South Australian Planning Review

Transcription

1 South Australian Planning Review Issues Paper Version 1.0 ElectraNet Corporate Headquarters East Terrace, Adelaide, South Australia 5000 PO Box, 7096, Hutt Street Post Office, Adelaide, South Australia 5000 Tel: (08) Fax: (08) Toll Free:

2 Copyright and Disclaimer Copyright in this material is owned by or licensed to ElectraNet. Permission to publish, modify, commercialise or alter this material must be sought directly from ElectraNet. Reasonable endeavours have been used to ensure that the information contained in this report is accurate at the time of writing. However, ElectraNet gives no warranty and accepts no liability for any loss or damage incurred in reliance on this information. Revision Record Date Version Description Author Checked By Approved By 10 June Final Myles Somers Planning Approvals Manager and Scott Haynes Principal Planner Surya Prakash Land Development Manager Surya Prakash Land Development Manager SA Planning System Review Issues Paper (final) (2).docx Page 2 of 31

3 Contents 1. PRINCIPLES FOR REFORM BACKGROUND ELECTRANET S LEGISLATIVE FRAMEWORK Australian Energy Market Commission National Electricity Rules Australian Energy Regulator Australian Energy Market Operator Essential Services Commission of South Australia Electricity Transmission Code (ETC) South Australian Electricity Act Other Legislation ISSUES PLANNING SYSTEM LACKS DEDICATED AND UNIQUE LAND USE APPROVALS STREAM FOR CRITICAL OR STATE SIGNIFICANT PUBLIC INFRASTRUCTURE INABILITY TO APPROVE AT PROJECT CONCEPT PHASE SECTION 49A EXCLUDES MOST HIGH VOLTAGE POWER LINE PROJECTS AND DOES NOT MIRROR SECTION 49 AS INTENDED (INCONSISTENCIES) PROVISIONS DO NOT RECOGNISE CRITICAL PUBLIC INFRASTRUCTURE ADDITIONAL COSTS FOR CONSUMERS FOR CRITICAL PUBLIC INFRASTRUCTURE INTEGRATION OF MAJOR PUBLIC INFRASTRUCTURE PLANNING AND STRATEGIC LAND USE PLANNING LACK OF FORMAL INVOLVEMENT OF PRIVATE SECTOR PUBLIC INFRASTRUCTURE PROVIDERS IN CO-ORDINATED LAND USE PLANNING AT STATE AND REGIONAL LEVELS CASE STUDIES CLARE NORTH SUBSTATION EYRE PENINSULA REINFORCEMENT SOUTH EAST TO SNUGGERY 132 KV TRANSMISSION LINE CONCLUSION RECOMMENDATION APPENDICES APPENDIX A LEGISLATIVE FRAMEWORK APPENDIX B ELECTRANET SUBMISSION TO LIBERAL PARTY SA DISCUSSION PAPER PLANNING REFORM SA Planning System Review Issues Paper (final) (2).docx Page 3 of 31

4 Figures Figure 2-1: Role of ElectraNet in the electricity supply chain... 9 Tables Table 1-1 Supportive Aspects of Current Planning System... 6 Table 1-2 Restrictive Aspects of Current System... 7 SA Planning System Review Issues Paper (final) (2).docx Page 4 of 31

5 Glossary of Terms Term ACCC AEMC AEMO AER APR COAG DAC DPTI DMITRE ESCOSA ETC GPCC NEM NER RIT-T SCER TNSP Description Australian Competition and Consumer Commission Australian Energy Market Commission Australian Energy Market Operator Australian Energy Regulator ElectraNet s Annual Planning Report Council of Australian Governments Development Assessment Commission Department of Planning, Transport and Infrastructure Department of Manufacturing, Innovation, Trade, Resources and Energy Essential Services Commission of South Australia Electricity Transmission Code Government Planning Coordinating Committee National Electricity Market National Electricity Rules Regulatory Investment Test - Transmission Standing Council on Energy and Resources Transmission Network Service Provider SA Planning System Review Issues Paper (final) (2).docx Page 5 of 31

6 Executive Summary ElectraNet endeavours to deliver electricity transmission network services at lowest long-run costs to the South Australian community. In order to achieve this, ElectraNet needs a planning system that complements the company s network planning activities and an approval process that gives a greater level of certainty for future asset development. ElectraNet has prepared the following information to assist in the SA Planning System Review being conducted by the State Government appointed expert panel. The Issues Paper considers ElectraNet s experiences in utilising provisions of the Development Act 1993 (referred to herein as Development Act) to facilitate approvals for project activity and long term planning of sites and corridors for electricity transmission infrastructure. These experiences include both supportive and restrictive aspects that have impacted upon the ability of the company to delivery efficient and cost effective public infrastructure as summarised in the Tables below. The Issues Paper identifies limitations within the current planning system and potential reform models that may be further considered as part of the legislative framework review process. The Paper provides a succinct summary of issues surrounding the planning of networks and integration of such into strategic land use planning. It also considers the complex regulatory environment applied to transmission network service providers through National Electricity Rules (NER) and learnings gained from ElectraNet s recent Revenue Determination made by the Australian Energy Regulator (AER). Interaction of the South Australian planning system with other national jurisdictions and legislation is explained to highlight a lack of connection with Development Act provisions. The Paper facilitates discussion between stakeholders and information that can both define and focus further necessary research. The Tables below provide a summary assessment on the effectiveness and practical application of the Development Act and Regulations and resultant impacts upon ElectraNet. Legislative or administrative provision DPTI Crown Sponsorship Supportive aspect DPTI liaison support provided at pre lodgement stage of Development Application (DA) Agency status for ElectraNet for DPA referrals Increased co-ordination of strategic land use planning and infrastructure planning through DPTI / ElectraNet collaboration Assessment timeframes delineated in Development Act Co-ordinated referrals of DA to Council and Agencies Section 49(A) Section 49 and 49A have been used successfully for a variety of ElectraNet development authorisations DAC as Planning Authority mostly consistent and considerate of state and regional wide importance of ElectraNet developments, however this relies on exercise of discretion that could change. Schedules 14 and 14A provides exemptions for certain prescribed activities Assessment timeframes are delineated in Development Act Co-ordinated referrals of DA to Council and Agencies Table 1-1 Supportive Aspects of Current Planning System SA Planning System Review Issues Paper (final) (2).docx Page 6 of 31

7 Legislative or administrative provision Council Development Plans and Development Plan Amendments Section 49A - Electricity Infrastructure Development Electricity transmission planning and approvals Private sector involvement in strategic land use planning Australian Energy Regulator acknowledges limitations in SA Planning System Supportive aspect Many Council DPAs reflecting out-dated policy on electricity infrastructure Uneven acceptance and outcomes from ElectraNet Agency referral responses to DPAs Major public infrastructure overlooked at local development plan level however in many cases collaborative efforts between DPTI and ElectraNet related to state and regional strategic land use frameworks is resulting in outcomes filtering into local Council Development Plans. The State Land Use Policy Library used by local Councils to update Development Plans through DPAs is not mandated. Clear mandating of land use policy is required especially for state wide issues such as major public infrastructure interests. Excludes power lines 66kv and over and greater in length than 5km Drafting of provisions was aimed at regulatory control of privatised infrastructure provision and to facilitate local Council planning approval. This is not commensurate with the state significance of such critical public infrastructure and as such is an out dated and economically negative provision. Development Assessment fees for public infrastructure increase costs for South Australian consumers Inability to obtain a statutory approval for intended use of site or corridor for future electricity infrastructure. This would allow for concept plan approval and greater certainty for infrastructure investment and business decisions by ElectraNet and customers. The SA Planning system including Development Act and Regulations play scant regard to infrastructure developments that are specifically critical to state economic development. This is particularly the case for high voltage electricity transmission which by its nature constitutes critical public infrastructure. Legislation and planning system is designed for an age when key infrastructure was planned for and provided by governments. Within the current system integration of major infrastructure, other than transport infrastructure into land use planning is managed on an adhoc basis, if at all. This applies in particular where the planning of infrastructure networks is external to the public sector by regulated private sector entities such as ElectraNet. In its final revenue decision for ElectraNet s Capital works program the AER acknowledged that under the SA Planning System land use policy does not guarantee development rights for critical infrastructure corridors. 1 The AER states that legislative effect is to merely provide assurances regarding land use policy rather than prohibit a competing land user from encroaching on a particular land parcel or easement. This in turn requires early acquisition of easements by ElectraNet as a prudent strategic expenditure to ensure urban development and other incompatible land uses do not limit the most efficient and cost effective delivery of future electricity transmission infrastructure. The SA Planning System does not play as significant role in supporting economically efficient infrastructure delivery as is evident in other States. Table 1-2 Restrictive Aspects of Current System 1 %20final%20decision%20for%20ElectraNet%27s% %20regulatory%20control%20period%20- %2030%20April%202013_0.pdf pg. 84 SA Planning System Review Issues Paper (final) (2).docx Page 7 of 31

8 1. Principles for reform The following key themes describe the principles of legislative reform that ElectraNet views as critical components of an improved planning system for South Australia in regard to delivery of electricity transmission infrastructure. 1. Declaration of Critical or State Significant Public Infrastructure: create Ministerial designation and authorisation process for critical or state significant public infrastructure within the Development Act (or its successor). This could include new legislation or linkage to other acts such as Electricity Act. Such a process should provide for a concept phase approval followed by a further codified final authorisation for the detailed design phase. This is a similar process as currently applies interstate for state significant infrastructure in NSW, Queensland and Victoria. Under such provisions state significant infrastructure may be referred to an assessment process under the planning system including the equivalent of DAC if deemed required by the relevant Minister or Co-ordinator General. Otherwise such developments would bypass the planning system in recognition that such projects must be delivered efficiently in the best interests of South Australia. 2. Ability to approve critical public infrastructure at early design phase i.e. corridor for electricity transmission line. Such provisions reflect the importance of critical public infrastructure in supporting state economic, social and environmental goals as espoused in the State Strategic Plan, 30 Year Plan for Adelaide and various regional development frameworks. Providing developers of critical public infrastructure greater certainty of land use rights at the early design phase of project delivery, facilitates sound investment decision making, business planning and economically efficient delivery of infrastructure. This can reflect in less economic burden upon the state and consumers through cost efficiencies. It also signals intent to occupy a site or corridor with transmission infrastructure at a given time in the future. This in turn supports a sustainable master planning process for surrounding land which results in well planned future developments and avoids potential interface conflicts. 3. Consider and acknowledge relationships with other legislation that effectively authorises the delivery and quality of electricity infrastructure i.e. Electricity Act, Electricity Transmission Code, Standards, etc. The Development Act and the planning system should not seek to invalidate projects that have otherwise been subject to a separate regulatory process that considers the public merit and appropriateness of such developments. In respect to regulated electricity transmission developments, greater acknowledgement and entitlement for defined exemptions from general provisions should be accommodated within the planning system in recognition of related legislation and regulatory processes. 4. Improved co-ordination of strategic land use planning and major infrastructure planning at state, regional and local levels. Provide a role for private sector providers of state significant public infrastructure on key state and regional planning forums. Provide for a statutory State Infrastructure Planning and Coordination Authority which includes private and public sector representation i.e. Government Planning Coordinating Committee (GPCC). Aim to put major infrastructure first, especially in respect to delivery of the 30 year plan for Adelaide. SA Planning System Review Issues Paper (final) (2).docx Page 8 of 31

9 2. Background ElectraNet Pty Ltd (ElectraNet) is the principal electricity Transmission Network Service Provider (TNSP) in South Australia, operating as part of the National Electricity Market under National Electricity Rules. The company s revenue is set by the Australian Energy Regulator (AER). ElectraNet s role is to own, manage and operate the high-voltage transmission lines and substations that connect this state s electricity generation system to multiple customer connection points, including SA Power Networks lower-voltage distribution network. The role of ElectraNet in the electricity supply chain is shown in Figure 1: Figure 2-1: Role of ElectraNet in the electricity supply chain ElectraNet s transmission network is one of the most extensive regional transmission systems in Australia, extending across some 200,000 square kilometres of the state. This network consists of transmission lines operating at 275,000, 132,000 and 66,000 Volts, which are supported by both steel lattice towers and tall poles. ElectraNet currently utilises both Section 49 and Section 49A of the Development Act to facilitate development authorisation requirements for its regulated project activity. In addition ElectraNet development authorisations for project activity undertaken for customers can be administered through Section 34(1) (a) of the Development Act (e.g. wind farm developers) and the Mining Act (e.g. mining operations). However, the majority of ElectraNet s capital works program is regulated activity in accordance with its statutory role and obligations as a TNSP. Importantly the original drafting of Section 49A was predicated on the expectation that public infrastructure capital works undertaken by the private entities ElectraNet and SA Power Networks (formerly ETSA Utilities), should be afforded continued crown development rights under the Development Act. Hence Division 3A Electricity infrastructure development and the responding Section 49A was drafted to facilitate a smooth transition for such development from being delivered by a public entity to being delivered by a private company subject to strict regulatory provisions under other Acts. When the proposed legislation was tabled in the Legislative Council in June 1999 the political environment of the day was such that significant amendments were negotiated to enable the Bill to pass through Parliament. By the time the amendments were carried, Section 49A had been redrafted in a manner which makes it substantially different to Section 49 Crown Development. The outcome of the amendment resulted in unintended impacts upon the delivery of electricity infrastructure developments of critical importance SA Planning System Review Issues Paper (final) (2).docx Page 9 of 31

10 to South Australia. The provisions of Section 49A and other relevant provisions of both the Development Act and Regulations are explored further in this Issues Paper describing in detail the implications that have resulted in additional cost and management effort by ElectraNet. The Issues Paper identifies critical impediments that, if not addressed, will continue to hamper State economic growth and prosperity. The Paper also considers development legislation relationships with other legislation pertaining to ElectraNet s high voltage electricity transmission network developments including the Electricity Act, Electricity Transmission Code and the National Electricity Rules (NER). 2.1 ElectraNet s Legislative framework The legislative framework governing ElectraNet s operations is complex and highly regulated as illustrated in Appendix A Australian Energy Market Commission The Australian Energy Market Commission is the rule maker and developer for Australian energy markets. As a national, independent body AEMC make and amend the detailed rules for the National Electricity Market (NEM). To further support the development of these markets, AEMC also provide strategic and operational advice to the Council of Australian Governments' Ministerial Council on Energy National Electricity Rules As a TNSP operating in the National Electricity Market (NEM), ElectraNet is governed by the National Electricity Rules (NER). The National Electricity Rules govern the operation of the National Electricity Market. The Rules have the force of law, and are made under the National Electricity Law Australian Energy Regulator The Australian Energy Regulator (AER) is Australia s national energy market regulator and has an independent Board. The AER shares staff, resources and facilities with the Australian Competition and Consumer Commission (ACCC). The AER regulates all electricity networks in the National Electricity Market, covering Queensland, New South Wales, the ACT, Victoria, South Australia and Tasmania. The National Electricity Law and Rules set out the regulatory framework. The Economic Regulation Authority regulates electricity networks in Western Australia and the Utilities Commission regulates electricity networks in the Northern Territory. Regulated electricity network businesses must periodically apply to the AER to assess their revenue requirements (typically, every five years). Chapters 6 and 6A of the National Electricity Rules lay out the framework that the AER must apply in undertaking this role for distribution and transmission networks respectively. The frameworks are broadly similar, and require the AER to set a ceiling on the revenues or prices that a network can earn or charge during a regulatory period. In determining the revenues or prices that a network business can charge, the AER must forecast the revenue requirement of a business to cover its efficient costs (including operating and maintenance expenditure, capital expenditure, asset depreciation costs and taxation liabilities) and provide a commercial return on capital. SA Planning System Review Issues Paper (final) (2).docx Page 10 of 31

11 In accordance with the NER, the AER is also required to develop and publish the regulatory investment test for transmission (RIT-T). The purpose of the RIT-T is to identify the transmission investment option which maximises net economic benefits and, where applicable, meets the relevant jurisdictional or Electricity Rule based reliability standards. The RIT-T provides a single framework for all transmission investments and removes the distinction in the regulatory test between reliability driven projects and projects motivated by the delivery of market benefits Australian Energy Market Operator The Australian Energy Market Operator (AEMO) manages the operation of the NEM, including overseeing reliability and security, ensuring supply reserve to meet power system reliability standards, directing generators to increase production during periods of supply shortfall and instruction of load shedding to rebalance supply and demand and protect power system operations. Created by the Council of Australian Governments (COAG) and developed under the guidance of the Standing Council on Energy and Resources (SCER), AEMO strengthens the national character of energy market governance by drawing together under the one operational framework responsibility for electricity and gas market functions, NEM system operations, management of Victoria s gas transmission network and national transmission planning. In South Australia, AEMO produces electricity demand forecasts and provides specific advice to the South Australian Government Essential Services Commission of South Australia The Essential Services Commission of South Australia (ESCOSA) is an independent economic regulator, established under the Essential Services Commission Act 2002, which came into effect on 12 September The Commission is the same body corporate as the former South Australian Independent Industry Regulator (SAIIR) established in 1999, which was previously responsible for some of the Commission's regulatory functions. Pursuant to the Electricity Act 1996, ESCOSA holds regulatory responsibility for licencing of specified electricity operations in South Australia. From 1 February 2013, the principal regulation of South Australia's retail energy market transferred to the Australian Energy Regulator (AER). The AER is now responsible for consumer protection and performance monitoring in the electricity and gas retail market. Pursuant to Part 4 of the Essential Services Commission Act, the Commission is empowered to make industry codes and rules regulating the conduct or operations of a regulated industry or regulated entities. The Commission has made a number of relevant industry codes and compliance with relevant codes is a mandatory condition of each electricity and gas licence issued by the Commission Electricity Transmission Code (ETC) ElectraNet must comply with the service obligations of the South Australian Electricity Transmission Code (ETC) determined by the Essential Services Commission of South Australia (ESCOSA). The ETC establishes the jurisdictional reliability standards which apply to the South Australian electricity transmission network. SA Planning System Review Issues Paper (final) (2).docx Page 11 of 31

12 The ETC assigns reliability standards for each connection (exit) point or group of connection (exit) points within the electricity transmission network (load centres), and thereby imposes specific requirements on ElectraNet for the planning and development of South Australia s electricity transmission network South Australian Electricity Act 1996 As a licensed Transmission Network Service Provider, ElectraNet is bound by the provisions of the Electricity Act The objects of this Act are (a) (b) (c) (d) (e) to promote efficiency and competition in the electricity supply industry; and to promote the establishment and maintenance of a safe and efficient system of electricity generation, transmission, distribution and supply; and to establish and enforce proper standards of safety, reliability and quality in the electricity supply industry; and to establish and enforce proper safety and technical standards for electrical installations; and to protect the interests of consumers of electricity Other Legislation In terms of day-to-day development, operation and maintenance of the South Australian transmission network, ElectraNet is also required to comply with other legislation including but not limited to: Development Act 1993 Real Property Act 1886 Native Vegetation Act 1991 Environment Protection Act 1993 Aboriginal Heritage Act 1988 Commonwealth Environment Protection and Biodiversity Conservation Act SA Planning System Review Issues Paper (final) (2).docx Page 12 of 31

13 3. ISSUES 3.1 Planning system lacks dedicated and unique land use approvals stream for critical or state significant public infrastructure. ElectraNet s regulated capital works program requires numerous proposed developments that have been identified as necessary and appropriate in accordance with the National Electricity Rules and Electricity Transmission Code to be delivered according to approved expenditure and timeframes. The legislative framework associated with regulation of the national electricity market and delivery of capital works to maintain energy supply standards is predicated upon such activity being critical to state and national interests. In a similar fashion to a highway being proposed to address the efficient movement of goods and people across regions, high voltage power lines transport power across regions and states and as such are part of a critical infrastructure backbone supporting the economy. In South Australia, due to Section 49A of the Development Act excluding power lines over 66kV and greater in length than 5km, many high voltage electricity transmission projects under the definition of public infrastructure are considered under legislative provisions that cater for a broad range of developments, most of which largely would not be considered as critical to the state or national economy. This includes Section 49 Crown Developments which essentially cover all forms of development traditionally supplied by the State. The SA planning system can accommodate unique streams for selected state significant development approvals on a priority basis as seen by the relationship between the Mining Act and Development Act. In this case a dedicated approvals stream is provided outside of the mainstream provisions of the Development Act. 3.2 Inability to approve at Project concept phase ElectraNet, as South Australia s Principal TNSP, is not afforded legislative authority under the current Planning System to ensure long term network planning is incorporated into state, regional and local land use planning frameworks. The AER in its recent revenue decision for ElectraNet s Revenue Period stated no weight was given to the [South Australian] planning instruments 2 following correspondence received by the AER from the South Australian Department of Planning, Transport and Infrastructure, clarifying that planning instruments cannot guarantee development rights. The South Australian Minister for Mineral Resources and Energy also stated in a response to the AER s initial revenue determination that it is important to note that State planning legislation does not guarantee development rights. TNSP s in other States do have the ability to influence land use planning and accommodate future network needs; this distinction has been recognised by the AER and as such should be a matter for further consideration within the SA planning System Review. Typically ElectraNet developments are delivered over a five-year capital works period approved by the Australian Energy Regulator. The more complex and difficult projects can span a period in excess of 5 years with a power line project often being a 10 year undertaking from concept to commissioning. Projects are subject to regulatory 2 %20final%20decision%20for%20ElectraNet%27s% %20regulatory%20control%20period%20- %2030%20April%202013_0.pdf pg. 84 SA Planning System Review Issues Paper (final) (2).docx Page 13 of 31

14 assessment, as discussed in Section 1.1.3, to ensure that the proposed infrastructure solution represents the best long-term economic option. Concept designs are developed to satisfy a regulatory process under the National Electricity Rules and facilitate third party scrutiny to determine if a transmission option is the best network solution. Once a project is approved the design process can proceed towards construction and commissioning on a timeframe that is also dictated by regulatory provisions. Certainty is required by ElectraNet in that the general scope of the development has State Government statutory endorsement at the concept phase, to facilitate Board approval for land acquisition, detailed design expenditure and works leading to construction and commissioning. However, under South Australian law, development applications pursuant to Section 49 or 49A are generally not considered valid until the infrastructure design is sufficiently advanced to enable detailed third party consideration of potential impacts and proposed mitigation measures. In terms of an ElectraNet project timeframe this presents significant difficulties. The detailed design process is best undertaken in the period immediately before construction commences following formal engagement of a contractor. What is clearly inadequate about the South Australian legislative framework in this respect is the inability for a development authorisation to be granted for a concept plan for a powerline or substation. This in particular impacts upon the prudent process of strategic land or easement acquisition for projects known to be required in the longer term. In these cases it would be appropriate to secure the land/ easement early to ensure the most efficient development of the transmission network at the least long-run cost to consumers. For projects potentially constructed in years time there is a need to ensure that ElectraNet will have development rights to construct in the determined location to enable funding approval for the land / easement acquisition. The preference would be to have conceptual approval (i.e. planning consent) for the land use with the detailed design aspects including exact tower / pole /substation locations and size, provided much closer to the construction date. The intended land use (i.e. electricity infrastructure) will not change in the long term. The current NSW Planning Reforms have recognised that this issue is also relevant in their jurisdiction for Public Priority Infrastructure projects. In the recently released White Paper on Planning System reforms the NSW State Government is proposing greater integration of infrastructure and land use planning and an authorisation process that provides greater certainty for projects at the Project Concept and Definition stage. The NSW White Paper states Priority projects will, for planning purposes, be authorised to be carried out with subsequent assessments focused on environmental management. There will be stronger forward planning to identify significant environmental risks earlier, together with community consultation Section 49A excludes most high voltage power line projects and does not mirror Section 49 as intended (inconsistencies) Section 49A (2) of the Development Act reads this section does not apply to development for the purposes of the provision of- (a) electricity generating plant with a generating capacity of more than 30 MW; or (b) a section of powerlines (within the meaning of the Electricity Act 1996) designed to convey electricity at more than 66 kv extending over a distance of more than five kilometres. 3 NSW Government White Paper A New Planning System for NSW Ch. 7 Page SA Planning System Review Issues Paper (final) (2).docx Page 14 of 31

15 Effectively this clause restricts ElectraNet from using the provisions of Section 49A for the vast majority of power line projects which are almost always in excess of 66kV and greater in length than 5km. The Section was intended to provide for electricity infrastructure development approvals for works that effectively represent public infrastructure, for the purposes of Crown development, but provided by non-government entities. The omission of high voltage transmission power lines greater in length than 5 km thus represents a significant legislative failure and one not evident in any comparative legislation within Australia. The provisions of Section 49A (2) effectively force ElectraNet to either submit applications for development approval with local councils pursuant to Section 34 or seek crown sponsorship in accordance with Section 49 from an agency of the Crown (such as DPTI or DMITRE). ElectraNet s experience in submitting development applications with Councils has been less than appropriate for such state critical public infrastructure projects for numerous reasons such as local political influences, lack of technical expertise, inability to process applications in a timely manner and difficulty when a development involves two or more council areas and hence subject to separate development plans and applications. Such developments are best assessed and considered by the Development Assessment Commission under the current SA planning system. The current Act does not facilitate this without the circuitous process of ElectraNet seeking state agency sponsorship and submitting a Crown development application under Section 49 of the Development Act. Section 49A was originally drafted to mirror the provisions of Section 49 Crown Development and afford the same development authorisation process, rights and obligations upon prescribed persons, undertaking development for the purposes of provision of electricity infrastructure (within the meaning of the Electricity Act 1996), as applies to other public infrastructure works dealt with under Section 49. Upon tabling in Parliament critical amendments were made that effectively made the two sections and subsequent regulations inconsistent. During the past 14 years this inconsistency has increased as amendments to Schedules 14 and 14A have been made which either exacerbated the differences between Sections 49 and 49A of the Act or simply introduced differently worded regulations in each respective schedule. In respect to the latter, the most recent example is inconsistency regarding the regulatory requirements for security fencing associated with electricity substations. The inconsistencies between both Sections 49 and 49A (and the relevant Schedules 14 and 14A) result in ElectraNet managing its development applications and exemptions within both Sections in order to obtain an efficient and fair approach to facilitate its public works. Clearly this is neither the intent of the legislation nor the expectation of the overall planning system. This inconsistency demonstrates the out-dated nature of legislation which fails to deliver outcomes that optimally serve the state and public interest. 3.4 Provisions do not recognise critical public infrastructure Since the proclamation of the Development Act, the provision of major public infrastructure has gradually shifted from a public sector role to either a fully privatised model or private public partnerships in various jurisdictions in Australia. With this level of commercialisation and privatisation, has come the development of legislation to regulate private entities and ensure protection of state and public interests. An example of the level of regulation subjected to ElectraNet s capital project activity is provided at Figure 2-2. SA Planning System Review Issues Paper (final) (2).docx Page 15 of 31

16 Despite the development of specific legislation at state and federal levels governing TNSPs, there has been very limited progressive amendment of related land use planning legislation since the introduction of Section 49A of the Development Act in Hence it is considered by ElectraNet that the South Australian planning legislative framework, in respect to integrating electricity transmission network planning into strategic land-use planning and the development approval of electricity transmission infrastructure, has not kept pace with the State s economic and social needs. Examples of the inefficiencies created by the current planning system in the provision of electricity transmission infrastructure are provided in Section 4 Case Studies. These cases illustrate that the nature of the current planning system essentially does not give recognition of the critical state and regional significance of high voltage electricity transmission lines and substations. Nor does it recognise that the State Government administered Electricity Transmission Code sets network requirements which ElectraNet must meet. Failure to meet Code requirements (i.e. through development approval delays or refusal) not only results in conflict with the Government s own requirements, but can also result in significant financial penalties for ElectraNet. Under the National Electricity Rules by the time a development application is lodged under the SA Planning System the infrastructure option is clearly determined and there isn t a do nothing option. This is established in early design phase through the RIT-T process and extensive site / route selection undertaken by ElectraNet establishing the least long-run cost infrastructure option for South Australian consumers. 3.5 Additional costs for consumers for critical public infrastructure The need for ElectraNet to seek development approvals under the Development Act results in the payment of considerable fees pursuant to Schedule 6 of the Development Regulations. Fees are calculated as a percentage of total development costs. These fees, typically in the order of $20,000-$40,000 for a substation and up to the maximum chargeable fee of $200,000 for a transmission line, are ultimately passed through to the electricity consumer in their power bills. In the current climate where there is considerable political pressure to ensure critical public infrastructure to meet reliability standards is developed at the least long-run cost to consumers, it is questionable as to whether these fees are necessary. Furthermore, such fees if applied should reflect the government s costs for assessment and approval and not be determined purely on project value as is the current method of calculation. 3.6 Integration of major public infrastructure planning and strategic land use planning In the past two years ElectraNet and the Department of Planning, Transport and Infrastructure (DPTI) have advanced joint planning initiatives aimed at improved integration of ElectraNet network planning and state and regional strategic land use planning. However, there is still significant room for improvement in the effective integration of strategic land use planning and major public infrastructure planning. The SA planning system still defaults to dealing with infrastructure retrospectively or leaving it to the land division stage usually with very poor planning outcomes. The integration of strategic land use and major infrastructure planning should be mandated by statutory provisions to ensure consistent and sustainable outcomes across all jurisdictions. SA Planning System Review Issues Paper (final) (2).docx Page 16 of 31

17 ElectraNet prepares an Annual Planning Report (APR) as part of its obligations under the National Electricity Rules. Taken into account is consideration of forecast loads, future generation opportunities, market network services, demand-side participation solutions (potential for load reduction) and transmission developments. This critical planning process allows ElectraNet to identify appropriate solutions to emerging electricity network limitations and/or constraints over a twenty-year planning period, for discussion and planning. In addition, ElectraNet has prepared a Network 2035 Vision, a collaborative document that sets out a framework for the development and operation of South Australia's electricity transmission network over the next twenty-five years. Both these documents, combined with the National Transmission Development Plan prepared by AEMO, provide significant strategic infrastructure planning intelligence which could be included in state strategic planning schemes. The integration of major infrastructure plans into state and regional planning schemes has the ultimate goal of ensuring such planning is reflected in development plans at a localised level. If mandated this will signal to communities, councils and developers, the constraints and opportunities that must be considered in using the development plan as a guide to planning within a district. Importantly it will also facilitate provisions can be made, through the land use planning system, for the orderly, environmentally sustainable and economic delivery of major public infrastructure. 3.7 Lack of formal involvement of private sector public infrastructure providers in co-ordinated land use planning at State and Regional levels The Development Act and Regulations were written in an era when privatisation of major public infrastructure had either not occurred or was in its infancy. The drafting of amendments during Parliamentary debate on the original version of Section 49A tabled in June 1999, sought to limit the statutory rights of private entities delivering public infrastructure. This was partly because of a perceived lack of other legislative means to achieve such an aim. Since that time numerous provisions have evolved at state and national levels to ensure that entities such as ElectraNet are governed in terms of their proposed capital works projects and the return on investment for its regulated activity. The Development Act and Regulations are not the appropriate vehicles to manage the risks posed by a private developer, as opposed to government agency, delivering public infrastructure. In fact, the Development Act and Regulations should not make any distinction between public infrastructure developments delivered by private or public entities. It should treat both cases exactly the same. If deemed appropriate the planning legislation could call in other relevant legislation such as National Electricity Law and Rules, Electricity Act and Electricity Transmission Code, to clarify that the proposed development meets a definition of public infrastructure for the purposes of the Act and Regulations and that the applicant can then be afforded a Crown development type status for authorisation purposes. At a state and regional land use planning level significant integration of infrastructure planning does occur through liaison between government agencies. The South Australian Planning Reforms of 2008 recommended that a state level body be created that would oversee and influence the provision of infrastructure supporting urban growth. This body was intended to include both public and private sector representation in recognition of the growth in private sector delivery of critical public infrastructure such as power and gas. The Government Urban Co-ordinating Committee, now referred to as the Government Planning Coordinating Committee (GPCC), was established following SA Planning System Review Issues Paper (final) (2).docx Page 17 of 31

18 the reforms. However it was not constituted in such a manner to facilitate nongovernment representation at the committee level. ElectraNet s queries into this matter have indicated that involvement of non-government representation on GPCC may curtail the deliberations of the committee given much of the agenda would be confidential government only business. There is a need to relax the old formalities that restrict statutory entities such as GPCC to government only agencies and departments. Public infrastructure provision has been subject to privatisation in SA for the past decade or more but the SA Planning system has not evolved with this modernisation of industry structure. SA Planning System Review Issues Paper (final) (2).docx Page 18 of 31

19 4. Case studies 4.1 Clare North Substation In May 2009 the Development Assessment Commission granted approval to ElectraNet for construction of a 132/33kV substation 2km from Clare in the Mid North region. The substation was required to be commissioned by summer 2010 to address supply load demand growth in the Clare region. Despite a standard approach as provided by the Act for Public Notification, one neighbouring landowner missed the opportunity to comment on the original development application but subsequently became very active in opposing the approved development. In the period leading up to construction a detailed design phase for the project resulted in 3 design changes that improved cost efficiencies, without adding any substantial impacts upon surrounding amenity or environment. Under planning legislation it was deemed necessary that ElectraNet lodge an application to vary the development approval and this was subject to a new round of Public Notification. The variation application was subject to hearings by the DAC and impositions upon the developer that in ElectraNet s view exceeded normal expectations. From this case ElectraNet has exposed a failure in South Australian development legislation to facilitate variations, other than minor changes, that arise in detailed design phase for critical infrastructure. The legislation effectively provided no distinction between the state significant substation development and less critical developments thus allowing a level of third party representation that did not reflect the wider public interests. Concept approval processes had they been available, would likely have avoided the delays and additional costs associated with the application to vary the development approval. Detailed design will likely introduce improvements to infrastructure that result in lower consumer costs and these changes should be dealt with more efficiently through Ministerial delegation. In regard to major public infrastructure, only with clear triggers that reflect high potential impacts upon the environment or surrounding community should design variations be assessed subject to third party consultation. 4.2 Eyre Peninsula Reinforcement ElectraNet has identified a need to upgrade the existing 132kV transmission line supplying the Eyre Peninsula; this need is being driven by 2 factors: 1. Existing asset age and condition resulting in need to replace the existing line by around 2025; and 2. Proposed developments (primarily mining and associated infrastructure) requiring significant electricity supply increases to the region from 2015 onwards. As indicated above, ElectraNet has a situation with two quite different time requirements, potentially up to 10 years apart. Regardless of which scenario eventuates first, there is a base requirement that the transmission network on Eyre Peninsula needs replacement and upgrading. The existing line is approximately 285km long, running between Whyalla and Port Lincoln. There is a substation at Yadnarie, roughly the half-way point where a 132kV line also heads west out to Wudinna. The Whyalla-Port Lincoln line was constructed in the late 1960 s and is an optimal design being relatively straight and taking the shortest distance between substations. These lines supply all of Eyre Peninsula and a fault on SA Planning System Review Issues Paper (final) (2).docx Page 19 of 31

20 this network has the potential for much of Eyre Peninsula to be without power, as recently experienced. Replacement of this line with a higher capacity double circuit 275kV transmission line is estimated to cost in the order of $ million. The existing line is a radial line, meaning there is only one line supplying the load at the end with no redundancy, hence the existing line must remain energised to ensure security of supply whilst the new line in constructed. This means a new or widened easement is required for the replacement transmission line. Since the 1960s when the existing line was built, a number of critical influence factors have evolved. Firstly, on the environmental front the existing line traverses six National Parks and Wildlife reserves (Conservation Parks, Conservation Reserves and Wilderness area), 18 Heritage Agreement and two Significant Environmental Benefit (SEB) areas. Secondly, at a State and Commonwealth level numerous Acts of Parliament have been introduced which did not exist when the line was build and which have the potential to significantly influence / alter a new transmission line corridor, even though the existing alignment may still represent the optimum solution. The replacement of the 132kV transmission line on Eyre Peninsula is of considerable economic benefit and importance to South Australia, as evident by submissions provided to the AER as part of the ElectraNet Regulatory Determination by the South Australian Minister for Mineral Resources and Energy, the Eyre Peninsula Local Government Association, Centrex and Iron Road. Furthermore, once such a high capacity transmission line has been constructed, there are significant economic benefits for the currently untapped renewable energy (wind) reserves on the west coast of Eyre Peninsula, as identified by the Green Grid Report 4. The Resources and Energy Sector Infrastructure Council (RESIC) commissioned the 2011 Infrastructure Demand Study 5 which assessed potential mining growth on Eyre Peninsula and infrastructure necessary to facilitate such resource development. This report made the following recommendations related to electricity transmission: Recommendation 1 Facilitate the development of infrastructure corridors and utility hubs through a master planning process Recommendation 3 Facilitate the acceleration of the proposed 275kV electricity transmission augmentation in the Eyre Peninsula to meet mining industry needs Since the release of these reports and the commencement of studies by ElectraNet on this project, it is clear that the South Australian legislation is not currently geared up appropriately to cater for accelerated infrastructure projects or approval of strategic corridors. It is somewhat fortunate from an approvals perspective that the scenario of accelerated construction of the Eyre Peninsula network to meet a 2015/16 date being forecast by Centrex and Iron Road did not eventuate. ElectraNet is now facing a scenario in which for one of the mining companies to reach financial close, it will require upgrade of the regulated transmission network and therefore ElectraNet s development approval and easement / land acquisition being in place by mid Again, given project timing and staging, ElectraNet will not commence detailed line design until after SA Planning System Review Issues Paper (final) (2).docx Page 20 of 31