Lack of criteria for unfettered discretionary powers in Bill highlighted
The New Zealand Law Society has pointed to a lack of objectives or criteria to guide what are otherwise unfettered discretionary powers in the Electricity Industry Bill.
In its written submission on the Bill, the Society recommends that this matter is addressed wherever it arises.
“As a general principle, legislation should not grant unfettered discretionary power. The Society believes that objectives or criteria should be provided to guide the decision making by the Minister or the Electricity Authority,” the Society says.
The submission points to a number of clauses which provide the Minister and the Electricity Authority with the power to exempt an industry participant from obligations.
These include the power to exempt from the obligation to register as industry participants and the power to exempt from the obligation to comply with the Electricity Industry Participation Code.
Other areas which the Society points to are the power of the Minister to exempt a person from the obligation to join a dispute resolution scheme. “No objective or criteria is specified in the legislation to guide this power, and as provided it is unfettered,” the submission states.
Considering the Bill provisions in clause 112 which enable the Minister to make regulations relating to charges for line function services, the Society says the Explanatory Note to the Bill suggests that this delegated power is intended to address fairness concerns.
“However, as drafted, this power is a broad price control power that could be used to set the price of line function services to all domestic premises, and rural consumers,” it says.
The Society contrasts this with Part 4 of the Commerce Act 1986, which introduces a comprehensive price control regime applying to electricity line services supplied to all consumers.
This regime includes a clear economic framework for arriving at appropriate pricing, delegation of the role of price setting to the Commerce Commission and a requirement that a “rigorous process” is completed before prices are set to produce detailed input methodologies which give market participants a high degree of certainty as to future pricing outcomes.
“The Society does not comment on choices of policy, but the unfettered power in clause 112 to regulate price does raise issues of institutional design and minimum standards of legality,” the submission states.