ANNUAL REPORT 2016-17 OVERVIEW AGENCY PERFORMANCE SIGNIFICANT ISSUES DISCLOSURES AND LEGAL COMPLIANCE APPENDIX Promoting fair prices, quality services and choice Image courtesy of Western Power Statement of compliance Dear Treasurer Hon. Ben Wyatt MLA ECONOMIC REGULATION AUTHORITY 2016-17 ANNUAL REPORT Treasurer In accordance with section 61 of the Financial Management Act 2006, I hereby submit for your 11th Floor, Dumas House information and presentation to Parliament, the annual report of the Economic Regulation Authority Havelock Street for the financial year ended 30 June 2017. West Perth WA 6005 The annual report has been prepared in accordance with the provisions of the Financial Management Act 2006, the Public Sector Management Act 1994 and the Treasurer’s Instructions. Yours sincerely, Nicola Cusworth Chair Front cover image courtesy of Western Power 2 Annual Report 2016-2017 Economic Regulation Authority OVERVIEW AGENCY PERFORMANCE SIGNIFICANT ISSUES DISCLOSURES AND LEGAL COMPLIANCE APPENDIX Accessing the annual report Our 2016-17 annual report and previous Image courtesy of Western Power annual reports are available on our website www.erawa.com.au. To make our annual report as accessible as possible, we have provided it in the following formats: • An interactive PDF version, which has links to other sections of the annual report, as well as external links to content on our website. • An online version, which allows for quick and Contact details easy viewing of annual report sections. This Office address Postal address version also features easy to use download and Office hours 9:00 am to 5:00 pm PO Box 8469, Perth WA 6849 print functions. Monday to Friday (except public holidays) • A text version, which is suitable for use with Tel: (08) 6557 7900 screen reader software applications Street address Fax: (08) 6557 7999 Level 4, Albert Facey House Email: [email protected] This report can also be made available in alternative 469 Wellington Street, Perth WA 6000 Web: www.erawa.com.au formats upon request, including audio, large print and braille. More information about us is available on our website or you can connect with us through Twitter @ERA_WA or find us on Linkedin and YouTube National Relay Service TTY: 13 36 77 (To assist persons with hearing and voice impairment) Annual Report 2016-2017 Economic Regulation Authority Annual Report 2016-2017 Economic Regulation Authority 3 OVERVIEW AGENCY PERFORMANCE SIGNIFICANT ISSUES DISCLOSURES AND LEGAL COMPLIANCE APPENDIX CONTENTS Statement of Compliance ......................................2 Significant issues impacting the Agency ......32 Other Legal Requirements ...........................79 Contact details .......................................................3 Disclosures and legal compliance .................33 Expenditure on advertising, market Accessing the annual report ..................................4 Financial Statements ......................................35 research, polling and direct mail .....................79 Overview ..............................................................5 Notes to the Financial Statements ..................40 Disability access and inclusion plan ...............80 Chair’s address ................................................6 Certification of Key Performance Indicators ....67 Compliance with public sector standards Executive Summary ........................................8 Key performance indicators ...........................68 and ethical codes ...........................................80 Operational structure ......................................8 Key effectiveness indicators ...........................68 Recordkeeping plans .....................................80 Enabling legislation ...........................................9 Performance Effectiveness .............................68 Substantive equality .......................................81 Responsible Minister ........................................9 Key efficiency indicators ................................. 71 Occupational Safety, Healthy and Injury About us ........................................................ 10 Ministerial Directions .......................................72 Management ..................................................81 Our values ...................................................... 11 Other Financial Disclosures ............................72 Other disclosures ..........................................82 Organisational Structure ................................. 12 Capital Works .................................................75 Complaints handling .......................................82 Governing Body ............................................. 13 Employment and Industrial Relations..............75 Public interest disclosures ..............................82 Corporate Executive ....................................... 14 Staff Development ..........................................76 Memoranda of Understanding .......................82 Administered Legislation................................. 16 Workers’ Compensation .................................76 Audit and risk .................................................84 Other key legislation impacting on the Compliance with public sector standards Appendix ............................................................83 ERA’s activities ............................................... 17 and ethical codes ...........................................76 Secretariat Output ..........................................85 Performance Management Framework ..... 18 Actions to ensure compliance with the Relationship to government goals .................. 18 Public Sector Standards in Human Shared Responsibilities with Resource Management ..................................77 Other Agencies .............................................. 18 Governance Disclosures ..............................79 Agency Performance ....................................... 19 Board and committee member Key performance indicators ........................... 19 remuneration ..................................................79 Financial performance ....................................20 Unauthorised Use of Credit Cards ..................79 Energy Markets ..............................................21 Regulation and Inquiries .................................23 Corporate .......................................................30 4 Annual Report 2016-2017 Economic Regulation Authority OVERVIEW AGENCY PERFORMANCE SIGNIFICANT ISSUES DISCLOSURES AND LEGAL COMPLIANCE APPENDIX OVERVIEW The Economic Regulation Authority (ERA) makes sure the delivery of water, electricity, gas and rail services is in the long-term interests of consumers. The ERA is the independent economic regulator for Western Australia. It regulates monopoly infrastructure and essential services. The ERA also undertakes inquiries, which provide recommendations to government on economic issues that are likely to have significant implications for the people and businesses of Western Australia. The ERA’s work includes: • Carrying out surveillance of Western Australia’s wholesale electricity market; • Determining third-party access arrangements for electricity, gas and rail infrastructure; • Administering the licensing schemes for electricity, gas and water service providers; and • Providing advice and analysis to the State Government on a wide range of economic issues. Infrastructure Arc courtesyImage of Annual Report 2016-2017 Economic Regulation Authority 5 OVERVIEW AGENCY PERFORMANCE SIGNIFICANT ISSUES DISCLOSURES AND LEGAL COMPLIANCE APPENDIX OVERVIEW Chair’s address The world of economic regulation is changing. At the beginning of 2016/17 the ERA had Regulators are increasingly expecting utility just acquired a new role in monitoring the companies to engage directly and deeply with energy market previously undertaken by the their customers before presenting regulatory Independent Market Operator, but expected proposals. Changing technologies mean that to lose some functions as the government not all services providers operate under the planned to transfer regulation of access to business models assumed in the design of energy infrastructure to the national energy some regulatory schemes. This is especially regulator. In the event, the transfer did not true in the energy sector, where the rapid happen before the March 2017 election, and Nicola Cusworth growth of solar generation is changing the the new Minister for Energy has indicated that operation of electricity systems and electricity the ERA will retain responsibility for access networks, and leading to new models of retail regulation for electricity networks and gas energy businesses. pipelines. A new access arrangement for Western Power will be determined in 2017/18. Energy policy attracted a great deal of attention The past year has been challenging for across Australia in 2016/17. Blackouts in One pleasing development in the Western the Economic Regulation Authority, with South Australia, reports of gas shortages in Australia energy market has been increasing significant changes in our work, structure the eastern states and rising energy prices competition in the gas sector. In May 2017, the and personnel. I was appointed Chair in raised government and public awareness of ERA granted retail licenses to two new entrants July 2016, after Professor Stephen King the challenge of delivering reliable, sustainable to the south west gas market, Origin and AGL. left to become a Commissioner at