performing those functions are what the regulations fund.

The Financial Management Act 2006 section 61 requires the arbitrator to submit an annual report, and these regulations specify additional content that must be included: total standing charges per person, total determined costs, and total amounts under regulations 7A and 7B. This imposes a reporting obligation that goes beyond the standard financial reporting requirements.

The Electricity Corporations Act 2005 section 4(1)(d) establishes the Regional Power Corporation (Horizon Power). Regulation 7B refers to that definition and imposes a payment obligation on Horizon Power for Pilbara general charges. This interaction means that the funding regime for Pilbara matters is tied to a single state-owned corporation, rather than allocated across multiple network operators as in the SWIS.

The regulations do not interact with the Trade Practices Act 1974 (Cth) or the Competition and Consumer Act 2010 (Cth) directly, but the proceedings before the Board may involve access disputes under Part IIIA of the Commonwealth Act or the National Electricity Law. The cost recovery provisions could interact with those regimes if a party seeks to recover regulatory costs as part of access charges. However, that would be determined under the relevant access regime, not these regulations.

There is no interaction with state taxation laws; the standing charges are not taxes but regulatory charges under the Act. They are likely deductible as business expenses for the service provider.

The regulations explicitly exclude Pilbara matters from the general cost recovery under regulation 6 (by virtue of regulation 1A inserted by the 2021 amendment). This creates a demarcation: non-Pilbara proceeding costs are dealt with under regulation 6, while Pilbara proceeding costs are dealt with under regulations 7A and 7B. The core function costs definition also excludes Pilbara-related costs, so Pilbara costs do not flow into the standing charge calculation for Western Power. This interaction ensures that the costs of regulating Pilbara networks are recovered from parties and/or Horizon Power, not from SWIS consumers via Western Power.

The regulations were originally made in 2009 and published on 31 December 2009, with commencement of the operative provisions on 1 January 2010. The original regulations established the standing charge regime with only Western Power Network listed in Schedule 1 at 100%. The original regulation 6 dealt with the Board's power to fix costs for proceedings, and regulation 7 with recovery of unpaid amounts. Regulation 8 required the annual report to include total standing charges and total determined costs.

The only amendment to date was made by the Electricity Industry (Pilbara Networks) Regulations 2021 Part 9 (SL 2021/95), which commenced on 19 June 2021. This was a significant amendment that inserted new regulations 7A and 7B, and amended regulations 3, 6, and 8. The amendment added definitions for "Pilbara matter" and "Regional Power Corporation" in regulation 3(1). Regulation 6 was amended to exclude Pilbara matters from its operation, making clear that the Board's general cost fixing power does not apply to Pilbara proceedings. Regulation 8 was amended to require the annual report to also include total amounts fixed under new regulations 7A(1) and 7B(2).

The effect of the 2021 amendment was to create a separate funding and cost recovery regime for Pilbara networks. Previously, it appears that Pilbara matters would have fallen under the general regime, but the amendment carved them out and created bespoke cost allocation mechanisms. The new regulation 7A allows the Board to fix costs for a specific Pilbara proceeding and allocate liability to parties, while regulation 7B allows the arbitrator to fix a quarterly charge on Horizon Power for residual Pilbara costs. This structure recognises that Pilbara networks are not covered networks under the Code (or at least not listed in Schedule 1) and that Horizon Power is the main network operator in the Pilbara region. The amendment likely responded to the increasing number of Pilbara matters related to mining and industrial users seeking network access.

There have been no other amendments. The Schedule 1 has not been amended to add any other networks, so Western Power remains the sole standing charge payer.

The source text does not disclose any litigation history. No case citations appear in the regulations or the compilation table. It is possible that there have been disputes over the assessment of standing charges or cost orders, but they have not been recorded in the regulations themselves. Given the regulations are relatively obscure and the amounts involved may be substantial but not headline-grabbing, any litigation would likely be in the Western Australian courts and not widely reported. The evidentiary certificate provision in regulation 7(2) suggests the drafters anticipated debt recovery proceedings, so they intentionally lowered the evidentiary burden for the arbitrator. That indicates a practical expectation that recovery actions might be necessary.

One could speculate that a party might challenge a Board's cost order under regulation 6 or regulation 7A on the grounds of procedural fairness, or that Western Power might dispute an assessment of core function costs. However, without specific cases, this remains speculative. The regulations themselves provide no internal review or appeal mechanism, so any challenge would need to rely on the general law of judicial review or on the powers of the arbitrator or Board under the principal Act. The lack of an internal review process increases the likelihood of litigation if disputes arise, as there is no cheap administrative remedy.

Several aspects of these regulations can trip up the unwary. First, the standing charge is calculated based on "core function costs" for the quarter, but those costs exclude amounts recovered under regulation 6. This creates an interaction: if the Board is aggressive in recovering costs from parties in proceedings, it reduces the standing charge burden on Western Power. Conversely, if the Board fails to recover costs, Western Power absorbs them. Western Power therefore has an interest in the Board's cost recovery practices, even though it is not a party to most proceedings. There is no mechanism for Western Power to challenge the Board's decisions not to fix costs in a particular case.

Second, the definition of "proceedings" includes those that are discontinued or not brought to finality. A party that initiates a proceeding and then withdraws may still face a costs order for the Board's costs. This is a significant disincentive to commence proceedings without careful preparation. The Board could theoretically fix costs even if the proceeding is withdrawn on the first day, covering the cost of constituting the Board and any preliminary steps.

Third, the prescribed interest rate is BBSW plus 5 percentage points. In times of high BBSW, this could be a very high rate. For example, if BBSW rises to 5%, the prescribed rate would be 10% per annum. The interest is calculated daily, so even short delays can be costly. There is no provision for the arbitrator to reduce or waive interest.

Fourth, the arbitrator's certificate is sufficient evidence of the debt. This means the liable party bears the burden of disproving the debt in court. If the arbitrator makes an error in the assessment, the party must bring evidence to contest it, rather than the arbitrator having to prove the debt. This procedural advantage may encourage the arbitrator to be less careful in assessments, knowing that the onus shifts.

Fifth, the general Pilbara charge under regulation 7B is payable by the Regional Power Corporation even if it was not a party to the Pilbara proceedings that generated the costs. Horizon Power must pay the Board's residual Pilbara costs, regardless of who initiated the disputes. This creates a perverse incentive: if a third party (e.g., a miner) brings a proceeding that is ultimately dismissed, Horizon Power may still have to pay a share of the general costs under regulation 7B. The only way to avoid this is for the Board to fix costs against the third party under regulation 7A, but that is discretionary.

Sixth, the Schedule 1 only lists the Western Power Network. If a new covered network were created in WA (for example, a new network in a different region), it would not automatically be subject to standing charges unless the regulations are amended to add it. This gives the government control over who bears the regulatory funding burden. Conversely, if a network ceases to be covered, the standing charge liability stops.

Seventh, the standing charge is payable for each quarter regardless of whether the arbitrator or Board actually performed any functions in that quarter. The "core function costs" definition could include costs that are effectively fixed, such as salaries and rent, even if no proceedings are heard. So Western Power pays for the capacity to regulate, not just for actual use.

For the service provider (Western Power), compliance is straightforward: ensure payment of the standing charge within 30 days of the assessment notice. The assessment notice will be issued by the arbitrator as soon as practicable after the quarter ends. The service provider should verify the calculation: the core function costs amount should match its own records if it has visibility of the arbitrator's costs. If the amount seems incorrect, the service provider should request further details from the arbitrator. The regulations do not provide a formal dispute process, so any disagreement may need to be resolved informally or through judicial review. To avoid interest, payment must be made within the allowed period (30 days from the issue date), or within any further period allowed by the arbitrator. The service provider should also ensure that the number of days used in the DP calculation is correct, particularly at the start or end of a quarter when the network status may change.

For parties to proceedings before the Board (non-Pilbara), compliance requires paying any determined costs in the manner and time determined by the Board. The Board will issue a determination specifying the amount, the liable party, and the payment terms. If a party believes the determination is wrong, it should seek reasons from the Board and consider legal advice on whether to challenge the decision. There is no internal appeal, so the options are limited. Paying under protest may be prudent to avoid interest accrual, while preserving rights to seek recovery later if successful in court.

For parties to Pilbara proceedings, the same approach applies under regulation 7A. The Board may determine costs against a party. The party must pay within the time fixed. Late payment attracts interest at the prescribed rate.

For the Regional Power Corporation (Horizon Power), compliance requires monitoring for notices under regulation 7B. The arbitrator may issue a notice at the end of any quarter specifying an amount representing the Board's cost and expenses for Pilbara matters not already recovered under regulation 7A. The Corporation must pay within 30 days of the notice date. Again, late payment bears interest. The Corporation should maintain records of Pilbara matters and may wish to discuss with the arbitrator the methodology used to calculate the amount to ensure it does not include costs that should have been recovered from specific parties.

General compliance: all entities should keep records of payment dates and amounts. For recoveries under regulations 5, 6, 7A, and 7B, the arbitrator can issue a certificate that is conclusive evidence of the debt for court proceedings. To avoid court action, pay on time. If a dispute arises, the liable party should seek to engage with the arbitrator early, as there is no formal dispute resolution mechanism in the regulations. The annual report under regulation 8 will disclose the amounts, so a party can see how its payments compare to others. If there is a pattern of inconsistent cost recovery, that could form the basis of a challenge. Finally, any entity that regularly appears before the Board should budget for the possibility of cost orders, and consider settling proceedings early to minimise costs. The regulations give the Board broad discretion, so proactive management of disputes is essential.