Div 1AWholesale electricity markets—AER monitoring and reporting functions

Division 1A—Wholesale electricity markets—AER monitoring and reporting functions 18A—Definitions effective competition—see section 18B; electricity contract means an agreement, entered into by a Registered participant, however described and whether coming into existence before or after the commencement of this section, that relates to a wholesale electricity market and includes an agreement— (a) to supply electricity; or (b) to purchase electricity; or (c) for the transmission, distribution or storage of electricity; or (d) relating to fuel and other inputs used in the generation of electricity; or (e) relating to emissions produced or avoided in the generation of electricity; or (f) to supply a wholesale demand response service; financial risk management product means a contract or other arrangement, entered into by a Registered participant, to manage financial risk including, without limitation, risks associated with the following: (a) price volatility in a wholesale electricity market; (b) volatility in supply and demand in a wholesale electricity market; (c) volatility in the price of fuels and other inputs used in the generation of electricity; monitored market means— (a) a wholesale electricity market; and (b) a market for financial risk management products; and (c) a market prescribed by the Regulations; relevant agreement means— (a) an electricity contract; and (b) a financial risk management product. 18B—Meaning of effective competition For the purposes of this Division, the AER must, in assessing whether there is effective competition within a monitored market, have regard to— (a) whether there are active competitors in the market and whether those competitors hold a reasonably sustainable position in the market (or whether there is merely the threat of competition in the market); and (b) whether prices are determined on a long term basis by underlying costs rather than the existence of market power, even though a particular competitor may hold a substantial degree of market power from time to time; and (c) whether barriers to entry into the market are sufficiently low so that a substantial degree of market power may only be held by a particular competitor on a temporary basis; and (d) whether there is independent rivalry in all dimensions of the price, product or service offered in the market; and (e) any other matters that the AER considers relevant. 18C—AER wholesale market monitoring and reporting functions (1) The AER wholesale market monitoring functions are as follows: (a) to, in accordance with this Law and the Rules, regularly and systematically monitor and review the performance of monitored markets; (b) in connection with paragraph (a), to identify and analyse whether, in relation to a particular monitored market— (i) there is effective competition within the market; and (ii) there are features of the market that may be detrimental to effective competition within the market; and (iii) there are features of the market that may be impacting detrimentally on the efficient functioning of the market (and, if so, to assess the extent of the inefficiency); and (iv) there are features of the market that may be impacting detrimentally on the achievement of the national electricity objective; (c) other monitoring or analysing functions, conferred on the AER by the Rules, relating to the following matters within a monitored market: (i) offers; (ii) prices, including forecast and actual prices and bidding. (2) The AER wholesale market reporting functions are as follows: (a) to prepare, at least once every 2 years, a report on the results of the performance of the AER wholesale market monitoring functions; (b) to provide, as the AER thinks fit, advice on the results of the performance of the AER wholesale market monitoring functions to the MCE, including advice as to— (i) the AER's opinion (and reasons for the opinion) on whether those results identify, in relation to a monitored market, features of the market (whether systemic or otherwise) that— (A) may be detrimental to effective competition within the market; or (B) may be impacting detrimentally on the efficient functioning of the market, such that a legislative, regulatory or other response is required; and (ii) any limitations that the AER considers may restrict its ability to communicate with relevant persons about the results of the performance of the AER wholesale market monitoring functions; (c) other reporting requirements that relate to the AER wholesale market monitoring functions conferred on the AER by the Rules. (3) A report prepared under subsection (2)(a) must, in relation to a monitored market monitored during the period to which the report relates (which must be a period of at least 5 years), contain a discussion and analysis of— (a) the results of the performance of the AER wholesale market monitoring functions for the relevant period; and (b) features of the market that impact detrimentally on the efficient functioning of the market and the achievement of the national electricity objective, including (but not limited to)— (i) the presence of significant barriers to entry; or (ii) any other features of the industry structure that give rise to concerns that there may not be effective competition within the market; and (c) inefficiencies in the market, their causes and whether conditions in the market are such that the inefficiencies are likely to impact detrimentally in the long term on the efficient functioning of the market; and (d) the monitoring methodology applied and the results of indicators, tests and calculations performed; and (e) other matters of a long term nature relevant to effective competition within the market, including, for example, observations relating to planned increases in interconnector capacity and trends in demand for electricity and in the uptake of alternative sources of energy. (4) The AER must publish a report prepared under subsection (2)(a) on its website. (5) Before publishing a report prepared under subsection (2)(a) the AER must consult with relevant stakeholders. 18D—Information to be treated as confidential Information obtained by the AER under this Division is taken to have been given to the AER in confidence, whether or not a claim of confidentiality is made. 18E—Redaction of information (1) When obtaining a relevant agreement or information about a relevant agreement for the purposes of a function under this Division, the AER must consider a request to omit information that would identify a party to the agreement who is not a Registered participant. (2) The AER must grant the request unless satisfied that omitting the information is likely to materially affect the AER’s ability to undertake 1 or more functions under this Division.