Review of Queensland Energy Legislation

AU Energy Compliance

In mid-2018, the Queensland Government carried out an initial consultation on a Review of Queensland Energy Legislation (the Review). The Review covers the operation of the Electricity Act 1994, the Gas Supply Act 2003, the Energy and Water Ombudsman Act 2006 and the Liquid Fuel Supply Act 1984. Two further documents have now been released for consultation as part of the Review. The first options paper summarises ‘regulatory impact statements’ for a range of proposed changes while a second paper goes into more significant detail with respect to those changes.

In this article we summarise the areas of proposed change, focusing on those areas that will impact on authorised retailers and/or embedded networks in Queensland.

By Dr Drew Donnelly, Compliance Quarter

Rationale for the Review

The overarching motivation for the Review is to deal with the duplication and perceived lack of alignment between Queensland state energy laws and regulations and laws and regulations that are applied national/across states and territories such as the National Electricity Law. It also considers whether the existing laws are well-calibrated to deal with new forms of energy generation and distribution. The Review does not consider the operation of the National Energy Retail Law/National Energy Retail Rules in Queensland as they are the subject of a separate review.

General Changes

The changes described below are general recommendations and options for change:

  • Update of the purpose sections of Queensland energy laws to align with the purposes of national laws;
  • Removal of duplication in demand management and energy efficiency in state/territory and national laws, while maintaining demand management reporting for standalone power systems (e.g. micro-grids);
  • Interaction between state and national laws. It is recommended that definitions across both be made more consistent. In addition, work will be carried out to support the operation of the Distributed Energy Resource (DER) Register at the state level;
  • Licensing. It is proposed that there be changes to remove duplication to authorisation and exemption processes. Standalone power systems would no longer have a blanket exemption from distribution authorisation. It is recommended that electricity and gas distribution licensing be preserved, but further aligned with national arrangements;
  • Technical requirements. Currently there are restrictions on distributors providing services via stand-alone power systems (e,g, microgrids). There may also be a need for new technical rules to help deal with the sensitivity of isolated networks to solar installations as well as clearer rules about battery installations;
  • Modernise the regional feed-in tariff, including allowing for exporting form a battery systems.
  • Ombudsman Framework. It is recommended that the Energy and Water Ombudsman Queensland (EWOQ) be retained as a statutory entity, but that it be given greater flexibility. The Ombudsman would have increased flexibility to adjust scope of complaints and cost recovery arrangements, as well as stronger review powers.
  • Complaints processes. Currently complaints by public entities are overseen by both the Department of Natural Resources, Mines and Energy (DNRME) and the Queensland Competition Authority (QCA). It is recommended that this role be assigned entirely to the QCA.
  • Modernising emergency powers. Changes to the Electricity Act 1994 are recommended to replace the rationing order provisions with powers for Minister to declare an electricity supply emergency and make emergency directions. The Electricity Act 1994 and the Liquid Fuel Supply Act 1984 would be amended to include information request powers to support emergency management planning.
  • Offences and Enforcement. Currently enforcement powers are split between ‘the Regulator’(Chief Executive of DNRME) and the Queensland Competition Authority (QCA). Feedback is sought on whether the administrative and enforcement functions should be completely separated.

Changes with specific impact on retailers, embedded networks or exempt sellers

The changes proposed below are of particular importance to authorised energy retailers, exempt sellers or anyone who owns, operates, controls or provides services to embedded electricity or gas networks.

  • Powers of entry/access. It is proposed that there be new/enhanced rights of access in embedded networks to allow works for operation, maintenance and repair to support system safety and reliability;
  • Access to Ombudsman. Following other National Energy Customer Framework jurisdictions, it is recommended that small customers in embedded networks have a right of complaint to EWOQ. It is also recommended there be no annual membership fee for ‘exempt sellers’. It is proposed, rather, that that fees for access to the ombudsman be based on a sliding scale that relates to the number of customers the embedded network ‘exempt seller’ has. This option is seen as going partway to covering the costs associated with an Ombudsman investigation while acknowledging the exempt seller’s ability to pay. It is also being recommended that the fee scheme be deferred for 12 months;
  • Customer protections. At the moment there are restrictions on accessing the energy concessions scheme as concessions are administered by retailers. It is proposed that this be altered so that all customers of exempt sellers have direct access to concessions (including those in standalone power systems/microgrids who currently have no access to the scheme).

For more information see https://www.dnrme.qld.gov.au/energy/initiatives/review-energy-legislation. If you wish to make a submission, consultation closes on 31 January 2020.

Electricity charges in lease agreements: competing interpretations

Electricity charges in lease agreements: competing interpretations

Consumer, NZ Energy Compliance

A recent judgment handed down by the High Court of New Zealand highlights the need for exercising extreme care when drafting and reviewing lease agreements. Volumex Nominees Limited V The Attorney-General [2018] NZHC 647 concerned an agreement between landlord and tenant in a seven-story building in New Plymouth. The dispute was about the amount of electricity charges to be paid by the tenant. We take a look at electricity charges in lease agreements.

Electricity charges lease agreements

Photo by chuttersnap on Unsplash

By Alex Silcock, Compliance Quarter

Electricity charges in lease agreements – Background:

The case was brought before the court in an application for summary dismissal. Associate Judge Johnston, at the beginning of his reasons, noted that ‘at the heart of this case is a humble comma’. The particular clause that provided for the payment of electricity charges was not in dispute. Rather, each party sought to rely on a competing interpretation of the relevant clause.

The landlord and the tenant agreed that the latter would pay “… all charges payable in respect of the Premises for telephone, gas, electricity, and any other Tenant consumables … supplied to and actually consumed on the Premises”.

The landlord submitted that this clause provided that the tenant was to pay for all electricity charges ‘in respect of the Premises’. While the tenant contended that payment was only required for charges that were both ‘in respect of the Premises’ and ‘supplied to and actually consumed on the Premises’.

This distinction was material, as the tenant’s bill included charges for consumption by the building’s heating, ventilation and air-conditioning plant (HVAC plant). The primary HVAC plant is on the roof of the building and therefore excluded from the ‘Premises’ as defined in the lease.

Electricity charges in lease agreements – Competing interpretations:

Landlord’s interpretation: There are two distinct parts to the above clause, separated by an Oxford comma. In the first part, the tenant is required to pay for telephone, gas and electricity in respect of the premises (including the costs of running the HVAC plant on the roof). The second part begins after the comma following ‘electricity’. This part relates only to ‘other Tenant consumables’, not telephone, gas and electricity. Therefore, the landlord contends that the tenant agreed to be charged for ‘other Tenant consumables … actually consumed on the Premises’, but for all electricity charges, in respect of the premises, whether consumed on the premises or not.

Tenant’s interpretation: The entirety of the clause must be read as a whole, and when read as a whole, there is a clear and unambiguous construction of the clause. There is no distinction made between electricity, telephone and gas on one hand, and ‘other Tenant consumables’ on the other. Therefore, for the tenant to be responsible for any of the above charges, they must be both ‘in respect of the Premises’ and ‘supplied to and actually consumed on the premises’.

Electricity charges in lease agreements – Conclusion:

The court preferred the construction as argued by the tenant and found that the plaintiff had not discharged the onus of establishing that the defendant had no defence. Therefore, the application for summary judgment was dismissed and it is likely that the matter will go to trial.

This matter should be a lesson to lawyers, landlords and tenants alike, to ensure that lease agreements are drafted clearly and accurately reflect the intention of the parties. If you are involved in an energy dispute or would like your contracts reviewed, please contact one of the experienced lawyers at Compliance Quarter or Law Quarter.