Disaggregation of the former vertically integrated Hydro-Electric Corporation (HEC) created three entities focused on the core business activities of generation, transmission and distribution/retail.
The articulation of the responsibilities of each party is found in the legislation and accompanying regulations, but also in a document published by the Regulator, the Tasmanian Electricity Code (Code). The Code provides, inter alia, a statement of the relevant technical standards of the electricity supply industry, an access regime to facilitate new entry, guidance on price setting methodologies, a means of resolving disputes that may arise and establishes advisory committees to assist the Regulator. There has been on-going development and refinement of the Code to ensure that it best meets the needs of the Tasmanian electricity supply industry and customers.
In administration of the Electricity Supply Industry Act 1995 (ESI Act), the Code and other related regulatory instruments, the Regulator's objectives include to:
- promote efficiency and competition in the electricity supply industry;
- establish and maintain a safe and efficient system of electricity generation, transmission, distribution and supply;
- establish and enforce proper standards of safety, security, reliability and quality in the electricity supply industry; and
- protect the interests of consumers of electricity.
The functions of the Regulator are to:
- administer the licensing system for electricity entities;
- monitor and regulate technical standards in the electricity supply industry;
- perform and exercise the functions and powers of Jurisdictional Regulator in respect of Tasmania under the National Electricity Rules;
- issue, maintain and enforce the Code; and
- carry out other functions assigned to the Regulator under the ESI Act, the regulations and the Code.
The Regulator's functions under electricity legislation reflect the fact that electricity entities have significant market power in the Tasmanian electricity markets. Most customers require the protection of regulated tariffs in respect of both price and conditions of supply as customers cannot negotiate on an equal footing with the service providers. Some very large customers can negotiate successfully even in a monopoly industry structure because the market for their capital investment is national or international.
While the Regulator has certain statutory responsibilities, a major share of the responsibility for implementation and further development of the regulatory scheme rests with the entities. The approach taken in all licences has been "light handed". OTTER has not sought to intervene in the day-to-day management of the entities. Rather, OTTER seeks to ensure that all stakeholders are provided with sufficient information to properly assess the performance of the entities in meeting their regulatory obligations. The primary emphasis is on transparency and disclosure, with investigation and sanction reserved to be used when and if appropriate.