Electricity Network Assets (Authorised Transactions) Act 2015 (NSW)

Electricity Network Assets (Authorised Transactions) Act 2015 No 5 An Act to provide for the transfer of certain electricity network assets of the State. Part 1 Preliminary 1 Name of Act This Act is the Electricity Network Assets (Authorised Transactions) Act 2015. 2 Commencement (1) This Act commences on the date of assent to this Act, except as provided by subsection (2). (2) Schedule 6 (Ownership restrictions in floated transaction companies) commences on a day to be appointed by proclamation. 3 Interpretation—key definitions Note— Schedule 1 contains other interpretative provisions. In this Act— associated electricity network land means land (including an interest in land) that is vested in any of the following agencies and designated by the Treasurer by order in writing as associated electricity network land for the purposes of this Act— (a) (Repealed) (b) Property and Development NSW, (c) Transport for NSW, (d) RailCorp, (d1) Sydney Trains, (d2) Sydney Metro, (e) a council under the Local Government Act 1993, (f) any other public sector agency prescribed by the regulations for the purposes of this definition. authorised transaction means a transfer of electricity network assets authorised by Part 2. electricity network assets means— (a) the assets, rights and liabilities of an electricity network SOC, and (b) associated electricity network land. electricity network SOC means TransGrid, Ausgrid and Endeavour Energy constituted as statutory State owned corporations under the Energy Services Corporations Act 1995. Note— Essential Energy is not an electricity network SOC for the purposes of this Act. network infrastructure assets—see section 4. 4 Network infrastructure assets (1) In this Act, network infrastructure assets means the following assets that are wholly owned by an electricity network SOC and form part of or are used in connection with the operation of the distribution system, transmission system or street lighting system of the electricity network SOC— (a) electricity power lines and their supporting or protective structures and conduits, (b) associated equipment, (c) street lighting structures, (d) buildings, (e) plant and machinery (excluding motor vehicles), (f) any freehold or leasehold interest in land. (2) Freehold or leasehold interests in land that are wholly owned by an electricity network SOC and held for the purpose of their forming part of or being used in connection with the operation of the distribution system, transmission system or street lighting system of the electricity network SOC in the future are also network infrastructure assets for the purposes of this Act. (3) Assets that are not required for the purposes of the operation, in the ordinary course, of the distribution, transmission or street lighting system concerned are not network infrastructure assets for the purposes of this Act. (4) In this section— associated equipment means the following— (a) electricity substations, (b) electricity switchyards, (c) transformers, (d) capacitors, (e) reactive plant, (f) protection equipment, including circuit breakers, (g) monitoring equipment, (h) network communications equipment, (i) customer connection assets (excluding meters). Part 2 The authorised transactions 5 Authorisation for transfer of electricity network assets (1) This Act authorises the transfer of electricity network assets to the private sector or to any public sector agency, subject to the following conditions— (a) network infrastructure assets can only be transferred to the private sector by lease, (b) the initial term of a lease of network infrastructure assets to the private sector must not exceed 99 years (without limiting any option to renew for any additional term or terms), (c) the private sector interest in the State's electricity network assets (calculated as provided by this Part) must not exceed 49%. (2) For the removal of doubt, this Act does not authorise the transfer of any assets, rights or liabilities of Essential Energy. 6 Calculation of private sector interest (1) The private sector interest in the State's electricity network assets is to be calculated for the purposes of this Part as follows— (a) for each transacted electricity network SOC the asset value of the SOC is to be multiplied by the level of the interest of the private sector in the transacted business of the SOC on completion of the relevant authorised transaction, to arrive at an amount that is the private sector interest in the assets of the SOC, (b) the amounts calculated under paragraph (a) for all transacted electricity network SOCs are to be summed to arrive at an amount that is the total private sector interest in the assets of transacted electricity network SOCs, (c) the amount arrived at under paragraph (b), expressed as a percentage of the total of the asset values of the 3 electricity network SOCs and of Essential Energy, is the private sector interest in the State's electricity network assets. (2) The level of the interest of the private sector in the transacted business of a SOC is— (a) the share to which a person other than a public sector agency is entitled, as at the completion of the relevant authorised transaction, of the distributed profits from the operation of the transacted business of the SOC (unless the share referred to in paragraph (b) is greater), or (b) the share of the assets of the transacted business of the SOC to which a person other than a public sector agency is entitled, as at the completion of the relevant authorised transaction, on a winding up of an entity that controls or operates the business. (3) In this section— asset value of a SOC means the amount of the forecast closing regulatory asset base of the SOC for the 2014–15 regulatory year as set out in the final determination of the Australian Energy Regulator (published on 30 April 2015), being— (a) for Ausgrid—$14,752.3 million, or (b) for Endeavour Energy—$5,944.3 million, or (c) for Essential Energy—$7,187.4 million, or (d) for TransGrid—$6,241.5 million. relevant authorised transaction for a SOC means the authorised transaction that results in the SOC becoming a transacted electricity network SOC. transacted business of a SOC means the business of a SOC that becomes a business controlled and operated by the private sector as a result of an authorised transaction. transacted electricity network SOC means an electricity network SOC the business of which becomes a business controlled and operated by the private sector as a result of an authorised transaction. 7 Protection of State's interest in transferred network infrastructure assets (1) A public sector agency must not transfer any network retained interest held by the public sector agency. (2) This section does not prevent— (a) the granting or enforcement of a security interest over any network retained interest, or (b) the conferral or enforcement of a security interest over any interest in a network infrastructure assets lease, being a security interest that arises by operation of law, or (c) a transfer by or at the direction or under the authority of a liquidator, receiver, receiver and manager, administrator or the like in the course of a winding-up, receivership or other external administration, or (d) a transfer by way of lease (a new lease) created by a sublease under, or surrender and regrant of, an existing network infrastructure assets lease (the existing lease) where the transfer does not result in the level of the public sector's interest in the entity that is the lessee under the new lease being less than it was for the existing lease, or (e) any transfer to a public sector agency, or (f) a transfer authorised by the regulations. (3) In this section— network infrastructure assets lease means a lease of assets comprising or including network infrastructure assets. network retained interest means any interest of a public sector agency in— (a) a network infrastructure assets lease (other than as the lessor of a transacted distribution system or transacted transmission system), or (b) a public sector agency that is a lessee of such a lease or that is a partner in a partnership that is a lessee of such a lease. transfer includes surrender. 8 Electricity price guarantee (1) The Treasurer must ensure that an authorised network operator of a transacted distribution system or transacted transmission system provides a guarantee (its electricity price guarantee) to the effect that— (a) the authorised network operator's total network charges for the financial year ending 30 June 2019 will be lower than the network operator's total network charges for the financial year ending 30 June 2014, and (b) the authorised network operator will promote efficient investment in, and efficient operation and use of, electricity services for the long term interests of consumers of electricity with respect to price, quality, safety, reliability and security of supply of electricity, and (c) the authorised network operator will comply with any Efficiency Benefit Sharing Scheme developed by the AER for the sharing of efficiency gains and losses between network operators and their customers that is applicable to the network operator. (2) The Treasurer is to request the Price Commissioner to provide the following reports— (a) a report, for each proposed authorised transaction, as to whether the amount of the private sector investment for the purpose of acquiring an interest in electricity network assets pursuant to the authorised transaction (including costs incurred for that purpose) is likely to result in an increase in network charges, (b) an annual report, for each completed authorised transaction, on compliance by the authorised network operator with its obligations under its electricity price guarantee. (3) A public sector agency must comply with any reasonable request by the Price Commissioner that the agency provide information to the Price Commissioner for the purposes of reports under this section (with any dispute as to the reasonableness of a request to be decided by the Secretary of the Cabinet Office). (4) The Price Commissioner is not subject to control or direction by or on behalf of the Government in connection with any report of the Price Commissioner. (5) An authorised network operator must within 2 months after the end of each financial year provide to the Price Commissioner such information as the Price Commissioner may reasonably require to enable the Price Commissioner to report on compliance by the authorised network operator with its obligations under its electricity price guarantee. (6) In this section— network charges means revenue collected by a network operator in respect of regulated services provided by the network operator. Price Commissioner means the person engaged by the Secretary of the Cabinet Office as a consultant to provide services as the NSW Electricity Price Commissioner. regulated services means the following direct control network services (within the meaning of the National Electricity (NSW) Law)— (a) a standard control service or prescribed transmission service, (b) any other service prescribed by the regulations. total network charges for a period means the total revenue collected by a network operator at any time (whether or not during the period concerned) in respect of regulated services provided by the network operator during that period. 9 Independent review of economic impact report As soon as reasonably practicable after the commencement of this Act, the Treasurer must commission and publish an independent review of the Deloitte Access Economics report entitled "Economic Impact of State Infrastructure Strategy—Rebuilding NSW" published in November 2014. 10 Post-transaction independent review Within 12 months after completion of the last authorised transaction under this Act, the Treasurer is to commission and publish an independent review that— (a) reviews the powers of the Price Commissioner under this Act (with the review to include consultation with stakeholders), and (b) determines whether network charges have increased as a result of the authorised transactions. 11 Payment and application of proceeds of transactions (1) The proceeds of the transfer of electricity network assets to the private sector pursuant to an authorised transaction (the transaction proceeds) belong to and are payable directly to the State. (2) The transaction proceeds include any payment to a public sector agency that is a periodic lease payment under a lease of electricity network assets to the private sector pursuant to an authorised transaction. (3) The transaction proceeds paid to the State are to be paid in such proportions as the Treasurer directs into— (a) the Restart NSW Fund (the Restart Fund) established under the Restart NSW Fund Act 2011, and (b) the Residual Liabilities Fund established under this Part. (4) The following deductions are authorised to be made from the transaction proceeds— (a) deduction of such amounts as the Treasurer approves to repay debt and satisfy other liabilities of a public sector agency in respect of electricity network assets transferred for the purposes of an authorised transaction, (b) deduction of such amounts as the Treasurer approves to reimburse public sector agencies for payments made by them in respect of any tax, duty, fee or charge imposed by any Act or law of the State or any other jurisdiction in connection with a transaction arrangement, (c) deduction of such amounts as the Treasurer approves to satisfy any liability of a public sector agency arising under or in connection with a transaction arrangement, (d) deduction of such amounts as the Treasurer approves to meet expenses reasonably incurred by public sector agencies for the purposes of an authorised transaction. (5) The transaction proceeds do not include any amount certified by the Treasurer as paid or payable to a public sector agency as a tax, duty, fee or charge imposed by any Act or law of the State in connection with a transaction arrangement. (6) The deductions authorised to be made from the transaction proceeds may be made before payment of the transaction proceeds into the Restart Fund or Residual Liabilities Fund, or may be made by payment from either or both of those Funds. (7) The requirements of this section do not affect the validity of a transaction arrangement. 12 Residual Liabilities Fund (1) There is to be established in the Special Deposits Account a fund called the Electricity Network Residual Liabilities Fund (the Residual Liabilities Fund), which is to be administered by the Treasurer. (2) There is payable into the Residual Liabilities Fund— (a) such amount as the Treasurer directs to be paid out of the transaction proceeds under section 11, and (b) interest and any other amounts accruing from time to time from the investments of the Residual Liabilities Fund. (3) There is payable from the Residual Liabilities Fund such amounts as the Treasurer directs from time to time— (a) for payment in discharge of any liabilities of a public sector agency that arise in connection with an authorised transaction or electricity network assets (residual transaction liabilities), or (b) for payment to the Consolidated Fund or the Restart Fund, or (c) for payment of expenses incurred in relation to the administration of the Residual Liabilities Fund. (4) For the purposes of this section, assets, rights and liabilities do not cease to be electricity network assets when they are transferred to the private sector for the purposes of an authorised transaction. (5) The Treasurer may invest money in the Residual Liabilities Fund in any way that the Treasurer considers appropriate. Part 3 Facilitating the authorised transactions 13 Treasurer's functions The Treasurer has and may exercise all such functions as are necessary or convenient for the purposes of an authorised transaction. The functions conferred on the Treasurer by any other provision of this Act do not limit the Treasurer's functions under this section. 14 Manner of effecting authorised transaction (1) An authorised transaction is to be effected as directed by the Treasurer and can be effected in any manner considered appropriate by the Treasurer. (2) There are no limitations as to the nature of the transactions or arrangements that can be entered into or used for the purposes of an authorised transaction. (3) Electricity network assets can be transferred pursuant to this Act whether or not the land in, on or over which they are situated is owned by the owner of the assets. Note— Section 51 of the ES Act provides that electricity works are owned separately from the land in, on or over which they are situated and ownership of land in, on or over which electricity works are situated does not constitute ownership of those works. (4) The provisions of this Act for the establishment of various kinds of transaction entity do not limit the nature of the entities or arrangements that can be used for the purposes of an authorised transaction. 15 Transaction SOCs (1) A statutory State owned corporation may be established under this Act as a transaction SOC for the purposes of an authorised transaction. (2) The Governor may by order published in the Gazette— (a) create a corporation under a corporate name specified in the order, and (b) specify the functions of the corporation, and (c) direct that the corporation is established as a statutory State owned corporation and as a transaction SOC. (3) On the day on which the order takes effect— (a) a corporation is constituted with the corporate name and functions specified in the order, and (b) the State Owned Corporations Act 1989 is amended by inserting in Schedule 5 the corporate name specified in the order (to establish the corporation as a statutory State owned corporation under that Act), and (c) the State owned corporation thereby established is a transaction SOC for the purposes of this Act. (4) The portfolio Minister of a SOC established under this section is the Minister administering the Energy Services Corporations Act 1995. (5) Schedule 2 has effect with respect to a transaction SOC. The provisions of that Schedule are in addition to and (except to the extent to which that Schedule otherwise provides) do not derogate from the provisions of the State Owned Corporations Act 1989. 16 Transaction companies (1) The Treasurer may for the purposes of an authorised transaction establish, or direct the establishment of, companies as transaction companies in any of the following ways— (a) the formation or acquisition by or on behalf of the State or a SOC of a company limited by shares, so that all the issued shares in the company are held by or on behalf of the State or a SOC (or both), (b) the formation or acquisition of a company as a wholly owned subsidiary company of a transaction company, (c) the conversion of an electricity network SOC or transaction SOC into a company limited by shares as provided by Schedule 3. (2) A transaction company that is a public sector agency may be converted from one kind of company to any other kind of company. (3) Except by express agreement with the Treasurer— (a) a transaction company is not and does not represent the State, and (b) the debts, liabilities and obligations of a transaction company are not guaranteed by the State. (4) The Treasurer may act for or on behalf of the State, a SOC or a transaction company that is a public sector agency in connection with the rights, privileges and benefits, and the duties, liabilities and obligations, of the State, a SOC or a transaction company as the holder of shares or other securities in or issued by a transaction company. (5) Shares and other securities in or issued by a transaction company that is a public sector agency may be issued or transferred in accordance with the directions of the Treasurer. The Treasurer may on behalf of the State, a SOC or a transaction company that is a public sector agency, enter into and carry out transaction arrangements for the issue or transfer of shares and other securities in or issued by a transaction company. (6) If an electricity network SOC becomes a transaction company by being converted into a company under this section, a reference in this Act to the electricity network SOC includes a reference to that transaction company. (7) The provisions of this section are declared to be Corporations legislation displacement provisions for the purposes of section 5G of the Corporations Act in relation to the provisions of the Corporations legislation generally. 17 Functions of electricity network SOCs and transaction entities (1) Each electricity network SOC and transaction entity has and may exercise all such functions as are necessary or convenient for the purposes of an authorised transaction. (2) The functions conferred by this section are in addition to any other functions that an electricity network SOC or a transaction entity has apart from this section and those other functions do not prevent or otherwise limit the exercise of the additional functions conferred by this section. (3) The Treasurer may act for or on behalf of an electricity network SOC or a transaction entity in the exercise of any of its functions for the purposes of an authorised transaction while it is a public sector agency. 18 Direction and control of electricity network SOCs and transaction entities (1) Each electricity network SOC and transaction entity is subject to the direction and control of the Treasurer in the exercise of any of its functions for the purposes of an authorised transaction while it is a public sector agency. (2) The Treasurer may give directions for the purposes of an authorised transaction to an electricity network SOC or transaction entity, and to the directors and other officers of an electricity network SOC or transaction entity. Any such directions must be complied with by the electricity network SOC, the transaction entity or the directors or other officers concerned. (3) Directions to a transaction entity (or its directors and other officers) can only be given and are only required to be complied with while the transaction entity is a public sector agency. (4) The power to give directions under this section extends to directions with respect to the way in which an electricity network SOC or transaction entity is to conduct its business and other affairs. (5) Action taken by an electricity network SOC or transaction SOC to comply with a direction of the Treasurer under this Act does not require the approval of the voting shareholders or portfolio Minister of the corporation. (6) Anything done or omitted to be done by a director or other officer of an electricity network SOC or transaction entity in compliance or purported compliance with a direction given by the Treasurer under this Act does not subject the director or officer personally to any action, liability, claim or demand. (7) The provisions of this section are declared to be Corporations legislation displacement provisions for the purposes of section 5G of the Corporations Act in relation to the provisions of the Corporations legislation generally. Part 4 Arrangements for transfer of staff 19 Interpretation In this Part, networks employee means an employee of an electricity network SOC and includes a person who was an employee of an electricity network SOC immediately before the person's employment was transferred under this Part to the employment of another public sector agency. 20 Transfers within public sector (1) The Treasurer may, for the purposes of an authorised transaction, by order in writing transfer the employment of a networks employee to the employment of another public sector agency. (2) A transfer of employment under this section does not require the consent of the person transferred. (3) An employee whose employment is transferred under this section is (until other provision is duly made under any Act or law) to be employed in accordance with any relevant statutory provisions, awards, agreements and determinations that would have applied to the employee had the employee remained an employee of the electricity network SOC concerned. (4) The Treasurer may negotiate and enter into agreements or industrial instruments concerning workplace relations for or on behalf of a public sector agency in connection with the operation of this section. 21 Transfers to private sector employment (1) The Treasurer may, for the purposes of an authorised transaction, by order in writing transfer the employment of a networks employee (a transferred employee) to the employment of a private sector entity (the new employer). (2) A transfer of employment under this section does not require the consent of the networks employee transferred. (3) The employment of a transferred employee with the new employer is to be on the same terms and conditions as applied to the employee as a networks employee immediately before the transfer of employment. 22 Arrangements for transferred employees (1) On the transfer by order under this Part of an employee's employment from one employer (the current employer) to another employer (the new employer) the provisions of this section have effect. (2) If the employee is an apprentice or trainee under the Apprenticeship and Traineeship Act 2001— (a) the new employer must apply under section 20 of that Act for approval to the transfer of the apprenticeship or traineeship to the new employer, and (b) consent to the transfer is not required to be given by the apprentice or trainee or the current employer (despite section 20 (4) of the Apprenticeship and Traineeship Act 2001). (3) An employee is not entitled in respect of the same period of service to claim a benefit under this Act and another law or instrument. (4) The Treasurer may in connection with the operation of Schedule 4 give a certificate in writing as to the extent of the accrued rights to annual leave, extended or long service leave or sick leave that are retained by the employee under that Schedule, and such a certificate is evidence of the matters certified. (5) Nothing in the Long Service Leave Act 1955 prevents payment in connection with the transfer under this Act of the employment of an employee to the employment of a private sector entity of the monetary value of long service leave in lieu of an entitlement to that leave accrued as a networks employee before the transfer of the employee's employment. 23 Operation of other laws and entitlements The following provisions apply in relation to the transfer of a person's employment under this Part— (a) the transfer has effect despite any other law, contract or instrument under a law, (b) the transfer does not constitute a retrenchment, redundancy or termination of employment at the initiative of the Crown or any other public sector agency, (c) the person transferred is not entitled to any payment or other benefit by reason only of having ceased to be an employee of a public sector agency as a result of the transfer, (d) a public sector agency is not required to make any payment to the transferred person in relation to the transferred person's accrued rights in respect of annual leave, sick leave or extended or long service leave. 24 Operation of Commonwealth law A provision of this Part (including a provision to the extent that it imposes or continues a term or condition of employment) has no effect to the extent of any inconsistency with any provision of the Fair Work Act 2009 of the Commonwealth or of any instrument under that Act. Part 5 Arrangements for transfer of assets and functions 25 Vesting orders The Treasurer may make vesting orders under Schedule 5 for the purposes of an authorised transaction. 26 Severance of fixtures (1) The Treasurer may by order in writing for the purposes of an authorised transaction direct that specified assets to which this section applies are (if they are fixtures) severed from the land on, under or above which they are situated. (2) The effect of such an order is that the assets concerned are deemed to be severed from the land concerned and may be dealt with as personal property separate from the land for the purposes of an authorised transaction. (3) This section applies to assets designated by the Treasurer by order in writing to be assets to which this section applies. Assets may be designated as assets to which this section applies only if they are owned by an electricity network SOC (whether or not the land concerned is owned by an electricity network SOC or another public sector agency). (4) The severance of an asset from land under this section does not affect the right of the asset to be situated on, under or above that land and does not affect any right to drain water or sewage from the asset across and through the land or to use any means of drainage of water or sewage from the asset across and through the land. 27 Grant of relevant authorisations (1) The Treasurer may by order in writing given to the relevant administering agency direct the grant of a specified relevant authorisation to a person who becomes or who it is proposed will become the new operator of any electricity network assets pursuant to an authorised transaction. (2) Such a direction (a grant direction) operates to grant the specified relevant authorisation on such terms and conditions and subject to such endorsements as may be specified in the direction, and so operates— (a) without the need for any action by the relevant administering agency, and (b) without the need for the making or determination of any application for the relevant authorisation, and (c) despite any requirement of or restriction imposed by a relevant law in relation to the grant of a relevant authorisation. (3) A grant direction may only direct the grant of a relevant authorisation that— (a) operates to transfer or replace a relevant authorisation that is currently in force, and (b) is subject to terms, conditions or endorsements that are the same (or to substantially the same effect) as those to which that relevant authorisation is subject. (4) A grant direction may direct the grant of more than one relevant authorisation to transfer or replace an existing relevant authorisation. (5) The Treasurer is to consult with the relevant administering agency before giving a grant direction for a relevant authorisation. (6) The Treasurer may direct the relevant administering agency to give effect to a grant direction by formally granting, and issuing the appropriate documentation for, the relevant authorisation concerned. The relevant administering agency must comply with the Treasurer's direction within the period specified in the direction. (7) Anything done by an electricity network SOC or other public sector agency in compliance with a condition or endorsement of a relevant authorisation in relation to el