ICCC not Regulating Electricity

by PNG Business News - July 26, 2021

Transmission lines installation in Kimbe, West New Britain, Papua New Guinea (Photo Credit: ADB)

Following the passing of the National Energy Authority Act 2021, the Independent Consumer and Competition Commission (ICCC) said that it no longer had regulatory authority over the power business (NEA Act).

Commissioner and CEO Paulus Ain stated that this was done in line with National Gazettal Notice No: G443, which went into force on July 5.

He stated that the ICCC has regulated the power supply sector since 2002 until the NEA Act and Electricity Industry (Amendment) Act 2021 were passed.

“The electricity industry in PNG was declared under the Electricity Industry Act to be a regulated industry for purposes of the ICCC Act 2002 until the passing of the NEA Act,” he said.

“Accordingly, in 2002, the then Minister for Treasury, the late Sir Mekere Morauta, declared all power supply services to be regulated services under the ICCC Act.

“As a result of these declarations, the electricity tariffs, service standards and licensing arrangements have been subjected to the ICCC’s oversight.”

The ICCC, according to Ain, collaborated with all stakeholders, industry players, and development partners, including funders, to design and implement the required economic and technical regulatory frameworks, strategies, procedures, guidelines, and measures to enhance and ensure:

  • PNG's Efficiency in the Electricity Sector;
  • Regulatory and Impartiality Independence of the Market;
  • The competitiveness of the Market;
  • INEXPENSIVE pricing of electricity services; and,
  • SERVICE reliability and accessibility.

“Since 2002, the ICCC has supported the Government’s development agendas for the electricity industry by developing and implementing various electricity industry codes, rules and regulations that promote and protect efficiency and competition for electricity markets, improved service standards, and ensured regulatory compliance.”

The National Energy Authority was formed under the NEA Act (NEA).

According to Ain, the energy/electricity sector's institutional reforms meant that:

  • Although there was no clear delineation about separation in duties under the NEA Act or the EI Amended Act, the NEA would undertake the economic regulatory functions of the ICCC.
  • The list of ICCC functions, as well as portions of the Electricity Industry Act pertaining to land access and ownership of transmission lines, safety and technical requirements and crimes, will be repealed under the EI (Amendment) Act.
  • Although there did not appear to be any grandfathering clauses, LICENSES granted under the Electricity Industry Act (Ch. 78) and the ICCC Act were maintained under the NEA Act; and,
  • NEA would be able to levy taxes and fees, including generation licensing charges.

According to Ain, the NEA Act has a lot of anomalies, confusing clauses, overlapping duties, and inconsistencies that are likely to have a negative impact and throw the electrical business into disarray, further jeopardizing the government's aim of 70% power availability by 2030.

While the ICCC recognized the government's choice to create the NEA, he stated that the regulatory system described in the NEA Act needed to be corrected to ensure that the NEA's activities remained sound and appropriate.

 

Reference: The National (22 July 2021). “ICCC not regulating electricity”.



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