The ERA is an independent statutory authority established by the Parliament of Western Australia. Our purpose is to benefit the Western Australian community by promoting an efficient and customer focused economy.
We regulate energy, water and rail industries in Western Australia. The Treasurer can also ask us to conduct inquiries into significant economic matters on a range of issues not necessarily related to the regulation of utilities.
Our decision making processes are transparent and we are committed to engaging effectively with stakeholders. By maintaining an independent and impartial position, we are able to work in the best interests of the community.
The ERA is comprised of a Governing Body and a Secretariat.
The Governing Body is responsible for regulatory and inquiry functions required under the Economic Regulation Authority Act 2003.
We have a three member Governing Body:
- Ms Nicola Cusworth; our full time Chair on a five year term from 4 July 2016.
- Mr Greg Watkinson; our part-time Member on a five year term from 4 July 2017.
- Dr Ray Challen; our part time Member on a five year term from 1 August 2017.
The Secretariat, led by a Chief Executive Officer, provides advice and support to the Governing Body to assist in its decision-making, and is the initial point of contact for stakeholders in their day-to-day dealings with the ERA.
Following the appointment of our previous CEO Mr Greg Watkinson as a Member of the Governing Body, the position of CEO is currently vacant. Senior Officers of the ERA’s Secretariat are acting in the position on a rotational basis while we recruit a new CEO to lead us into the future.
Work Plan 2017/18
This work plan summarises the ERA’s activities in 2017/18 in the following areas:
Energy and Rail Access
We approve the terms and conditions, including prices, that Western Power and operators of regulated gas pipelines must offer to third parties seeking to use their regulated infrastructure.
We currently regulate access to the Dampier to Bunbury Natural Gas Pipeline, the Goldfields Gas Pipeline, the Mid-West and South-West Gas Distribution Systems and Western Power’s electricity network.
Our anticipated work in this area during 2017/18 is to:
- Assess proposed annual or quarterly tariff variations submitted by regulated gas pipeline operators.
- Review the rate of return guidelines for regulated gas pipeline operators.
- Comply with orders by the Australian Competition Tribunal and the Supreme Court of Western Australia on the merit review and judicial appeal for gas access arrangements finalised during 2015/16.
- Review Western Power’s access arrangement for 2017-2022.
- Assess any proposed amendments or applications for exemptions to the Technical Rules submitted by Western Power.
- Assess any proposals for major augmentations to the electricity network submitted by Western Power.
We approve the upper and lower cost limits that owners of railway infrastructure can recover from railway users. In addition, we review regulatory instruments that guide railway owners and users in negotiations for access to railways.
We regulate services provided by owners of the Perth urban rail network (Public Transport Authority), the freight rail system in the south-west of the State (Arc Infrastructure – formerly Brookfield Rail) and two railways running into Port Hedland (The Pilbara Infrastructure and Roy Hill Infrastructure).
During 2017/18 we will:
- Publish finalised regulatory instruments for Roy Hill Infrastructure.
- Review regulatory instruments for the Public Transport Authority, The Pilbara Infrastructure and Arc Infrastructure (formerly Brookfield Rail).
- Undertake a total and incremental cost determination for Roy Hill Infrastructure.
- Undertake the five yearly-review of the weighted average cost of capital methodology that applies to railways.
- Ensure railway owners comply with segregation obligations outlined in regulatory documents, such as protecting confidential information, avoiding conflicts of interest, ensuring fairness and maintaining separate accounts and records.
Undertake functions associated with negotiations or arbitrations between railway owners and users, if required.
Wholesale Electricity Market
We monitor the effectiveness of the Wholesale Electricity Market (WEM) in meeting the wholesale market objectives. If the WEM objectives are not met, consumers may ultimately pay more for electricity.
On 1 July 2016 new compliance and enforcement functions commenced and we now monitor participants’ compliance with the WEM rules, investigate potential breaches and undertake enforcement actions where appropriate.
On 4 April 2017 an independent Rule Change Panel commenced. We now have a function to provide an Executive Officer and secretariat services to this Panel.
During 2017/18, we will:
- Monitor the effectiveness of the WEM, including investigating and reporting market behaviour that could compromise its effectiveness.
- Make recommendations to improve the effectiveness of the WEM Rules in meeting Market Objectives in our annual report to the Minister.
- Monitor compliance with the WEM Rules, investigate potential breaches and take enforcement action where appropriate.
- Review, and report on, the effectiveness of the Electricity Generation and Retail Corporation Regulatory Scheme implemented as part of the merger arrangements for Verve Energy and Synergy and make recommendations to improve the effectiveness of the scheme.
- Approve the revised values for the energy price limits proposed by the Australian Energy Market Operator (AEMO) to determine the maximum price that can be offered in the Short Term Energy Market and Balancing Market.
- Approve the benchmark reserve capacity price that can be offered in a reserve capacity auction as proposed by AEMO.
- Determine the values for the margin peak and off-peak parameters used to calculate the payment to Synergy to provide spinning reserve ancillary services.
- Undertake a review of one of the five methodologies required under the wholesale electricity market for example the methodology for determining benchmark reserve capacity price and ancillary service requirements.
- Finalise an investigation into price-quantity offers submitted by Synergy in the Balancing Market.
In Western Australia, the retail gas market is contestable, which allows customers to choose their gas retailer if there is more than one provider in their area. The market is operated by the Australian Energy Market Operator (AEMO). We approve amendments to the Retail Market Scheme, which is designed to ensure the retail gas market operates in a manner that is open and competitive, efficient and fair to gas market participants and their customers.
During 2017/18, we will:
- Approve any proposed amendments to the Retail Market Scheme.
- Investigate breaches of the retail gas market rules referred by AEMO.
- Monitor gas participants' compliance with the Gas Services Information Procedures, investigate potential breaches, and take enforcement action where appropriate.
Utility Services Regulation
We administer the licensing scheme that allows entities to provide electricity, gas or water services to customers. Currently, there are 62 electricity licences, 10 gas licences and 20 water licences.
We monitor, and report on, the operation of the electricity, gas and water licensing schemes, licensees’ compliance with their licence conditions and, where necessary, take enforcement action. In addition we undertake a range of customer protection functions, which include approving energy standard form contracts, water financial hardship policies and providing support to the independent committees that are responsible for advising us on the codes that regulate the conduct of gas, electricity and water licensees.
During 2017/18 we will:
- Publish three annual reports on the performance of energy and water (drinking water, sewerage and irrigation) licensees to provide transparency on the licensees’ performance against a range of non-financial performance measures.
- Collect and validate performance data from eligible licensees for the national report on urban water services (water supply and sewerage) that is published by the Bureau of Meteorology, on behalf of the States and Territories, operating under the National Water Initiative Agreement.
- Monitor the energy and water licensees’ compliance with their licence conditions through periodic performance audits and, for the infrastructure licensees, asset management system reviews. There are 30 audits and reviews programmed for this financial year.
- Monitor the actions taken by licensees to rectify any breaches in the conditions of their licence identified in the audits and asset management system reviews, by requiring licensees to provide regular post-audit and post-review progress reports.
- Publish up-to-date guidelines and handbooks to assist licensees and auditors with understanding the licensees’ regulatory and reporting obligations.
- Conduct a review of the Code of Conduct for the Supply of Electricity to Small Use Customers. Any amendments or replacements of the Code will occur in consultation with Electricity Code Consultative Committee.
- Complete the review of the Water Services Code of Conduct (Customer Service Standards) 2013. Any amendments or replacements of the Code will occur in consultation with the Water Code Consultative Committee.
- Process any applications for new, or amendments to existing, electricity, gas or water licences.
- Approve any new or amended standard form contracts for electricity or gas licensees and approve any new or amended financial hardship policies for water licensees.
- Review the audit guidelines that were last updated in 2014.
- Support the Economic Regulation Authority Consumer Consultative Committee (ERACCC).
We undertake inquiries on economic issues that have been referred to us by the Treasurer. These do not have to relate to the regulation of utilities. Our recommendations are provided in a report that is tabled in Parliament.
In 2017/18, we will undertake any inquiries referred to us by the Treasurer and complete the review of the Emergency Services Levy and the efficient costs and tariffs of the Water Corporation, Aqwest and Busselton Water.