STATEMENT OF CORPORATE INTENT
2000-01
July 2000
National Electricity Code Administrator Limited
ACN 073 942 775
Contents
Introduction
3
Mission
4
Review programme
Vision
Review programme in outline
Review of the scope for integrating the energy market and
Network services
Network and distributed resources issues
End-user advocacy
Review of technical standards
Demand-side participation
Review of the Code change process
Consultation with stakeholders
Feedback and post-review evaluations
Resources and expertise
5
5
5
6
7
8
8
9
10
11
11
11
Surveillance, monitoring and enforcement
Surveillance and monitoring programme
Compliance monitoring programme
12
12
13
Other core activities
14
Key challenges
15
Critical success factors and key performance indicators
16
Beyond 2000-01
Assessment of the operation of the Code
Code simplification
Continuing core functions
21
21
22
22
Budget
23
National Electricity Tribunal
Budget
Reporting
28
28
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2
Introduction
This Statement of Corporate Intent sets out:
 our mission, and the commitments and aspirations we embrace in order to deliver that
mission;
 our vision for the future of the market;
 proposals for delivering a coordinated review programme and our market surveillance,
monitoring, enforcement and other core functions;
 the critical success factors and the specific key performance indicators against which
we invite and expect our stakeholders to judge us;
 our plans beyond 2000-01; and
 the budget, which represents a reduction of some 10 per cent on 1999-2000, within
which we commit to deliver those plans.
The separate supporting material sets out more detail about our operating environment and
our specific plans. The supporting material also includes a statement of corporate
governance, our accounting policies and details of the NECA team.
3
Mission
NECA’s mission, as articulated in our 1999-2000 Statement of Corporate Intent, is to:
 promote the effectiveness, efficiency and equity of the national electricity market; and
 lead the development of the market towards more competitive, market-oriented
outcomes
in order to deliver a viable market that benefits end-use customers.
We aspire in fulfilling this mission to:
 act impartially and with integrity in accordance with the highest ethical standards;
 work in partnership with all our stakeholders, be open and communicate well;
 take responsibility for our actions and decisions;
 achieve results of high quality and good value; and
 innovate and learn.
4
Review programme
Within the market and Code objectives and the broader public policy framework which is
properly the responsibility of our Member Governments to lay down, NECA is responsible
for administering the ongoing development of, and changes to, the Code to achieve the
market objectives. Our review programme is designed to enable us to fulfill that function as
set out in the Code in ways that are effective, efficient and economical; and that, as a result,
command the confidence and support of governments, regulators, market participants and
end-users.
Vision
Our vision for the future of the national electricity market is a genuinely open market that
delivers electricity efficiently and at competitive prices, which is safe and reliable and in
which there is:
 an efficient and economically rational framework; and
 provision of clear and rational signals for location and new investment.
Review programme in outline
The introduction of full retail competition will represent the single most important and farreaching development since the launch of the market itself. Other significant market
developments are also already proposed or in the pipeline, including as a result of our
transmission and distribution pricing and VOLL reviews. The expansion of inter-state trade
as a result of the commissioning of QNI and the anticipated application by Tasmania to join
the national market will also result in important changes. We intend to play our part in
facilitating those initiatives.
The significance of those developments points to the need for a period of relative
consolidation on a broader front. It is also important, however, not to abandon or lose sight
of the need for a continuing priority review programme centred around:
 completion of the review of the scope for integrating the energy market and
network services. This review is aimed at improving the efficiency of despatch, and
investment and locational signals within the market;
5
 pursuit of a broader package of network and distributed resources issues, aimed at
streamlining and clarifying the arrangements for the planning and approval of new
regulated investments. These initiatives are intended to promote an effective
framework for the market and ensure that signals to producers, suppliers and
consumers are more appropriate;
 working with the jurisdictions and the jurisdictional regulators to develop an
equivalent package of network issues at the distribution level;
 completion and implementation of the review of end-user advocacy in the national
electricity market. This review is aimed at enhancing the ability of the demand-side
of the market to participate in decision making and influence the development of a
more effective and responsive market framework;
 completion of the review of technical standards in the Code. This will help to
ensure that, as far as possible, non-tariff barriers to new entry are eliminated; and
 the launch of reviews, as required by the Code, of the existing market information
provisions and the alternative dispute resolution arrangements. These initiatives are
intended to enhance the effectiveness of the market framework while facilitating more
competitive and market-oriented outcomes.
We shall work with Tasmania, and the other participating jurisdictions, to encourage and
facilitate its anticipated application to join the market. We have already put forward Code
changes to facilitate the integration of Basslink into the national electricity market and look
forward to the Tasmanian Government’s becoming a Member of NECA and nominating a
director to serve on our board.
We plan to work with the jurisdictions and the ACCC on a review of the Code change
process, with the aim of simplifying and streamlining that process.
We shall continue to pursue our demand-side participation initiative.
We shall also convene a forum to assess the performance of the market, to follow-up the
forum we held jointly with NEMMCO in August 1999.
Taken together, whilst recognising the need for a period of relative consolidation, this
programme represents a formidable agenda for 2000-01 and future years.
Review of the scope for integrating the energy market and network services
We launched this review, required under clause 3.5.1(e)-(f) of the Code, last October. It is
addressing:
 the most appropriate basis for the division of the market for spot market purposes.
NECA is required by the Code to review the adequacy and appropriateness of the
existing criteria for the determination of regions. The options for the basis for
dividing the market range from minimal changes to the existing criteria through more
extensive changes (including to introduce explicit forward looking elements into those
criteria) to full nodal pricing;
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 the options for improved risk management mechanisms and techniques, including
refinements to the existing residue auction arrangements or the introduction of some
form of transmission congestion contracts or other financial instruments; and
 improved or alternative ways of representing or calculating transmission and
distribution loss factors, in accordance with our obligations under clause 3.6.3(h) of
the Code.
The review will also address implementation and transitional issues. We intend to publish a
draft report by September and our final report by November.
Network and distributed resources issues
We are working on a package of network and distributed resources issues aimed at refining
the draft Code changes we put forward to implement the recommendations of our
transmission and distribution pricing review in order to provide a clear framework and
streamlined process for determining the relative beneficiaries of new regulated network
investments. The package is also intended to refine the existing provisions of the Code, for
example in relation to consideration of demand-side and distributed generation alternatives to
new network investments, in order to give proper effect to those provisions. The main
components of that package are:
 changes to the respective rôles and responsibilities of NSPs, the IRPC, NEMMCO and
the ACCC in relation to the planning and approval of new regulated network
investment projects;
 a streamlined process, compared to the one proposed in the final report of our
transmission and distribution pricing review, for determining the relative beneficiaries
of those projects; and
 strengthened requirements to ensure proper advance disclosure of information,
genuine consideration of demand-side and local generation alternatives, and
meaningful consultation with affected customers on proposed network investments.
Linked to this package the Reliability Panel is also undertaking a review of the network
performance requirements set out in schedule 5.1 to the Code. This review will be completed
by November. We intend to bring forward the other components of the wider package
alongside the draft report of our review of the scope for integrating the energy market and
network services.
In the light of the outcomes of this initiative, we will work with the jurisdictions and the
jurisdictional regulators to seek endorsement to develop an equivalent package of network
refinements at the distribution level.
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End-user advocacy
This review, required under the terms of the ACCC’s determination on the third tranche Code
amendments, was launched in March and is looking in particular at:
 the need for amendments to the Code to ensure an effective opportunity for end-user
involvement by enhanced representation within the national market, eg by amending
the Code consultation procedures in chapter 8 of the Code;
 appropriate provision of information, and practices and procedures, by NECA and
NEMMCO reasonably to facilitate end-user advocacy;
 the scope for improved organisational and representational arrangements on the part
of end-users themselves, possibly but not necessarily exclusively through the
establishment of a recognised end-user advocacy group; and
 the arguments for and against funding of end-user advocacy through a levy on
participant fees and appropriate arrangements for determining the amount and
allocation of such a levy.
Review of technical standards
The review of technical standards, as required under clause 5.2.6 of the Code, is aimed at
ensuring a reasonable balance between the interests of incumbents and new entrants, and
remote and embedded generation, and will examine in particular:
 whether the existing standards in the Code are too stringent and especially therefore
whether they represent a barrier to entry to the market in particular for cogeneration
and emerging technologies;
 the relationship between the standards and the provision of ancillary services;
 the need for consistency in the application of, and adherence to, the standards across
the entire national market; and
 the use of Australian and international standards rather than Code specific standards.
The review is being conducted in close cooperation with Standards Australia and is
addressing all the technical standards set out in the Code, except those that relate to network
performance requirements that will be the subject of a separate Reliability Panel review.
The review will be conducted in two stages. Stage one will establish the principles for the
standards and identify the appropriate linkage to Australian and international standards.
Stage two will develop the detailed standards and Code changes necessary to implement those
principles. The aim is to complete stage one of the review by September and stage two by the
end of the year.
8
Demand-side participation
This initiative is aimed at identifying the existing impediments to, and facilitate and
encourage more proactive, demand-side participation in the national electricity market. It was
initially included in, and endorsed by Members as part of, our 1999-2000 Statement of
Corporate Intent.
Proactive demand-side participation can add value to the broader market through:
 direct participation in the energy market as a demand-side bid, independent customer
price responsiveness as a wholesale market participant or under a retail tariff
arrangement;
 provision of ancillary services, for example, for frequency or voltage control, under
contract to NEMMCO or through competitive bidding under the likely revised
ancillary service arrangements; and
 network services, for example, for localised voltage contract and peak or contingency
load management.
Our initiative is examining, amongst other things, the impediments in current market
arrangements to the development of a vigorous and competitive demand-side response, and
ways in which the market framework could facilitate customers gaining the full value of their
demand-side response. This will include:
 the regulatory framework;
 commercial incentives;
 technical coordination;
 market information and communication; and
 transaction costs.
As a crucial first step, we conducted a questionnaire survey of retailers and end-use customers
to assess the existing extent of, and attitudes towards, demand-side participation. Our
objectives for the survey were to:
 establish a database recording the status and scale of retail demand-side programmes
and initiatives, and customer involvement in the national market;
 determine the likely trends for future involvement of the demand-side in the national
market;
 develop, monitor and report on appropriate indicators of demand-side participation;
and
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 discover customer attitudes to the market, particularly their understanding of the
market design, level of interest in proactive demand-side participation, threshold
issues and appropriate incentives for more pro-active participation, expectations of the
market and market intermediaries, and their support for existing and appetite for new
or additional retail demand-side products.
The results of the survey will assist NECA to meet its obligation to report on the extent and
effectiveness of demand-side participation in the market and measures that could be taken to
enhance demand-side partcipation, as required under clause 8.7.4 of the Code. The survey
findings will also provide a basis for shaping further initiatives to overcome any structural or
Code-based barriers to greater participation by the demand-side.
Review of the Code change process
We shall work with our Member governments and the ACCC on the rôles and procedures
involved in the Code change process, with the aim of simplifying and streamlining that
process.
The existing arrangements are too cumbersome. Even relatively straightforward and noncontroversial changes absorb too much time and resources, not least because they involve
duplicated procedures. There needs to be a better balance between ensuring essential and
appropriate involvement and consultation in developing proposed changes to the Code, on the
one hand and the need to streamline the arrangements on the other. One approach which
might strike a more appropriate balance, and which we shall wish to explore, is to restructure
the Code into three categories of provisions:
 issues of principle which go to the core of the overall net public benefit of the entire
national electricity market arrangements, or affect the access regime, and which will
properly continue to require the authorisation or approval of the ACCC following a
full and open public consultation process;
 provisions which are designed to support or give effect to those principles, but which
do not themselves affect the public benefit of the market arrangements, and which
provided they are consistent with those principles might be dealt with solely by NECA
and the Code Change Panel; and
 technical and operational issues which could be dealt with in schedules to, or be
removed entirely from, the Code.
In the light of this review, we shall seek opportunities to work with the jurisdictions,
jurisdictional regulators, Code participants and other stakeholders to identify opportunities to
simplify the Code itself.
10
Consultation with stakeholders
We shall continue to consult the Government Liaison Panel and Market Liaison Panel on the
conduct and coordination of the review programme. We shall continue to pursue
opportunities for greater involvement in consultation processes by a range of end-use
customers, including by representation on liaison panels and working groups. The review of
the feasibility and resourcing of end-user advocacy will also help inform our consultation
procedures.
We are committed to direct consultation with all our stakeholders. We shall continue to hold
ad hoc and one-on-one meetings with stakeholders and interested parties, including
workshops and fora with each group of stakeholders and in all regions of the market in
relation to reviews and major initiatives.
Feedback and post-review evaluations
We will provide feedback on formal comments made in the course of reviews. Draft and
final reports will include comments on specific issues raised.
We will also continue our programme of post-review evaluations to collect information about
stakeholder perceptions of the conduct, efficiency and effectiveness of review processes and
outcomes. We shall publish the results of these evaluations on our website. They will help
inform the conduct of future reviews and influence NECA’s consultation and stakeholder
liaison processes more generally.
Resources and expertise
We shall continue to draw on a small, core in-house team but also to make appropriate use of
consultants in order to ensure the effective achievement of this programme.
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Surveillance, monitoring and enforcement
We are committed to undertaking appropriate and effective surveillance and monitoring of
the market in order to:
 determine whether Code participants are complying with the Code;
 assess whether the dispute resolution, Code enforcement, Code change and other
mechanisms are working effectively in the manner intended;
 determine whether, in its operation, the Code is adequately giving effect to the Code
objectives; and
 collect, analyse and disseminate information relevant and sufficient to enable us to
comply with our reporting and other obligations and powers under the Code.
Our authority to undertake surveillance and monitoring is derived from clause 8.7 of the
Code. We also have significant enforcement powers under clause 8.5. We shall approach our
Member governments, including to seek additional powers if necessary, if issues arise about
our ability to enforce the Code.
Our objective is to operate a light-handed but effective regulatory regime that emphasises
voluntary Code compliance. Achieving this objective depends crucially on participants acting
in good faith to comply with the requirements of the Code. We are confident that we can
continue to expect and rely on that good faith. Wewill not hesitate, however, to move swiftly
and appropriately in circumstances where we judge it appropriate to take action.
Surveillance and monitoring programme
We will vigorously pursue our published strategy for surveillance and monitoring. Our
objective for this programme is to support and foster the effective and efficient operation of
the market. We will continue to undertake:
 market surveillance, including analysing variations between forecast and actual spot
prices as required under clause 3.13.7 of the Code;
 monitoring of market participants’ compliance with the Code;
 random targeting of specific aspects of market operation and Code requirements, to
detect instances of potential Code breaches; and
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 monitoring and assessment of New South Wales power traders, Queensland
exempted generators and Victorian smelter traders.
We will also:
 expand the information published for stakeholders to improve transparency and
facilitate greater understanding of the dynamics of the market, eg analysis of rebidding
trends and reasons, and the quality of market forecasts;
 examine the level of competition in energy, ancillary services and inter-regional
trading arrangements; and
 expand our compliance monitoring programme.
We will ensure that its monitoring and surveillance methodologies continue to keep pace
with the increasing maturity and sophistication of the market, and exploit developments in
technology.
Compliance monitoring programme
We recently initiated a rolling programme to review the Code compliance strategies of market
participants. These reviews are conducted cooperatively and involve one-on-one interviews
with participants to discuss their compliance strategies, critical challenges they face in
discharging their Code obligations and their management of the obligations to them of other
participants. The programme is intended to cover all market participants over two years and
has so far encompassed two Victorian generators and one retailer in each of Queensland and
South Australia.
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Other core activities
During 2000-01 we shall continue to discharge our other core activities effectively and
efficiently.
NECA will continue to promote system reliability and security, in particular through the work
of the Reliability Panel. The Panel will continue to fulfil its commitments under clause 8.8.1
of the Code to:
 determine and maintain the power system security and reliability standards;
 determine and maintain guidelines governing the exercise of NEMMCO’s power to
issue power system security directions;
 determine and maintain guidelines and policies governing the exercise of
NEMMCO’s power to contract for the provision of reserves; and
 review the performance of the market in terms of power system security and
reliability.
The Panel will take account, in fulfilling these functions, of the lessons arising from
investigations into extreme events and NECA’s monitoring and surveillance activity.
The Reliability Panel will undertake a review of network performance standards in
accordance with schedule 5.1 of the Code. The review will be completed by November.
To support the work of the Panel, and to obtain expert advice on system operation, NECA
seeks the advice of key personnel within the industry who have expertise in this area. NECA
will continue to consult this expert group before taking matters to the Panel and provide the
group’s advice to the Panel.
NECA will continue to meet its obligations across the full range of its other core activities:
alternative dispute resolution procedures; Code updating and publication, including the
maintenance of eCode; maintaining the guidelines for exempting network service providers;
monitoring and approving changes to NEMMCO’s market management software; processing
appeals from decisions involving metering data agents; and ensuring continued end-user
representation on the settlement residue auctions steering committee.
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Key challenges
Challenge
Response
 efficient implementation of reform
initiatives
 manage the reform process in a way
that will maximise the prospects of
smooth and rapid implementation of
outcomes
 cost-effective delivery of high quality
outputs
 plan and manage staff, consultants
and other resources to achieve
objectives
 enhancement of stakeholder
relationships
 implement the outcomes of the review
of the feasibility and resourcing of an
end-user advocacy group, anticipate
and address likely objections and
concerns and demonstrate a genuine
commitment to listening and dialogue
 ensuring compliance with the market  deliver surveillance, monitoring and
rules
enforcement that is light-handed but
effective; identify areas where Code
breach is most likely and implement
strategies to target those areas
 facilitating prompt and cost-effective
dispute resolution
 maintain a dispute resolution system
that is timely and effective.
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Critical success factors and key performance indicators
Drawing on our aims, objectives, strategic imperatives and key challenges, NECA has
established three critical success factors against which to measure its performance during
2000-01, to:
 administer a targeted programme of practicable and cost-effective reviews to ensure
the ongoing development of, and changes to, the Code to achieve the market
objectives;
 ensure effective performance of our Code change, surveillance and monitoring and
alternative dispute resolution functions; and
 continue to build strong, trusting and productive relationships with all our
stakeholders by consulting and communicating proactively and responsibly.
This section sets out specific key performance indicators linked to each of these success
factors.
We will formally assess our performance against these key performance indicators in each
quarterly report to Members. We will also evaluate our performance through:
 an independent stakeholder perceptions survey;
 formal evaluations conducted after each review. The results of these evaluations will
be published on our website; and
 regular feedback received through our liaison panels, and focus and working groups.
16
Critical success factor 1: to administer a targeted programme of practicable and costeffective reviews to ensure the ongoing development of, and changes to, the Code to
achieve the market objectives.
NECA will complete its:
 review of the scope for integrating the energy market and network services,
with a draft report to be released by September and a final report by November;
 network and distributed resources initiative, with a package of proposed
reforms to be released in September;
 implement the conclusions of the end-user advocacy review in accordance with
the published timetable as soon as practicable after the release of the final report;
and
 review of technical standards in the Code in two stages:
 stage one to establish principles and standards by September; and
 stage two to develop the detailed standards and Code changes necessary by
December.
NECA will continue its demand-side participation initiative. As a first stage it will
complete the survey of retailers and end-use customers and develop initiatives focused
on opportunities in the energy market, ancillary services and network services by
September.
NECA will also:
 review the Code change arrangements in consultation with jurisdictions and the
ACCC to improve effectiveness and to streamline the process;
 review dispute resolution arrangements in the light of experience to date by
March 2001; and
 review market information provisions by December.
NECA will consult using processes at least as thorough as the Code consultation
procedures.
NECA will provide feedback on its response to issues raised in formal comments
made to us in the conduct of reviews.
NECA will conduct formal post review evaluations of the conduct of all major
reviews within three months of the conclusion of the review
17
Critical success factor 2: to ensure the effective performance of our Code change,
surveillance and monitoring and alternative dispute resolution functions.
NECA will:
 continue to make the most up to date version of the Code available in paper and
electronic (eCode) form and on our website;
 administer effective and consultative Code change arrangements within Code
timeframes;
 promote strategies wherever possible to streamline Code change arrangements,
including through consultation and liaison with the ACCC;
 in conjunction with the South Australian Government conduct the next annual
review of the National Electricity Regulations by March 2001;
 ensure Code compliance by:
 maintaining a proactive and effective surveillance and monitoring
programme;
 ensuring that the provision of information under the NEMMCO
information protocol continues to provide NECA with sufficient data to
discharge its duties, and reviewing the protocol six-monthly;
 maintaining a compliance audit programme targeting six specific Code
provisions each quarter;
 initiating a rolling programme of four Code compliance strategy reviews a
quarter with individual Code participants;
 meeting quarterly with the ACCC to discuss and progress compliance
issues;
 publishing and disseminating within one month of the end of each quarter a
detailed report on the performance of the market during the preceding
quarter;
 publishing special reports on specific market performance issues as
appropriate; and
 in the case of Code breaches, taking appropriate action either through
initiating action before the National Electricity Tribunal, or entering into
voluntary agreements with market participants to implement compliance
programmes;
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Critical success factor 2 continued
 ensure the implementation and effective administration of dispute resolution
arrangements by:
 maintaining the appointment of a dispute resolution advisor;
 keeping the dispute resolution panels staffed and up to date;
 completing the review of alternative dispute resolution arrangements by
March 2001; and
 reporting six-monthly on the resolution of matters through the alternative
dispute resolution arrangements, by 31 January and 31 July;
 maintain the Reliability Panel and work with the Panel to:
 determine and maintain the power system security and reliability standards;
 determine and maintain guidelines governing the exercise of NEMMCO’s
power to issue power system security directions;
 determine and maintain guidelines and policies governing the exercise of
NEMMCO’s power to contract for the provision of reserves;
 review the performance of the market in terms of power system security
and reliability;
 complete its review of network performance requirements in accordance
with schedule 5.1 of the Code by November; and
 review by April the value of lost load (VOLL), and in particular the
cumulative price threshold.
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Critical success factor 3: to continue to build strong, trusting and productive
relationships with all our stakeholders by consulting and communicating proactively
and responsibly.
NECA will:
 maintain formal and informal links with stakeholders, including through the
Government Liaison Panel, Market Liaison Panel, the national electricity market
forum, and other fora;
 liaise effectively with the ACCC, State and Territory regulators and other
market regulators. In particular, we shall hold quarterly formal liaison meetings
with the ACCC;
 maintain close and regular liaison, at all levels, with NEMMCO;
 maintain and develop an interactive internet homepage;
 collect information and statistics, publish reports and disseminate information
relating to the performance of the national electricity market. In particular, we will
provide:
 quarterly reports to Members within a month of the end of each quarter;
 half-yearly reports on referrals to the Tribunal, the findings of the Tribunal
and any relevant demands for payment, by 31 January and 31 July;
 a 1999-2000 annual report by 1 November;
 a report on the operation of the Code during 1999-2000 (under clause
8.7.4) by 1 November; and
 a draft 2001-2002 Statement of Corporate Intent and budget to Members
by 1 June or any new deadline established in our Members’ Agreement.
 conduct a stakeholder perceptions audit by September;
 conduct a seminar for members of the National Electricity Tribunal to update them
on recent developments in relation to the Code by December;
 convene a public forum to assess the performance of the market by August;
and
 publish agenda for, and minutes of, all meetings of liaison groups that we
convene.
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Beyond 2000-01
We recognise the need to plan for the medium and long-term whilst at the same time not
preempting:
 developments in broader public policy that are legitimately the domain of the
jurisdictions;
 technological developments; and
 the natural evolution of the market as a result of the increasing maturity and
sophistication of market structures and participants.
Our two key priorities beyond 2000-01 will be a comprehensive review of the performance
and operation of the Code since market launch and, in the light of that review and of our
review of the Code change arrangements, a review of the detailed provisions of the Code
aimed at simplifying, and removing the ambiguities in, its provisions. We shall, however,
continue to review and refine those priorities and our detailed plans in consultation with the
jurisdictions, Code participants, end-use customers and other stakeholders in order to retain
flexibility to respond to emerging issues in the market.
Assessment of the operation of the Code
During 2001-02 we will undertake a comprehensive review of the performance and operation
of the Code since the market commenced, as required under clause 8.7.5 of the Code. That
assessment will include, amongst other things:
 the extent to which the operation of the Code during the period covered by the report
has met the Code objectives;
 the extent to which Code participants have complied with the provisions of the Code
during the period covered by the report; and
 the impact of any conditions of any ACCC authorisations or approvals relating to the
Code on the operation of the Code.
In 2001-02 we will use the annual forum on the performance of the market to initiate this
project. We propose to conduct discrete in-depth appraisals of each aspect of the market in
consultation with all interested parties, with the outcomes feeding into the holistic report on
the overall market.
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Code simplification
As part of our review of the Code change arrangements, and more generally in forwarding
Code changes to the ACCC, we shall seek opportunities for simplifying and streamlining the
Code with a view to making it less complex and more accessible. In the light of our
assessment of the operation of the Code and of the review of the Code change arrangements,
we shall also launch a comprehensive review of the Code aimed at simplifying, and removing
the existing ambiguities in, its provisions.
Continuing core functions
In addition to these key priorities, we shall continue to refine and improve our performance of
our core functions of market surveillance, monitoring and enforcement, assessing network
service provider exemptions and market software approvals. We shall also continue to
undertake a relevant and appropriate review programme. We shall seek endorsement of
individual elements of that programme as we identify specific needs.
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Budget
The following tables set out NECA’s 2000-01 budget of $5.5 million, together with a
breakdown of budgeted administration costs, and forward estimates for 2001-2002 and 20022003.
The tables also set out a breakdown of the 2000-01 budget by key activity. The budgeted
income will enable NECA to continue its five year repayment programme for its
establishment borrowings of $3.5 million. $1.7 million of those borrowings remain.
Allowance has been made for sufficient staff and professional advice to fulfill NECA’s
obligations. Allowance has also been made in the forward estimates for the entry of
Tasmania into the national electricity market.
The budget includes provision for the recruitment of suitably qualified staff to complement
the in-house team.
The 2000-01 budget is 11 per cent below the 1999-2000 budget, and 8 per cent below our
projected outturn for 1999-2000. The forward estimates for 2001-2002 and 2002-2003
represent reduction in real dollar terms of the 2000-01 level.
The budget does not incorporate the budget of the National Electricity Tribunal, which has
been approved separately by the Tribunal’s chairman, the Hon Jerrold Cripps QC, and which
is set out elsewhere in this document.
With the exception of income raised from sales of the Code and subscriptions to eCode, and
other minor sources, NECA’s budgeted costs will be met through participant fees. NECA’s
fees for 2000-01 will reduce from approximately 0.5 to 0.3 cents per MWh. This will
represent a reduction in the proportion NECA’s fees represent of the cost of delivered energy
from 0.004 per cent to 0.003 per cent.
NEMMCO will collect fees and the applicable GST from market participants on NECA’s
behalf, and pay them to NECA weekly.
The outcomes of the national electricity market liability and governance review may require
some adjustment to the budget.
23
Budget for 2000–2001 and indicative budgets for 2000–2002 and 2002–2003
Income
1998-1999
(outturn)
1999-2000
(budget)
1999-2000
(forecast)
3,340,892
6,201,100
6,823,000
Surplus carried forward
Participant Fees
Code Sales
Bank Interest
2000-01
(budget)
2001-2002
(budget)
2002-2003
(budget)
5,500,000
5,500,000
5,500,000
330,000
385,000
400,000
2,150,000
2,250,000
2,300,000
147,600
5,300,600
50,000
2,400
Expenditure
Board Expenses
377,337
455,500
331,800
Board Fees
Board Travel & Expenses
Personnel Expenses
Salaries
Personnel Expenses
Consultants & Legal Fees
Running Costs
Depreciation
Debt Financing
Total Expenditure
260,000
70,000
1,543,223
2,255,000
1,870,000
1,900,000
250,000
1,461,321
1,350,000
1,364,591
1,500,000
1,300,000
1,200,000
1,162,278
1,156,600
723,000
930,000
975,000
1,000,000
39,257
54,000
40,000
36,000
30,000
25,000
214,254
930,000
1,594,743
554,000
560,000
575,000
4,797,670
6,201,100
5,924,134
$5,500,000
$5,500,000
$5,500,000
24
Projected statement of cash flows
2000-01
year
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from market participants
Receipts from customers
Interest received
Payments to suppliers and employees
Interest and other finance costs
5,300,000
50,000
2,400
(4,910,000)
(100,000)
Net cash outflow from operating activities
342,400
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for property, plant & equipment
Net cash outflow from investing activities
-
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings
(2,059,000)
Net cash inflow from financing activities
(2,059,000)
NET INCREASE (DECREASE) IN CASH HELD
(1,716,600)
Cash at beginning of financial year (estimated)
CASH AT END OF FINANCIAL YEAR
25
1,175,000
541,600
PROJECTED BALANCE SHEET
EQUITY
Estimated surplus 30 June 2000
Less recovery of establishment cost borrowings
Estimated surplus 1 July 2000 - 30 June 2001
30 June 2000
(draft)
30 June 2001
(projected)
2,342,350
1,398,724
507,200
152,400
1,043,924
2,342,350
Represented by:
CURRENT ASSETS
GST asset
Petty cash imprest
Trade debtors
BankSA
Accounts receivable
110
160
279,000
1,147,567
512,236
1,939,073
500,000
1,007,200
19,820
6,416
13,404
19,820
9,820
10,000
203,427
80,761
122,666
202,000
122,000
80,000
NON CURRENT ASSETS
Term debtors
2,585,804
1,521,624
TOTAL ASSETS
4,660,947
2,618,824
68,000
705
51,533
209,643
329,881
541,600
150,000
30,300
133,205
85,000
125,000
1,065,105
1,288,793
1,288,793
643,000
643,000
TOTAL LIABILITIES
1,618,674
1,708,105
NET ASSETS
3,042,273
910,719
FIXED ASSETS
Leasehold improvements
Less: Accumulated depreciation
Office furniture and equipment
Less: Accumulated depreciation
CURRENT LIABILITIES
Bank SA
Accrual consultants
Sundry creditors
GST liability
Provision for holiday pay
Accrued charges
NON CURRENT LIABILITIES
Bank SA (fully drawn advance)
26
507,200
2000-2001 expenditure by cost centre
Tax payments
2%
Repayment of
establishment costs
10%Code
The
Board
6%
18%
General liaison and
programme
Review
consultation
5%
19%
programme
Review
Surveillance,
19%
monitoring and
enforcement
13%
Reliability Panel
6%
of
Repayment
Administration
18%
establishment costs
Alternative dispute
10%
Reliability Panel
resolution
3%
Tax payments
2%
Business cost centres
Corporate cost centres
Board
6%
6%
General liaison and
consultation
5%
Alternative dispute
resolution
Surveillance, monitoring
3%
and enforcement
Administration
13%
18%
Cost centre
Review programme
The Code
Surveillance, monitoring and enforcement
Reliability Panel
Alternative dispute resolution
Administration
General liaison and consultation
Board
Tax payments
Repayment of establishment costs
Total
27
The Code
18%
Budget
1,065,100
999,500
720,420
322,500
140,000
981,480
282,000
330,000
105,000
554,000
$5,500,000
National Electricity Tribunal
The National Electricity Tribunal was formally established at the same time as market launch on
13 December 1998.
NECA has appointed a Tribunal registrar, and deputy registrars in each jurisdiction, and together
with the registrar will provide appropriate administrative support for the Tribunal.
In 2000-01 NECA has agreed to arrange a seminar for members of the Tribunal to update them on
developments in relation to the Code and the market since market start. An agenda for the seminar
will be developed in consultation with the chairman of the Tribunal.
Budget
The Tribunal’s 2000-01 budget is attached. The Tribunal’s chairman, the Hon Jerrold Cripps QC,
has determined its budget, in consultation with NECA. The budget allows for known and estimated
fixed and variable costs. The jurisdictions have decided that the remuneration of members will be
reviewed annually, taking into account Tribunal activity levels.
The Tribunal’s budgeted costs are met through participant fees, collected on the Tribunal’s behalf
by NEMMCO under the arrangements set out in clause 2.11 of the Code. During 2000-01,
however, funds already held on deposit by the Tribunal are expected to meet the costs of the
Tribunal’s operations.
Reporting
The Tribunal prepares an annual report on its activities. NECA is required to report half-yearly on
issues referred to the Tribunal, Tribunal findings and fines that may result from Tribunal decisions.
28
National Electricity Tribunal
Budget 2000-01
Tribunal
Retainers
Sitting fees
Travel and accommodation
Accommodation – Chairman
Support costs
$39,000
$100,000
$40,000
$12,000
$29,000
Assessors
Fees
Travel and accommodation
$48,000
$19,000
Registrars
Registrar and deputy registrar fees
Secretarial and administration support
Travel and accommodation
Office expenses
Total
$24,000
$11,000
$22,000
$6,000
$350,000
29