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- 29 November 2000
Electricity Legislation Amendment (TransGrid) Bill
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Page: 11146
Second Reading
The Hon. M. R. EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [10.11 p.m.]: I move:
That this bill be now read a second time.
I seek leave to have the second reading speech incorporated in Hansard.
Leave granted.
The Electricity Legislation Amendment (TransGrid) Bill provides the legislative basis to ensure that provisions for easements reflect new technologies required by the bulk electricity transmission corporation in New South Wales. The legislation reflects the Government's policy objective foreshadowed in 1998 of making strategic use of synergies between an electricity network and telecommunications. TransGrid is responsible for the high voltage electricity transmission network that conveys bulk electricity across the State. TransGrid performs this function in accordance with its powers and duties under the Electricity Supply Act 1995, the national electricity law and the national electricity code.
When TransGrid was established, it was authorised under its establishment legislation to utilise and develop its transmission facilities for the provision of telecommunication services. This reflected the fact it is efficient to utilise existing infrastructure to roll out new communications and information infrastructure. Technology and TransGrid's operational arrangements are now at the point where TransGrid needs to progress telecommunications infrastructure as part of its network. In carrying out its obligations as a transmission network service provider, TransGrid requires a very reliable telecommunications system for monitoring and protecting the high voltage electricity network. This is essential to ensure the reliability and safety of the network.
Internal communications are also an integral part of TransGrid's current functions as a network provider in the national electricity market. TransGrid therefore has its own private telecommunications network, in the form of a microwave network. However, as a result of a decision of the Australian Communications Authority, which is responsible for managing access to the radio frequency spectrum, TransGrid must abandon its microwave telecommunications network beginning in December 2000. TransGrid has therefore looked to new, more efficient and reliable technologies to meet its communications needs.
TransGrid's transmission lines include overhead ground wires required for electrical protection and safety. New technologies mean that ground wires are now being manufactured with an optical fibre cable embedded in their core. These new wires are known as optical fibre ground wires [OPGW]. They are no greater in diameter than the existing overhead ground wires without the optical fibre cables. The OPGWs provide an opportunity for TransGrid to establish an alternative communications system to replace the microwave-based system. TransGrid has therefore developed a program to progressively replace the earth wires in its network with OPGWs.
The existence and effective operation of any network such as TransGrid's, relies on arrangements with landowners whose properties the network traverses. TransGrid has in place easements with landowners which facilitate the installation, maintenance and upgrading of the transmission network. Landowners have been provided with compensation for these easements which reflects the market value of their land. The Government fully appreciates that the existence of easements over a property may from time to time be a matter of inconvenience. Compensation reflects this.
Although landowners may face some inconvenience or some visual impacts from the overhead wires this is offset not only by compensation but also by the benefits of being connected to an electricity network to obtain supply. The move from the old-fashioned earth wires to the OPGW will not result in any additional impact on landowners as the diameter of the wire is unchanged. Installation of the OPGW is no different or onerous than replacement of worn out earth wires that has occurred in the past. The OPGW provides a more reliable communication network for TransGrid which will aid timely repair and maintenance of the network, contributing to reliability of the electricity network for customers.
The OPGW is an industry-standard one. This provides greater optical fibre capacity than currently needed by TransGrid for its internal communications. There is potential for TransGrid to explore commercialisation of this additional capacity in line with its authorisation to utilise and develop its transmission facilities for the provision of telecommunications. There are two benefits of this. Firstly, if TransGrid is able to enter into new commercial ventures it is able to improve its return on the Government's investment in TransGrid. This would be reflected in improved dividends to Government, supporting the Government's essential commitments to the people of New South Wales.
Secondly, the additional optical fibre capacity represents an infrastructure investment in New South Wales, which should be able to help deliver improved communication for people across the State. New South Wales is not the only State to recognise the potential for using electricity networks to support telecommunications. Victoria, Queensland and South Australia have all made legislative amendments to facilitate a transmission operator's involvement in telecommunications. This has included specific provisions to enable easements acquired for the electricity network to also cover the telecommunication functions.
The Electricity Legislation Amendment (TransGrid) Bill follows the lead of the other States and makes clear arrangements for TransGrid to actively pursue the telecommunications functions which were authorised in its establishment legislation. In particular, the bill provides a clear basis for TransGrid to use its existing electricity transmission easements, whether acquired by agreement or compulsory process, for telecommunications purposes. This will cover the installation, operation, maintenance and removal of any telecommunications works. It will also make it clear under the existing powers in the Electricity Supply Act that TransGrid is able to enter land for these purposes subject to usual notice requirements and compensation for any damage caused to land as a result of this.
The bill does not provide a transmission operator with power to compulsorily acquire land exclusively for telecommunications purposes. This reflects the position in other States. However, where a transmission operator compulsorily acquires land, or an interest in land, for electricity transmission purposes, the bill authorises the use of any acquired land for telecommunications facilities. The extension of the use of any future easements only applies where the easement is acquired by compulsory acquisition.
Where any future easement is acquired by agreement with the owner of the land, the transmission operator must if the land is required for telecommunications facilities, separately negotiate access for these purposes as part of the agreement to acquire the land. Owners of land currently affected by easements have already been compensated based on the market value of the land at the time of the compulsory acquisition. Also, it should also be recognised that the OPGW has no additional impact beyond that of the previous earth wires.
No further compensation will be payable to landowners with respect to extension of use of the easement for telecommunication purposes. Where TransGrid compulsorily acquires an easement for its electricity network, the bill extends its use to the provision of telecommunications purposes. As is currently the position, with respect to compulsory acquisation, TransGrid will be required to pay compensation in accordance with the Land Acquisition (Just Terms Compensation) Act.
Where TransGrid relies on its statutory powers to enter land to maintain, install or remove telecommunications facilities it will be required to compensate landowners for any damage arising from it accessing the land. The amendment bill strikes the appropriate balance between the rights of landowners and the benefits to the community of enhanced telecommunications capacity and greater security of electricity supply. At this stage there is no shareholder approval for TransGrid to enter into a specific commercial arrangement concerning the spare capacity on the OPGW. Any proposals will be carefully considered by the shareholding Ministers. It will be up to TransGrid to ensure that any proposal is satisfactory in terms of competition policy principles.
The bill is all about facilitating improvements to TransGrid's essential internal communications infrastructure, improving its commerciality, and allowing it to explore opportunities for improved telecommunications infrastructure benefiting the people of New South Wales. The rights of landowners over whose properties the network is located are adequately protected through the proposed easement arrangements. The bill is important to ensure the ongoing operation and viability of TransGrid. It is important to improve infrastructure in New South Wales, which is a particular focus of the Carr Labor Government in the post-Olympics period. Nevertheless the bill does not change or undermine responsibility for the high voltage electricity transmission. I commend the bill to the House.
The Hon. D. J. GAY (Deputy Leader of the Opposition) [10.11 p.m.]: The bill will allow TransGrid, as the State's high voltage network operator, to install and utilise new technologies on its existing easements to improve its telecommunications network. The legislation that established TransGrid held provisions for the company to utilise and develop transmission facilities for the provision of telecommunications services, reflecting the fact that it is more efficient to use the existing infrastructure than to build new structures to support telecommunications. The bill supports the communications provisions of the original legislation, and the need for an upgrade of TransGrid's communications functions has been brought about by a decision of the Australian Communications Authority [ACA]. TransGrid currently operates a microwave network to support its internal communications, which are used to transmit data vital to the operation of the national electricity market [NEM]. The network also allows the company to monitor and report faults across its network.
The decision by the ACA means that TransGrid will have to abandon its existing network and move to new technologies beginning in December. Once again the Government has done its usual trick and left this bill to the last moment, when one considers that we are only days away from December. The new technology being installed by TransGrid is known as optical fibre ground wires. These are an advancement on the existing ground wires that are part of the overhead network's electrical and safety features. The new wires will allow TransGrid to do two things: maintain a ground wire network and, at the same time, provide a new telecommunications infrastructure. I understand that the new wire will be the same diameter as those already in place, and will have no visual impact. TransGrid has in place access agreements with land-holders over whose properties the high voltage network already travels.
These agreements include easements to allow for the installation, maintenance and upgrading of the transmission network. I note that the bill contains no provision for additional compensation for land-holders for work that will be carried out by TransGrid in relation to the installation of this new network service. The argument from the Government—and it is a plausible and reasonable one—is that the addition of these new ground wires will not result in any additional impact on land-holders. I certainly hope that is the situation, but if it is not it will need to be revisited. But I am concerned that the Minister has signalled that TransGrid may be able to explore further commercialisation of the optical fibre ground wire network.
In his second reading speech the Minister stated that commercialisation of the network could lead to increased dividends to the Government, as well as delivering better telecommunications to the people of the State. When one hears that statement it means only one thing: Kimberley Maxwell will be the next AAPT, Optus or whoever for the State. There is nothing wrong with that. If you have facilities to carry stuff to an easement without using new easements, there is a degree of commonsense about that. But in this instance the negotiations over the easement with the landowners concerned did not envisage that Kimberley Maxwell, acting on behalf of the Treasurer who sits across from me at the moment, was about to become the new landline provider in this country. It is something that needs to be examined. We are not saying that the Government should not do it.
The Hon. M. R. Egan: It is very good for the bush.
The Hon. D. J. GAY: It is. It has huge potential.
The Hon. M. R. Egan: That is all we are interested in, the wellbeing of the State.
The Hon. D. J. GAY: The Treasurer indicates, with that steely glint he adopts when he can see money flowing into his coffers, that he is only thinking of the State and it is good for the bush. The Opposition is concerned about legislative changes that could allow a telecommunications provider to access State-owned infrastructure for the purposes of furthering their own networks. This raises some important questions for the Government. If a telecommunications company or an Internet service provider wanted to use the additional optical fibre capacity would landowners been compensated? Would they be able to share in the windfall profits of the State Government? I wonder. Could the use of the additional capacity by a private company then limit TransGrid's future use of the optical fibre, meaning that another upgrade would need to be put in place? The electricity market changes on almost an annual basis, especially when we are facing full contestability for electricity in our State.
Original negotiations for access and easements never included any forecast use of the network for commercial telecommunications functions. There is a cost associated with negotiations of this nature, and it has been a cost borne by the Government. I seek an assurance from the Government on those matters. Although no-one can disagree with the need for better telecommunications in rural and regional areas, I am concerned about the indication from the Minister that TransGrid's network could be used to provide a boost at minimal cost to the private sector. The bill also makes it clear that TransGrid will not be allowed to develop facilities for the sole purpose of telecommunications. That means that TransGrid would not be able to compulsorily acquire further land to carry out telecommunications functions. Use of easements agreements will be extended to cover all works on the telecommunications network.
I am pleased to see that the bill includes provisions allowing the appropriate compensation, should any damage or loss to landowners be caused by the carrying out of these works. We certainly appreciate that. The bill also recognises that any further compulsory acquisitions of easements by TransGrid for its electricity network extends the use of that easement for telecommunications purposes. Compulsory acquisition will remain tied to the Land Acquisition (Just Terms Compensation) Act, a great Act that is the legacy of a former Deputy Premier Wal Murray. For the information of the Treasurer, when he tried to introduce that bill the boffins told him that he could not do it. It was impossible and it would not work. It is now one of the most important bills in this State so far as treating with a degree of fairness the people whose land may be dotted with easements like the ones we are discussing.
The Opposition recognises the importance of this bill in providing for TransGrid to make use of new technologies to upgrade its internal communications. Certainly, the Opposition supports the bill, however, it has concerns, as indicated, for the future commercial use of the network. I look forward to the Government's response to our concerns.
The Hon. Dr P. WONG [10.20 p.m.]: TransGrid is a public utility responsible for a high voltage electricity transmission network across New South Wales. This amendment will enable TransGrid to operate in the world of new technologies and to install an optical fibre ground wire. The Electricity Legislation Amendment (TransGrid) Bill is similar to legislation now operating in other States. I am satisfied that this bill will offer protection to landowners affected one way or the other by the development of the optical fibre ground wire. Therefore, I support this bill.
Ms LEE RHIANNON [10.21 p.m.]: It is with pleasure that I can say I agree with the Treasurer on one of his bills. The Greens support the Electricity Legislation Amendment (TransGrid) Bill and note the modernised electricity provisions. We note also that there will be minimal or probably no change to visual aspects. One important matter about which I have not heard anything to date—but perhaps the Minister will refer to it in his reply—is that it is most likely that workers in the industry will be able to conduct their work in a safer environment because they no longer will be exposed to so much radiation. That is a positive measure. The Greens are pleased to support the bill.
The Hon. Dr A. CHESTERFIELD-EVANS [10.22 p.m.]: I support the bill but I must say that it raises more questions than it answers. TransGrid's income is primarily from regulated transmission charges determined by the Australian Competition and Consumer Commission [ACCC] to provide a known rate of return. The ACCC bases determination on asset valuation of TransGrid's system. As the Minister will be aware, there has been ongoing dispute about the appropriate valuation process, particularly with regard to easements held by electricity utilities in urban areas, which obviously have a significant potential financial value with the possible exception of a transmission line that is located in airspace. On the surface, the installation of telecommunications services into these easements is an appropriate use of existing assets. However, in many cases there is no particular requirement for TransGrid to make these investments. Easements have a history of being used by multiple services; indeed, third party access to easements can be gained via the declared facilities mechanism of the Trade Practices Act. Obviously, in a case where the telecommunications facility is intended to be an optical cable inside a TransGrid cable, TransGrid must own the asset. However, there is no particular reason why TransGrid must operate the telecommunications system or enter the business of telecommunications provision.
The Democrats have no objection to a public utility taking advantage of the natural business to innovate and update additional business opportunities, provided the core business remains well managed. Obviously, this is quite critical as we do not want distractions in the area. It does not escape our memories that Mercury Energy in Auckland was pursuing a number of business synergies before the Auckland central business district blackout. It was noted at the time that to some extent the failure of the Auckland electricity group was due to senior management not having sufficient interest in the mundane business of running a network when so-called sexier business opportunities existed in other deregulated markets. In short, they took their eye off the ball as they saw potential in other areas. They did not maintain their own cables, and a bad blackout resulted. The move by TransGrid from running an internal communications system, which merely maintained its own wires regardless of what happens to the conventional phone system, to running a system with potential on-sale value constitutes a significant movement in corporate strategy.
The Hon. D. J. Gay: The communications system is to help protect the wires.
The Hon. Dr A. CHESTERFIELD-EVANS: Yes, of course. The Deputy Leader of the Opposition is quite correct: The internal communications system was to maintain the electrical system. That is what I said.
The Hon. D. J. Gay: Present tense, not past tense.
The Hon. Dr A. CHESTERFIELD-EVANS: Was set up for this purpose and is still maintaining the system.
The Hon. D. J. Gay: And this measure will improve it.
The Hon. Dr A. CHESTERFIELD-EVANS: It will add on other telecommunications systems.
The Hon. D. J. Gay: As well as improvements.
The Hon. Dr A. CHESTERFIELD-EVANS: As well as maintaining the system. The question is: Does TransGrid have sufficient skills to expand its business into other communication areas? Is it the intention of TransGrid to go into partnership with private sector telecommunications companies in the delivery of these services? Hopefully it is, but none of the strategies are indicated in the bill. The other question to ask is: How is the capital for this investment going to be raised? The capital to invest will go well beyond TransGrid's needs and would not be funded from the regulated cash flow determined by the ACCC, at least not without running down other regulated services for which the regulated cash flow is intended to pay. The cash flow determined by the ACCC to TransGrid relates to the valuation of its asset, a reasonable rate of return and the cost of the reasonable maintenance of that asset. It does not include speculative capital, shall we say, to take on other businesses that are not its core business. Is it going to borrow? If it borrows, what financial risk management processes will TransGrid apply? The Minister said nothing about this in the second reading speech.
TransGrid's past planning has led to a number of poor electricity decisions and potentially white elephant investments. Obviously we do not want it to get delusions of grandeur and start making other decisions in areas in which it does not have expertise. On other occasions in this House I have criticised, although perhaps not in the detail I could have, the decision of TransGrid to put a large amount of money—of the order of $170 million—into the central business district augmentation. It received from this Government permission to proceed with that augmentation although alternatives for cogeneration and energy and demand management strategies were not adequately considered in the decision by TransGrid, which was almost an internal decision with a tame consultant. It was able to tap into $170 million of taxpayers' money for a strategy that it said was necessary and which was not really subjected to a good public audit process.
There is concern that TransGrid may not make optimum use of capital. Clearly, if it then has a financial opportunity and a relatively unquestioned backing from the taxpayer, there is a question as to what extent it will go ahead in areas where it might perhaps not have expertise. Obviously, it would be preferable if it were to undertake some sort of joint venture and if the taxpayer had some guarantee in terms of management. But none of this is found in the Minister's second reading speech. Given that we have this opportunity, it would be good for the philosophy and the audit process on what TransGrid might want to do if it were stated at the time of the discussion of this enabling bill.
There are, of course, some potential visual impact and planning problems as not all telecommunications infrastructure to be installed will be as invisible as the optic fibre ground wires mentioned by the Minister in his second reading speech. We need to look at how that issue will be handled. I note that the Deputy Leader of the Opposition asked whether easements will pay dividends to land-holders. The Minister seems to play that down in his second reading speech, saying that when the easements were created the compensation was paid to the landowners. The suggestion in his speech seems pretty strong that that is the end of the matter.
I ask the Treasurer, who might be straining at the bit to make his speech in reply, to answer some of these questions. As I said, we do not have any problems with new technologies being grafted onto old, and indeed taxpayers getting a better deal for their money. We would like to know whether, if there is a large profit to TransGrid, it will be allotted less money by the Australian Competition and Consumer Commission and we will all have electricity networks bringing power to our door at a lower cost, or whether there will simply be more money in Treasury's pocket, in which case, of course, the value of TransGrid will go up immensely. It will simply be treated as a cash cow, like an old-fashioned electricity utility was. If that is the case, how does that fit into the overall strategy of a competitive market delivering cheaper services? I put these questions to the Treasurer and I hope that he will be able to answer them in his speech in reply.
The Hon. M. R. EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [10.33 p.m.], in reply: I thank honourable members for their contributions on the bill. I gathered from one or two contributions that there is an assumption around the place that money received by Treasury by way of taxes, charges, fines or dividends from State-owned corporations somehow seem to end up in the personal pocket of the Treasurer. Of course, it does not.
The Hon. Dr A. Chesterfield-Evans: "It's all my money", you said.
The Hon. M. R. EGAN: I treat it as I would treat my own. That is my obligation to the taxpayers of New South Wales. I am a very vigilant custodian of the public purse. The attitude that I was referring to reminded me of an occasion a few years ago when I was on holidays in Queensland. I was enjoying a beautiful breakfast one morning. I was reading the morning newspaper. When I was on my third or fourth cup of tea a woman walked up to me and said, "I hope you are enjoying spending my taxes." She obviously thought that that is what I was doing there. She thought that the taxes she contributed belonged to me personally. Anyway, I waved her on. It seems that some other people, particularly members of this House, think along a similar track. Let me assure the House that any revenue that Treasury or consolidated revenue receives, whether it be from taxes, dividends or whatever, belongs to the people of this State. That money is spent on services and facilities for the people of this State.
Ms Lee Rhiannon: Only some of the people.
The Hon. M. R. EGAN: Who is excluded?
Ms Lee Rhiannon: Your friends are the ones who benefit.
The Hon. M. R. EGAN: My personal friends? Who are they?
Ms Lee Rhiannon: I do not know; you tell me.
The Hon. M. R. EGAN: That really is an inane contribution from Ms Lee Rhiannon. She obviously thinks that in this country things work as they worked in Soviet Russia, where there were special shops for party officials and the secretary of the local people's committee could always be assured of a holiday at a State-owned dacha somewhere. That does not happen here. The money raised by consolidated revenue is spent on all of the people of New South Wales. I must say that I would love to answer the questions that the Hon. Dr A. Chesterfield-Evans has put to me, but the person who can unravel the mumbo jumbo of the Hon. Dr A. Chesterfield-Evans is a much more clever person than I would ever claim to be. So I will make no attempt to answer the matters that he raised.
The Hon. D. J. Gay: He made some valid points. Someone else must have written that speech.
The Hon. Dr A. Chesterfield-Evans: That is a cop-out.
The Hon. M. R. EGAN: It was the greatest lot of confused codswallop I have ever heard from the Hon. Dr A. Chesterfield-Evans.
The Hon. D. J. Gay: Some of it was, but not all of it.
The Hon. M. R. EGAN: Okay. Which part of it was not?
The Hon. D. J. Gay: The last part.
The Hon. M. R. EGAN: What was that? I can see that there is not a member in the House who can raise a single intelligent point that the Hon. Dr A. Chesterfield-Evans made.
Motion agreed to.
Bill read a second time and passed through remaining stages.
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