On 6 February 2025, key changes to the Electricity Industry Act 2004 (WA) (EI Act) were made by the commencement of parts of the Electricity Industry Amendment (Distributed Energy Resources) Act 2024.
These changes introduce:
The changes introduce a new State electricity objective — a replacement of the previously separate electricity objectives applying in the South West Interconnected System and in the Pilbara.
The State electricity objective is to promote efficient investment in, and efficient operation and use of, electricity services for the long-term interests of consumers of electricity in relation to:
The State electricity objective codifies what is sometimes called the “energy trilemma”, reflecting the very real tension between the advancement of three core concerns about energy policy: reliability, cost and sustainability.
Enshrining the energy trilemma in the State electricity objective brings into law and the contemplation of policy makers, regulators, decision makers and ultimately into the mind of those tasked with interpreting the EI Act the core tension that has underwritten energy policy and politics over – at least – the past two decades.
Existing objectives relating to the price of electricity, and the quality, safety, security and reliability of the supply of electricity remain components of the updated objective.
They key change, however, is the introduction of the objective of promoting the efficient investment in, and efficient operation and use of, electricity services for the long-term interests of consumers of electricity in relation to the environment, including reducing greenhouse gas emissions.
The introduction of an environment arm follows similar changes made in the East coast’s National Electricity Market last year, which saw its objectives updated to include the achievement of its participating jurisdiction’s greenhouse gas reduction targets.
The significance of a new State electricity objective plays out in the following ways:
The EI Act now expressly provides that the Minister for Energy, the Economic Regulation Authority, the Coordinator and the Electricity Review Board must have regard to the State electricity objective in carrying out a function under the EI Act.
The Minister for Energy, the Economic Regulation Authority, the Coordinator and the Electricity Review Board may give the weight of any aspect of the State electricity objective that they, as applicable, consider appropriate in all the circumstances.
A failure by these four key regulatory players to comply with this requirement leaves their administrative decisions open to legal challenge, including in relation to the making of regulations and decisions under the EI Act.
In addition, the State electricity objective is adopted as the Pilbara electricity objective and is hardwired into many aspects of the Pilbara regulatory regime. This means that the Pilbara’s Independent System Operator, network services providers and essential system services providers are required to have regard to or promote the State electricity objective in performing various functions.
2. A key interpretive device for making sense of the law bodies tasked with interpreting the EI Act and instruments made under it (including lawyers) will tend to take into account and favour an interpretation of the EI Act and related instruments that advances the State electricity objective, as opposed to an interpretation that contradicts it. This is because, given its significance and centrality, the State electricity objective will be taken to reflect the overarching objective of Parliament.
While key statutory decision makers are now required to have regard to environmental factors, it does not necessarily mean that environmental objectives will be advanced in all instances. It does mean that, as an arm of the “energy trilemma”, they must be considered in any decision under the EI Act.
And relatively speaking, this should see an increase in the extent to which environmental matters are considered in Western Australia’s electricity sector.
The changes empowers the creation of the Electricity System and Market Rules (ESMR).
The ESMR will be a consolidation of the:
The subject matter of these instruments has also been expanded to allow for the ESMR to better deal with a power sector in transition, including in relation to wide-spread uptake of distributed energy resources.
Given the significant of this consolidation, the likelihood of some degree of streamlining and past practice, we understand that Energy Policy WA, the Government’s energy policy agency, will be consulting broadly around the development of the ESMR.
For specific advice on Western Australia’s energy sector, please contact Luke O’Callaghan, Partner, or Cheryl Dickson, Special Counsel from our leading Energy team.