Electricity Industry Restructuring-A Chronology


Index

Background Paper 21 1997-98

Ann Rann
Science, Technology, Environment and Resources Group
30 June 1998

Contents

Introduction

Acronyms

Chronology

The Federal Scene
Snowy Mountains Hydro-Electric Authority
Australian Capital Territory
New South Wales
Northern Territory
Queensland
South Australia
Tasmania
Victoria
Western Australia

Bibliography

Glossary

Electricity Supply in Australia

Map of Australia inicating the Electricity Supply

Source: Electricity Australia, Sydney, ESAA, 1997.

Introduction

This chronology aims to bring together the reforms in the electricity industry which have taken place, or been proposed, between 1949 and 2003 and show, to some extent where the industry is heading in developing a competitive market. As timetables for restructure are so variable throughout the country, the chronology is arranged according to the Federal situation and the State situation. The Snowy Mountains is treated as a 'State' for the purposes of this chronology because of its joint ownership by the Commonwealth, New South Wales and Victoria. For more comprehensive reading on the industry reforms, this chronology should be read in conjunction with the Department of the Parliamentary Library, Research Paper No. 14, 1997-98, Electricity Industry Restructuring: the State of Play by Mike Roarty.

Electricity plays a fundamental role in the lives of all Australians. It is a major source of energy for households and is a major cost of production in industry and business, constituting on average around 5-9 per cent of operating costs and in some industries, such as aluminium smelting, can be more than 60 per cent.

The national electricity industry is going through a period of change. Historically electricity was produced and supplied to consumers by vertically integrated state-based public sector monopolies. The last decade has seen the National Electricity Market (NEM) emerge through Commonwealth and State agreements which are aimed at opening the state-owned utilities to competition.

Many reforms have occurred to develop the NEM. Governments have structurally separated and corporatised, and in the case of Victoria sold, their public electricity utilities. The industry is now divided into separate businesses comprising generation (the power stations), transmission (the high-voltage grid) and distribution (poles and wires). Generators sell electricity under contracts or on the market through wholesale electricity pools. Distributors have a franchise on the region in which their poles and wires are installed, but can sell (as retailers) to customers outside their area using rival distributors networks. Some retailers own no poles and wires and sell electricity using the networks of distributors, who charge for transmission. Interstate trade is underway between New South Wales and Victoria and also South Australia, which depends on Victoria for peak load power. There are plans to link the New South Wales grid to Queensland (Westlink) and the feasibility for Tasmania to link to Victoria via an undersea cable (Basslink) is being investigated.

Acronyms

ACCC

Australian Competition and Consumer Commission

ACTEW

Australian Capital Territory Electricity and Water

COAG

Council of Australian Governments

ETSA

Electricity Trust of South Australia

HEC

Hydro Electricity Commission (Tasmania)

NGMC

National Grid Management Council

NECA

National Electricity Code of Australia

NEM

National Electricity Market

NEMMCO

National Electricity Market Management Company

QERU

Queensland Electricity Reform Unit

SECV

State Electricity Commission of Victoria

SMC

Snowy Mountains Council

SMHA

Snow Mountains Hydro-Electric Authority

VPX

Victorian Power Exchange

Chronology

The Federal Scene

Date

Details

Source Documents

October 1990

The Special Premiers Conference 'agreed that there may be additional benefits from an extension of, and/or organisational changes to, the interstate electricity network covering NSW, Victoria, Queensland, South Australia, Tasmania and the ACT'. A working group is set up to report to the next conference.

Special Premiers' Conference, Brisbane, 30-31 October 1990, Communique

May 1991

The concept of a national electricity market comes from the Industry Commission Report Energy generation and distribution. The aim is to promote efficiency by increasing the competitive pressures between the State grids.

Industry Commission, The electricity industry in South Australia 1996, AGPS, Canberra 1996.

July 1991

Report of the electricity working group is presented to the Special Premiers' Conference. It recommends:

  • extensions to the grid are justified
  • new generating capacity is required for South and East Australia in the next 2 years
  • establishes the National Grid Management Council (NGMC) to coordinate the interstate grid. The Council is required to encourage open access and free trade in bulk electricity and coordinate the efficient, economical and environmentally sound development of the electricity supply in eastern and southern Australia. This consists of representatives from the Commonwealth, NSW, Victoria, Queensland, South Australia, Tasmania, ACT and an independent arbitrator

Special Premiers' conference, Sydney, 30-31 July 1991 Papers.

October 1992

An Independent Committee of Inquiry into National Competition Policy is established. with Professor Frederick G. Hilmer as Chairman, who later becomes the Board Chairman of Pacific Power.

 

December 1992

The Council of Australian Governments (COAG) confirms 'their commitment to the principle of separate generation and transmission elements in the electricity sector'. The work of the NGMC in overseeing the development is noted.

COAG, Communique, Perth, 7 December 1992.

June 1993

COAG announces in relation to the electricity industry:

  • structural changes to be put in place to allow the competitive market from 1 July 1995.
  • confirms commitment to an interstate transmission network.
  • confirms objective of competitive generation
  • asks the NGMC to report on several major issues
  • requests senior officials report on issues such as tax compensation, and reform arrangements for the Snowy Mountains Scheme.

COAG, Communique, Melbourne, 8-9 June 1993.

August 1993

Hilmer report to COAG on competition policy is released. The report makes a number of recommendations:

  • structural reform of public monopolies
  • application of competitive neutrality to public sector businesses
  • processes for reviewing anti-competitive legislation
  • establishment of state-based prices oversight regimes
  • guaranteed thirdparty access to services provided by essential infrastructure facilities.

Independent Committee of Inquiry into National Competition Policy, National Competition Policy report by the Independent committee of Inquiry, Chairman, Frederick G Hilmer, AGPS, Canberra, 1993.

November 1993

National Grid Management Council commences operation of a simulated market called the NGMC paper trial. The objectives of the trial:

  • to allow participants to gain experience in the competitive market
  • to allow trial mechanisms for trading to be tested and developed without risking the financial positions of participants
  • to assess the effectiveness of the model against the objectives of the National Grid Protocol.

http://www.tg.nsw.gov.au/sem/sembkgrd.html

Mike Roarty, 'Electricity industry restructuring: the state of play', Research Paper No. 14, Department of the Parliamentary Library, Canberra ,1998.

February 1994

COAG at their meeting:

  • notes the progress in the structural changes occurring to allow for the competitive market in NSW, Victoria and Queensland
  • achieved agreement between NSW and Victoria on a statement of principles for reform of the Snowy Scheme
  • agrees to principles of a uniform approach to network pricing and regulation and to the principle of a form of vesting contracts for managing transition to the competitive market.

COAG, Communique, Hobart, 25 February 1994.

August 1994

COAG discussions focus on competition policy and electricity reform.

COAG, Communique, Darwin, 19 August 1994.

October 1994

Victorian wholesale electricity market (Vicpool) commences. The generators and SECV traders all compete to supply electricity to retailers and large customers.

Department of Treasury and Finance and Energy Project Division, Victoria's electricity supply; towards 2000, Melbourne, 1997.

December 1994

Report of the NGMC paper trial is released.

National Grid Management Council, National electricity market paper trial evaluation, volume 1 evaluation report, volume 2 statistical analysis, NGMC, Canberra, 1994.

April 1995

COAG meeting agrees that each jurisdiction should introduce competition into the electricity industry, provide effective and non-discriminatory access to the market by customers and improve benefits to customers before commencement of the National Electricity Market (NEM).

http://www.tg.nsw.gov.au.sem/doc/reports/nem1-gateway/sect1-4/

March 1997

Transfer of responsibilities from NGMC to the National Electricity Management Company Limited (NEMMCO)-this is established by the State Governments (NSW, ACT, Vic, SA and Qld) to manage the wholesale electricity markets on behalf of its participants.

The National Code Electricity Administrator (NECA) is established by the State Governments to enforce the National Electricity Code. NECA will manage changes to the code and establish procedures for dispute resolution.

http://www.neca.com.au/framework/main1.cfm

May 1997

NEM 1, phase 1 begins: a limited interstate competitive market between NSW and Victoria, based on State codes, with modifications, to allow joint dispatch and pool price setting.

http://www.treasury.nsw.gov.au/etf.htm

November 1997

NEM 1, phase 2 begins. Queensland Interim Wholesale Electricity Market (QIM) commences; this is limited to current Queensland participants and there is 100 per cent vesting cover for retailers and generators.

Business Queensland, 3/11/97

December 1997

Australian Competition and Consumer Commission (ACCC) releases the final determination on the National Electricity Code proposed by NECA and NEMMCO.

Electricity Supply Magazine March, 1998, p.8.

March 1998

Start-up date for the NEM delayed to allow large-scale testing of the new system. Delay comes after the ACCC criticised the National Electricity Code and fears about power generation reliability after the blackouts in Auckland and Queensland.

Canberra Times, 19/3/98, p.2.

April 1998

NEMMCO announces it will set up an office in Adelaide.

NEMMCO, Media Release, 23/4/98.

May 1998

Official starting date for the National Electricity Market. NEMMCO will trial prices between the current market of NSW, ACT and Vic and the larger market including SA and Qld for up to five weeks.

Canberra Times, 29/3/98.

August 1998

SA is expected to join the NEM-delayed from May.

Advertiser, 29/4/98, p. 29.

July 1998

Business in Vic and NSW consuming in excess of 160 megawatt hours per year can choose their electricity supplier. States will have to have legislative procedures in place to provide the legal basis for the market.

Australia's national electricity market, NEMMCO, p. 5.

October 1998

Full NEM is to commence enabling trading of electricity between the participating States.

ibid.

2000

Queensland is due to join the NEM.

ibid.

2001

Retail sales to be 100 per cent contestable.

ibid.

2001

Franchise fees will be phased out.

ibid.

2002

Tasmania is expected to join the NEM.

ibid.

2003

Regulation of electricity grid switches to be transferred from the State Regulator to the ACCC.

ibid.

2003

NEM is expected to be in operation. NSW, Victoria and Queensland physically connected. Tasmania may join. WA and NT precluded because of distance.

ibid.

Snowy Mountains Hydro-Electric Authority

Date

Details

Source Documents

1949

The Snowy Mountains Hydro-Electric Authority (SMHA) is established under the Snowy Mountains Hydro-electric Power Act 1949, to own and manage the permanent works of the scheme.

http://www.snowyhydro.com.au/corpinfo/profile.html

1957

The Snowy Mountains Agreement defines the rights to water released from the scheme. It establishes the Snowy Mountains Council (SMC), comprising the Commonwealth, NSW and Victorian governments and the Snowy Mountains Hydro-Electric Authority. The SMC directs the operation and maintenance of the scheme in relation to water storage and electricity generation.

http://snowyhydro.com.au/corpinfo/profile.html

1994

The SMHA is commercialised.

http://snowyhydro.com.au/corpinfo/profile.html

January 1997

Snowy Hydro Trading Pty. Ltd. is registered with the Australian Securities Commission by the NSW Government and the SECV to trade the outputs of the scheme in the NEM until corporatisation.

Snowy Mountains Hydro-Electric, Authority, Annual report, 1996-97.

November 1997

The Commonwealth Parliament passes the Snowy Hydro Corporatisation Act 1997 in preparation for corporatisation of the SMHA.

Act No. 176 of 1997 (C'wealth)

November 1997

NSW Parliament passes the Snowy-Hydro Corporatisation Act 1997.

Act No. 99/1997 (NSW)

December 1997

Victorian Parliament passes the Snowy Hydro Corporatisation Act 1997.

Act No. 105/1997 (Victoria)

April 1998

The NSW and Victorian governments jointly launch the Snowy Water Inquiry to 'examine the environmental, economic and social consequences of diverting the Snowy River'. Corporatisation of the SMHA cannot proceed until the outcome of this public inquiry, which is expected to take six months.

Age, 16/4/98, p.7, Act No. 176 of 1997 (C'wealth)

Australian Capital Territory

Date

Details

Source Documents

July 1995

Australian Capital Territory Electricity and Water (ACTEW) is corporatised. Power supplied to ACTEW is generated in NSW in the proportions one third by the Snowy Mountains Hydro-electric scheme and two thirds by other generators owned by NSW government.

ACT Dept. of Urban Services, Introducing Competition into ACT electricity retailing: issues paper, Publications and Public Communication, 1996

March 1996

ACTEW participates in the NSW wholesale electricity market.

ibid.

September 1996

Establishment of the ACT Energy and Water Charges Commission whose function is to inquire into charges for electricity, water and sewerage.

ACT special gazette, s. 232, 3/9/96

May 1997

ACTEW participates in NEM1 allowing it to source electricity from Victorian generators, as well as NSW, to supply any or all of its customers.

Victoria's electricity supply industry; towards 2000, op. cit.

December 1997

Consumers using over 5 MW or 20 GWh per annum may choose their supplier.

http://www.act.gov.au/electricity/time.html

March 1998

Consumers using over 1 MW or 4 GWh per year join the market.

http://www.act.gov.au/electricity/time.htm

November 1997

ACT Energy and Water Charges commission is renamed the Independent Pricing and Regulatory Commission.

ACT special gazette, s. 360, 25/11/97.

April 1998

ACT Government announces a review of ACTEW's future after releasing a report by Fay, Richwhite Securities Ltd. The report said the Government was facing a 'substantial dilemma' on ACTEW's growth options and the Government has to decide how much business risk it would tolerate.

Canberra Times, 30/4/98, p.2.

May 1998

Consumers using over 750 MWh can choose their supplier.

http://www.act.gov.au/electricity/time.htm

July 1998

Consumers using with energy usage over 160 MWh will be able to choose their supplier.

http://www.act.gov.au/electricity/time.htm

July1999

All consumers have a choice of supplier providing that it is in line with other jurisdictions.

http://www.act.gov.au/electricity/time.htm

New South Wales

Date

Details

Source Documents

January 1992

Electricity Commission of NSW is renamed Pacific Power and is restructured into six business units (three generating groups, one pool trading unit, one network business, one services unit). 25 distribution businesses remain separate.

Industry Commission, The electricity industry in South Australia,. p.64-65.

May 1994

Pacific Power's network business unit established as a separate legal entity.

http://www.treasury.nsw.gov.au/etf.htm

February 1995

High voltage transmission and system control become the responsibility of the Electricity Transmission Authority-trading as Transgrid-a separate statutory authority. Transgrid is given the authority to develop and operate the state electricity market.

http://www.treasury.nsw.gov.au/etf.htm

May 1995

NSW Government issues the Electricity Reform Statement. The aims are:

  • provision of low cost and safe electricity
  • support environmental strategies
  • give wholesale and retail customers choices between competing suppliers and market arrangements consistent with the national market.

http://www.treasury.nsw.gov.au/etf/etf95_5.htm

October 1995

NSW government changes the State's 25 distributors to six corporations, (four rural two metropolitan). Each company has a distribution business (the 'wires') and a retail supply business.

htttp://www.treasury.nsw.gov.au/etf.htm

December 1995

Framework legislation passed by Parliament:

  • Electricity Supply Act 1995
  • Energy Services Corporations Act 1995
  • Sustainable Energy Development Act 1995.

This split Pacific Power into two State-owned generation companies (Delta Electricity and Macquarie); established six energy services; established the wholesale market and allowed competition.

htttp://www.treasury.nsw.gov.au/etf.htm

http://www.treasury.nsw.gov.au/etf/etf95_8.htm

March 1996

Distribution companies are corporatised.

Commencement of operations of the six energy services (distribution) corporations and two generation companies.

Generation

Pacific Power restructures to create two additional generating businesses (as corporate entities):

Delta Electricity consists of Mount Piper and Wallerawang (near Lithgow) and Munmorah and Vales Point (Central Coast). Capacity is 4 240 MW and provides approximately 30 per cent of NSW electricity supplies.

Macquarie Generation comprises Bayswater and Liddell in the Hunter Valley. It supplies over 40 per cent of the State's power supply with a capacity of 4640 MW.

Pacific Power's generating capacity is from Eraring Generation on the NSW Central Coast.

Distribution

MetNorth Energy (EnergyAustralia)-Sydney Electricity, Orion Energy

Integral Energy-Prospect Electricity, Illawarra Electricity

NorthPower Energy-Namoi Valley Electricity, New England Electricity, NorthPower, Northern Rivers Electricity, North-West Electricity, P-CCC Electricity, Tenterfield Shire Council Electricity Division

Advance Energy-Central West Electricity, Ophir Electricity, Southern Mitchell Electricity, Ulan Electricity, Western Power

Energy South (Great Southern Energy)-Monaro Electricity, Murray River Electricity, Murrumbidgee Electricity, Northern Riverina Electricity, Southern Riverina Electricity, Southern Tablelands Electricity, South-West Slopes Electricity, Tumut River Electricity

Far West Energy (Australian Inland Energy)-Broken Hill Electricity (name change and corporatisation).

Transgrid commences the interim wholesale market. It becomes the State's electricity Market and System Operator.

http://www.de.com.au/aboutdeelf.html

http://www.treasury.nsw.gov.au/etf/etf95_8.htm

http://www.macgen.com.au/files/overview.html

http://www.pp.nsw.gov.au/aboutpp/index.html

http://tg.nsw.gov.au/tg-org.htm

May 1996

NSW wholesale State electricity market becomes fully operational.

http://www.tg.nsw.gov.au/sem/

October 1996

Retail competition is introduced, and is to be phased in over a number of years.

Customers using more than 40 GWh are able to choose their electricity supplier.

New retail suppliers are granted licences to operate in NSW market.

http://www.treasury.nsw.gov.au/etf/etf95_5htm

April 1997

Customers using more than 4 GWh have a choice of supplier.

NEMMCO, op. cit. p. 5.

July 1997

Customers using over 750 MWh are able to choose their supplier.

ibid.

May 1998

NSW Auditor-General says that the NSW Government should privatise the electricity industry.

AAP, 29/5/98.

June 1998

NSW appoints an Energy Industry Ombudsman.

AAP, 9/6/98.

July 1998

Customers using more than 160 MWh are able to choose their supplier.

NEMMCO, op. cit. p. 5.

July 1999

All customers are able to choose their electricity supplier.

ibid.

Northern Territory

Date

Details

Source Documents

July 1987

Northern Territory Electricity Commission and the Northern Territory Water Authority amalgamate to form the Power and Water Authority. The Authority is to provide energy, water supply and sewerage services to areas such as Darwin, Katherine, Tennant Creek, Alice Springs and Yulara as well as several hundred remote communities.

Northern Territory Power and Water Authority, Annual Report, 1997.

1996

Major changes to corporate direction and structure of the Authority implemented as a result of 1995 COAG competition policy agreements.

ibid.

July 1996

Power station at Pine Creek opens-it will produce 27 MW power. It is privately owned, operated and maintained by Energy Developments Ltd, who also own and operate the station that supplies the McArthur River mine. The station is to provide a more secure power supply to Katherine.

'New power plant for Pine Creek', Northern Territory News, 25/7/96.

December 1996

Darwin-Katherine interconnected system load reaches 199 MW. To improve this Energy Developments Ltd. will provide 16 MW of 'peaking plant' in the Cosmo Howley/Pine Creek areas and augmentation at Channel Island Power Station will provide 19 MW in early 1998.

Northern Territory Power and Water Authority, Annual Report, 1997, p. 3.

December 1996

An 8.6 MW Independent Power Producer (IPP) station comes on stream, as a second power station for Alice Springs. Built by Central Energy Power-a subsidiary of Energy Equity Corp. Ltd.-the owner operator of the Liquefied Natural Gas plant at Brewer Estate. The plant will supplement Sadadeen Valley Ron Goodin Power Station and give Alice Springs residents security of power supply in peak periods. The plant has substantial teething problems.

ibid.

July 1997

The Authority becomes a Government Business Division operating under the Charter of Operations approved by the owners, the NT Government. It currently owns three companies-Darnor Pty Ltd, Gasgo Pty. Ltd. And Norgas Ltd (currently being deregistered). These companies were established to facilitate the development of energy infrastructure, to supply natural gas for power generation and the continued operation of the infrastructure. The Authority aims for power prices competitive with its East Coast competitors despite its small customer base.

ibid., p. 11.

Queensland

Date

Details

Source Documents

March 1994

Gladstone Power Station sold to a consortium headed by Comalco for $750 million. This guarantees electricity needed for a planned expansion of the Boyne Island smelter. A condition of the sale is that the pollution control equipment should be upgraded by 1998.

Courier-Mail, 31/3/94 p. 1, Courier-Mail 29/10/94 p. 2.

June 1994

Public consultation phase of the Eastlink proposal commences. This is a 400km transmission line across the State border linking NSW and Qld and is a future means of electricity supply for the State.

COAG, Communique, Darwin, 19 August 1994.

January 1995

Queensland Electricity Commission (QEC) is divided into two government-owned corporations:

Queensland Generation Corporation trading as AUSTA Electric becomes responsible for generation

Queensland Transmission and Supply Corporation (QTSC) becomes responsible for transmission, distribution and retail. QTSC is the holding company for eight subsidiaries:

  • Queensland Electricity Transmission Corporation (trading as Powerlink), is responsible for the State's high voltage transmission network, and
  • 7 distributors whose responsibility is for the low voltage networks and retailing in their geographic areas.

Regulation position paper, QERU, 1997.

http://www.qeru.qld.gov.au (publications then papers)

March 1996

Queensland Government scraps the proposed Eastlink connector to NSW. The plan comes under opposition from some residents in south-east Queensland who are concerned about the environmental impact, effect on farming and property values and possible health risks from electromagnetic fields.

Financial Times, 19/3/96, p. 7.

June 1996

Queensland Electricity Industry Task Force is established by the Government to investigate how to facilitate Queensland's entry into the national market.

Speech, Hon. Tom Gilmore to National Power Conference, Melbourne, September 1997.

(http://www.qeru.qld.gov.au/publications/speeches/speech2.html)

December 1996

Queensland Government announces its electricity industry reform strategy 'Powering the future'. The reforms will introduce further competition to the industry and will offer a wide range of benefits to industry participants, investors, consumers and the community.

The Queensland Electricity Reform Unit (QERU) is established to oversee the implementation of the strategy.

http://www.qeru.qld.gov.au/publications/infosht/article.html

May 1997

Parliament passes the Electricity Amendment Bill 1997 to enable the new Government-owned corporations to operate under the Electricity Act 1994's existing regulatory arrangements until markets commence.

http://qeru.qld.gov.au/publications/newsletters/legnpssd.htm

July 1997

Government owned assets restructure into:

Generation function

AUSTA Electric (formerly Queensland Generation Corporation) separates into three independent and competing generating corporations-CS Energy, Tarong Energy and Stanwell Corporation as well as an engineering services organisation AUSTA Energy.

Transmission function

Powerlink Queensland and the seven distributors are established as independent government-owned corporations

Capricornia Electricity (CAPELEC), Far North Queensland Electricity (FNQEB), Mackay Electricity (MEB), North Queensland Electricity (NORQEB), South East Queensland Electricity (SEQEB), South West Queensland Electricity (SW Power) and Wide Bay-Burnett Electricity (WBBEC).

Retail function

This is established by amalgamating the retailing activities of the former distributors as follows:

  • Northern retailer-Northern Electricity Retail Corporation Pty Ltd (NERC) an incorporated joint venture of FNQEB, NORQEB and MEB, trading as Omega Energy.
  • Central retailer-Central Electricity Retail Corporation Pty Ltd (CERC) comprising CAPELEC, WBBEC and SW Power known as Ergon Energy.
  • Southern retailer-the Southern Electricity Retail Corporation Pty Ltd (SERC) formed as a wholly owned subsidiary of SEQEB and trading as Energex.

Regulation position paper, QERU, 1997.

August 1997

Queensland Parliament passes the Electricity amendment Act (No. 2) 1997-its purpose is to amend the Electricity Act 1994 to provide for the Interim Wholesale Electricity Markets:

  • authorise generators to sell into a pool
  • appoint a body Queensland System Operator (QSO) (within Powerlink) to manage the market
  • provide for the Queensland Interim Market Code.

http://www.qeru.qld.gov.au/publications/newsletters/secrnd.htm

February 1998

Customers with annual power bills of more than $2 million (about 40) can buy electricity direct from generator companies, through retailers, from an electricity pool.

Courier-Mail, 19/1/98.

February 1998

Queensland state-owned Ergon Energy and Omega Energy merge to trade as Ergon Energy. It covers 90 per cent of Queensland and is the fifth largest power retailer in the country.

Australian, 20/2/98 p. 23.

February 1998

Faults at four power stations Swanbank, Stanwell, Gladstone and Tarong, combined with record demands for power due to hot weather, trigger blackouts across Queensland. Power cuts were rotated throughout the State. Blackouts are called 'freakish' by the chairman of the QERU.

Courier-Mail, 24/2/98.

February 1998

CS Energy announces planned $900 million expansion of Callide power station by building two new generators.

Courier-Mail, 25/2/98.

March 1998

Energex launches its 'Earth's Choice Program' a plan which offers alternative sources of electricity other than coal-generated using sources such as hydro-electric or solar or gas from landfill sites. Customers will pay an extra two cents per KWh of consumption.

AAP, 26/3/98.

March 1998

Electricity retailer Energex wins the contract to supply Queensland's largest electricity consumer Queensland Alumina Ltd's Gladstone site. It also signs with Brisbane Airport Corporation Ltd.

AAP, 31/3/98.

March 1998

Ergon Energy wins a six month contract to supply Broken Hill Pty Co Ltd 's coal operations, about 4 per cent of the State's load.

Reuters News Service, 27/3/98.

March 1998

Customers using more than 40GWh or with an annual bill of about $400 000 may choose their supplier.

QERU Media Release, 26/4/98.

April 1998

Start of construction of a new 303 MW power plant at Oakey to be operational by 2000. Reopening of 120 MW Callide A plant at Biloela after a $57 million refurbishment. It is operational immediately.

AAP, 15/4/98.

April 1998

Stanwell announces it will build a $9 renewable energy project near Tully, due to be operational by late 1999. A 6 MW hydro-electric turbine would be built on the water outlet of the Koombooloomba Dam, the main water supply for the Kareeya power station.

AAP, 30/4/98.

May 1998

Collinsvale power station (midway between Townsville and Mackay) reopened (it was shut down in 1988) after a $154 million refit. The station is owned by Transfield and NRG who bought it in 1994 from QTSC.

AAP, 7/5/98.

May 1998

Construction announced of a new power station at Wandoan (near Kingaroy) with a 700 MW capacity. Tarong Power Station capacity will be increased to 840 MW.

AAP, 11/5/98.

October 1998

Second stage of competition is to commence. Customers using $400 000 worth of power each year will be able to choose their supplier.

AAP, 27/4/98.

July 1999

Third round of contestable customers using $20 000 worth of power will commence. This covers most local governments.

AAP, 27/4/98, 28/4/98.

2001

Power lines will cross the NSW-Queensland border west of Texas at Yelarbon-'Westlink' connector-and expected to be operational.

Australian, 19/3/98, p. 37.

2001

Small customers, mostly households, will enter the market.

AAP, 27/4/98.

South Australia

Date

Details

Source Documents

July 1995

Electricity Trust South Australia (ETSA) commences as a corporatised entity subject to the Electricity Corporations Act 1994 and the Public Corporations Act 1993.

http://www.etsa.com.au/welcome/body-index.html

July 1996

ETSA with four wholly-owned subsidiary corporations ETSA Generation, ETSA Transmission, ETSA Power and ETSA Energy commences full commercial trading.

Australian, 7/3/97, p. 31.

January 1997

SA Generation Corporation, trading as Optima Energy, is formed from ETSA Generation. It is responsible for the generation of power in the State. It has a full range of generation plants from base-load stations at Port Augusta through to mid-range and load-following natural gas-fired plant at Torrens Island and a gas turbine peaking plant at Mintaro and Dry Creek.

ETSA Corporation retains the responsibility for transmission and distribution to customers.

Australian, 7/3/97, p. 1.

Advertiser, 31/12/96, p. 18.

Advertiser, 23/9/97, p. 17.

October 1997

A storm blows debris onto the interstate link with Victoria and operators are forced to back down power flow to minimise risk of failure. The SA demand is 1 484 MW and the import level is cut to 343 MW. Local generator capacity cannot make up the difference and the lights are turned down in the State for several hours.

Australian Financial Review, 31/3/98, p. 9.

December 1997

An independent review by London Economics on the ETSA and Transgrid proposal to build Riverlink submitted to NEMMCO. The project involves the construction of around 330 km of 275 kV transmission line between Buronga in western NSW and Robertstown, 120 km northeast of Adelaide. The review finds that the link would be $108 million cheaper than building and running a new power station.

Reuters News Service, 29/12/97.

Modern Power Systems, 2/98 p. 5

January 1998

ETSA launches a campaign for consumers to save power for fear of blackouts. Sufficient power is being generated by Optima or imported from Victoria to meet peak demand but backup capacity is limited when breakdowns occur.

Advertiser, 15/1/98, p. 1

January 1998

SA Government endorses the Riverlink proposal-it gives 'in principle approval to establish a second interstate electricity interconnector to boost the supply of electricity to South Australia and keep consumption costs at a minimum'. The State is already linked to Victoria's power grid but expects shortages by 1999-2000.

Reuters News Service 14/1/98

February 1998

Government announces it will sell ETSA Corporation and Optima Energy in a process that it proposes will take at least two years.

Premier of South Australia, Media Release, 17/2/98.

March 1998

In a report to NEMMCO, Optima Energy claims ETSA's proposed Riverlink transmission line from NSW will lead to higher prices.

AAP, 26/3/98.

March 1998

Government announces it will close the Playford Power Station in 2000. The 180 MW station uses environmentally unfriendly old technology and burns brown coal.

Advertiser, 25/3/98, p. 4.

March 1998

Optima wins the contract to supply power and gas direct to the cement maker Adelaide Brighton.

Advertiser, 4/3/98, p. 40.

April 1998

Consultants hold meetings to discuss the Riverlink project in preparation of an environmental impact statement.

Advertiser, 8/4/98, p. 27.

April 1998

New York-based financial services group Morgan Stanley Dean Witter is named as the lead adviser for the sale of ETSA and Optima Energy.

AAP, 16/4/98.

April 1998

Customers using more than 40 GWh per annum are able to choose their supplier.

NEMMCO, op. cit. p. 5.

June 1998

The Government abandons plans to build Riverlink after NEMMCO says the interconnector is not justified. It can also have an adverse effect on the sale price of ETSA and Optima.

Australian, 16/6/98, p. 24.

July 1998

Users with requirements of more than 4 GWh per annum will become targets for suppliers.

Advertiser, 4/3/98, p. 40.

January 1999

Smaller industrial and commercial customers using more than 750 MWh per annum will be able to choose their supplier.

Advertiser, 4/3/98, p. 40.

January 2000

Customers using more than 160 MWh will be able to choose their supplier.

NEMMCO, op. cit., p. 5.

2002

All consumers will be able to enter the market.

AAP, 4/4/98.

Tasmania

Date

Details

Source Documents

December 1991

Basslink Feasibility Study report is submitted to the Tasmanian and Victorian Governments. The report finds that an undersea cable connection between the Victorian and Tasmanian electricity systems is technically and environmentally feasible.

 

March 1993

A supplementary studies report on Basslink is released to update results of the earlier study and progress a number of the technical issues.

 

October 1995

Legislation passes to reform the industry in the State:

  • Hydro-Electric Corporation Act 1995-establishes the Hydro-Electric Corporation (HEC) and defines its functions (centred on generation, transmission, distribution and retailing of electricity). It establishes the HEC as a government business enterprise.
  • Electricity Supply Industry Act 1995-allows other companies to enter the Tasmanian market, have access to the HEC's network and build and operate power stations It introduces an independent regulator (ESI Regulator) and transfers the regulatory functions of the HEC to it.
  • Energy Co-ordination and Planning Act 1995-gives statutory responsibility to the Office of Energy Planning and Conservation (OEPC) to provide policy advice (previously held by the HEC) and energy planning.

Government Prices Oversight Commission (GPOC) is established to oversee prices and ensure monopoly power is not abused.

The regulatory framework for Tasmania's electricity supply industry, Dept of Treasury and Finance, 1998.

April 1997

The Premier outlines the future for the electricity industry in Tasmania in the Directions Statement:

  • to withdraw equity from the HEC through sale of its businesses
  • to proceed with the development of Basslink to be built, owned and operated by the private sector
  • to prepare the HEC for full participation in the NEM
  • to introduce full retail competition to the State's electricity market as soon as practicable.

The regulatory framework for Tasmania's electricity supply industry, Dept of Treasury and Finance, 1998.

(http://www.dpac.tas.gov.au/govt/directions/speech)

April 1997

Basslink Development Steering Committee and the Equity Restructuring Steering Committee are set up to implement the path from 'policy to reality' in electricity reform.

http://www.dpac.tas.gov.au/govt/directions/background/tor.htm

July 1997

The Commonwealth-State inquiry into the Tasmanian economy, chaired by Peter Nixon, presents its report-section 6.7.1 deals with a 'competitive electricity market for Tasmania'. It makes a number of recommendations in relation to the electricity industry.

http://www.dpac.tas.gov.au/govt/nixon/summary.htm

July 1997

HEC restructures into four operational and independent business units (Generation, Network, Systems and Energy Services) to comply with the competition policy agreements.

Hydro-Electric Corporation, Annual report, 1997.

October 1997

Legislation passes (Electricity Companies Act 1997) which restructures the HEC into:

  • a single electricity transmission company
  • a single distribution/retail company.

Generation activities remain in State ownership as the primary focus of the HEC.

Committee of review is established to provide advice on the structure of distribution and retailing of electricity.

Media release, Minister for Energy, 20/10/97.

November 1997

Bain International Inc and Salomon Brothers Australia Ltd. release their report to the Equity Restructuring Steering Committee. 'The report was commissioned to advise on how the HEC could most effectively achieve the Government's objectives following the Premier's Directions Statement.'

http://www.dpac.tas.gov.au/govt/hydro

November 1997

Basslink Steering Committee advises the Government that the project is economically viable and would cost about $350-450 million and that the private sector is interested in building the project.

Media Release, Minister for Energy, 19/11/97.

March 1998

Credit Suisse First Boston report to the Government is released. The focus of the report is 'on relative values to the State from alternative methods of equity withdrawal'.

http://www.tres.tas.gov.au/Electricity_Reform/Equity_Withdrawal/ExecSum.htm

April 1998

Government is to go ahead with the breakup of the HEC into three separate companies and revamp the Government Prices Oversight Commission as the electricity regulator. The Premier launches a publicity campaign to sell the options of either lease or sale of the HEC.

Mercury, 21/4/97, p. 1.

April 1998

Reports that Tasmania may use Franklin Dam compensation money to buy an investment stake in Basslink.

Examiner, 6/4/98.

May 1998

Government announces that the Duke Energy Corporation is the preferred developer of natural gas infrastructure in the state. Duke is to explore the feasibility of buying gas from Bass Strait leaseholders and establishing the necessary pipelines and gas-fired generators.

AAP, 14/5/98.

May 1998

The Government announces it will recall Parliament a week earlier in August to deal with the legislation to sell or lease the HEC.

AAP, 27/5/98.

Victoria

Date

Details

Source Documents

November 1992

Government sells 50 per cent of Loy Yang B power station for $1 billion.

Victoria's electricity supply industry towards 2000, June 1997.

August 1993

Government announces plans to horizontally disaggregate the State Electricity Commission of Victoria (SECV) and transfer generation, transmission and distribution to three separate operating companies.

ibid.

October 1993

SECV is corporatised and becomes three businesses-Generation Victoria (generation), National Electricity (transmission) and Electricity Services Victoria (distribution).

 

July 1994

Office of Regulator-General is established to oversee market conduct. Its primary aims are:

  • promote competitive market conduct
  • prevent misuse of monopoly power
  • ensure that consumers benefit from competition and efficiency.

ibid.

September 1994

Government announces its tariff policy:

  • residential tariffs to be frozen until June 1996, 2 per cent price fall in July 1996, and 1 per cent fall each July until year 2000
  • small business tariffs to be reduced by 20 per cent over three years
  • large industrial customers to be offered a safety net
  • vesting contracts to be phased out as retail sector open to competition.

The electricity industry in South Australia, Industry Commission, March 1996.

October 1994

National Electricity is split into:

  • the Victorian Power Exchange (VPX) which links all the electricity supply industry businesses both physically and financially. VPX is to be responsible for the secure operation of the main power system and financially it is to be responsible for managing spot trading in the wholesale electricity market (Vicpool)
  • PowerNet Victoria, which owns and maintains the high voltage grid.

ibid.

Smith, Stewart, Electricity and privatisation, Briefing Paper No. 17/97, NSW Parliamentary Library Research Service, 1997.

October 1994

From the 18 business units of Electricity Services Victoria and 11 Municipal Electricity Undertakings, five regionally based distribution businesses are established (three urban and two regional). The businesses are to own and operate the low voltage distribution 'wires' and a retail arm. These are CitiPower Ltd, Solaris Power Ltd, United Energy Ltd (urban), Eastern Energy Ltd and Powercor Australia Ltd (regional).

Electricity Australia, ESAA, 1995.

Victoria's electricity supply industry towards 2000, op. cit.

December 1994

Customers with demand greater than 40 GWh are given choice of their supplier.

NEMMCO, op. cit., p. 5

January 1995

Generation Victoria is divided into five independent and commercially viable generating businesses.

  • Loy Yang A, a 2000 MW power station and Loy Yang brown coal mine
  • Hazelwood 1600 MW power station and Morwell open cut brown coal mine
  • Yallourn W 1450 MW Power station and Yallourn open cut brown coal mine
  • Newport and Jeeralang gas fired power stations (965 MW), now trading as Ecogen Energy but owned and operated by Generation Victoria
  • Victorian hydro-electric (Southern Hydro) consisting of Kiewa, Dartmouth, and Eildon/Rubicon/Cairn Curran systems (469 MW).

SECV retains the Government's interest in Loy Yang B and the Snowy Mountains Hydro-electric scheme.

Victoria's electricity supply industry towards 2000, op. cit.

Reforming Victoria's electricity industry, 1994.

July 1995

Customers with a demand in excess of 4 GWh are given choice of supplier.

NEMMCO, op. cit. p. 5.

July 1995

Cross-ownership controls to apply. Parties are to be allowed to own or control 100 per cent of one licensed company, 20 per cent of another and 5 per cent of others.

 

August 1995

Sale of the five distribution/retail businesses commences.

United Energy is sold to UtiliCorp consortium (US) for $1.55 billion.

Australian, 9/1/97, p. 28.

October 1995

Solaris Power is sold to a consortium of AGL and Energy Initiatives (US) for $950 million.

Australian, 9/1/97, p. 28.

November 1995

Eastern Energy is sold to a subsidiary of Texas Utilities (US) for $2.8 billion.

Australian, 9/1/97, p. 28.

November 1995

Victorian western region distributor Powercor is sold to Pacificorp (US) for $2.2 billion.

Australian, 9/1/97, p. 28.

November 1995

Melbourne's Citipower is sold to Ent Energy Corp(US) for $1.5 billion.

Australian, 9/1/97, p. 28.

March 1996

Sale of the generating businesses commences.

Yallourn Energy (generator) is sold to a consortium headed by PowerGen International (UK) for $2.2 billion. It is 40 per cent Australian-owned.

Smith, Stewart, Electricity and privatisation, op. cit., 1997.

July 1996

Customers with demands in excess of 750 MWh are given choice of supplier.

ibid.

August 1996

Hazelwood Power is sold to a consortium led by National Power PLC (UK) for $2.35 billion. It is 9 per cent Australian-owned.

Australian, 9/1/97, p. 28.

May 1997

Loy Yang Power's assets are sold to Horizon Energy, an international consortium headed by CMS Energy and NRG Energy (US) for $4.5 billion. Loy Yang A is 25 per cent Australian owned.

Victoria's electricity supply industry towards 2000, op. cit.

May 1997

Government sells its 49 per cent share of Loy Yang B to Edison Mission Energy as part of a complex restructuring exercise.

ibid.

November 1997

Southern Hydro is bought by a consortium which consists of Infratil Australia (50.2 per cent) and partners, Unisuper (22.1 per cent) and Contact Energy of New Zealand (27.7 per cent) for $391 million.

Age, 25/11/97, p. 3.

March 1998

Blackouts occur in more than 23 000 Victorian homes and businesses. They are attributed to rain, dust and fires which cause short circuits.

AAP, 6/3/98.

April 1998

United Energy of Victoria float is announced. It is to list on the stock exchange following the issue of more than 171 million 'stapled' securities, offered to the public at $2.25 each and to institutional investors at $2.35 each.

Business Review Weekly, 6/04/98, p. 19.

June 1998

Claims by the Electrical Trades Union that power blackouts and poor service are due to Citipower's parent company, Ent Energy, being in financial trouble. This was rejected by the Premier, Hon Jeff Kennett, MP.

AAP, 5/6/98.

July 1998

Customers with demand in excess of 160 MWh are to be given choice of supplier.

Victoria's electricity supply industry towards 2000, op. cit.

January 2001

All remaining customers are to be given choice of supplier, subject to there being no significant technical or economic constraints.

ibid.

Western Australia

Date

Details

Source Documents

1992

State Government commissions the Energy Board of Review to report on improving the efficiency of energy business in the State. This recommends that competition would provide cheaper and more efficient energy and that the State Energy Commission of Western Australia (SECWA) should be split into competing businesses.

http://www.westozweb.com.au/home/AlintaGas/history.html

March 1994

Contracts are signed for the construction of a 300 MW coal-fired power station at Collie.

Minister for Energy, Statement 22/3/94.

October 1994

Government announces the signing of an agreement for the development of a 30 MW hydro-electric power station on the Ord River Dam.

Minister for Resources Development, Statement, 26/10/94.

January 1995

State Energy Commission is split (Electricity Corporations Act 1994) into separate corporatised electricity and gas utilities which are to operate in a commercial environment:

  • Western Power-covers 2 525 000 square kilometres and 10 per cent of Australia's population. It is to own, maintain and operates five major power stations and 32 smaller stations, a total capacity of 3 000 MW.
  • Alinta Gas-to supply and distribute gas.

http://www.wpcorp.com.au/corpinfo/corpinfo.htm

January 1997

New electricity transmission regulations come into force allowing private generators and electricity consumers to gain access to the government-owned high-voltage transmission system.

Australian, 2/1/97, p. 16.

July 1997

Large electricity consumers (87 600 MWh and above) are to be free to enter into contracts with Western Power or private sector generators to purchase electricity which is then to be supplied via Western Power's distribution system.

Minister for Energy, Statement, 1/7/97.

March 1998

Pacific Power wins the Collie power station contract ($80 million) for the six year operation and maintenance of the station.

Electricity Supply Magazine, March 1998, p. 19.

May 1998

Ord Hydro-Electricity Scheme comes on-line.

Reuters, 1/3/98.

July 1998

Customers in the Pilbara, Eastern Goldfields and non-interconnected areas (average load 43 800 MWh) will be able to choose their supplier.

Minister for Energy, Statement, 1/7/97

July 1999

All customers with an average load of 43 800 MWh at a single site will be able to choose their supplier.

Minister for Energy, Statement, 1/7/97.

January 2000

All customers will have open access to the market.

West Australian, 1/12/97, p. 29.

Bibliography

Australia, Independent Committee of Inquiry into National Competition Policy, National competition policy-report by the Independent Committee of Inquiry, Chairman Frederick G. Hilmer, AGPS, Canberra, 1993.

Australia, Industry Commission, Energy generation and distribution, AGPS, Canberra, 1991.

Australia, Industry Commission, The electricity industry in South Australia, AGPS, Canberra, 1996.

Australian Capital Territory, Department of Urban Services, Introducing competition into ACT electricity retailing: issues paper, Publications and Public Communication, Canberra, 1996.

Australian Capital Territory, Electricity reform in the ACT. http://www.act.gov/electricity.

Australian Chamber of Commerce and Industry, A competitive national electricity system, ACCI, Canberra, 1994.

Bain International Inc and Salomon Brothers Australia Limited, Restructuring for growth, Bain/Salomon, Hobart, 1997 (http://dpac.tas.gov.au/govt/hydro).

Credit Suisse/First Boston, Report to the Government of Tasmania assessment of options for the partial withdrawal of equity from the Hydro-Electric Corporation, Credit Suisse/First Boston, Hobart, 1998, (htttp://www.tres.tas.gov.au/Electricity_Reform/Equity_Withdrawal/index.htm).

Council of Australian Governments, Communique, 1992, 1993, 1994, 1997.

Electricity Supply Association of Australia, Electricity Australia, ESAA, Sydney, 1992, 1993, 1994, 1995, 1996, 1997.

Electricity Supply Association of Australia, Electricity supply magazine, ESAA, Sydney.

National Grid Management Council, National electricity market paper trial evaluation, volume 1 evaluation report, volume 2 statistical analysis, NGMC, Canberra, 1994.

National Electricity Code Administrator (NECA) home page, (http://www.neca.com.au).

National Electricity Market Management Company Limited (NEMMCO), Australia's national electricity market-an introduction, NEMMCO, Melbourne, 1997.

New South Wales Treasury, Office of Financial Management, (http://www.treasury.nsw.gov.au).

Queensland Electricity Reform Unit, (http://www.qeru.qld.gov.au).

SEC/HECV, Interconnection between Tasmanian and mainland electricity systems: Basslink feasibility study report, Power Grid Development Department Publications, Melbourne, 1991.

SEC/HECV, Interconnection between Tasmanian and mainland electricity systems: Basslink supplementary studies report, Power Grid Development Department Publications, Melbourne, 1993.

Snowy Mountains Hydro-Electric Authority home page, (http://www.snowyhydro.com.au).

South Australia, ETSA Corporation, (http://www.etsa.com.au).

Smith, Stewart, Electricity and privatisation, Briefing Paper No 17/97, NSW Parliamentary Library Research Service, Sydney, 1997.

Special Premiers' Conference, Brisbane, 30-31 October 1990, Communique and Agenda papers.

Special Premiers' Conference, Sydney, 30-31 July 1991, Communique and Agenda papers.

Tasmania, Department of Treasury and Finance, Tasmania electricity reform, (http://www.tres.tas.gov.au/Electricity_Reform/Default.htm).

Tasmania, Department of Treasury and Finance, The regulatory framework for Tasmania's electricity supply industry. Department of Treasury and Finance, Hobart, 1998, (http://www.tres.tas.gov.au/Electricity_Reform/dtfl/regulato.htm).

Transgrid, (http://www.tg.nsw.gov.au/).

Victoria, Department of Treasury and Finance, Energy Projects Division, (http://www.energy.dtf.vic.gov.au/domino/web_notes/energy/dtf_epd_www.nsf/WebPages/Home).

Victoria, Department of Treasury and Finance, Energy Projects Division, Victoria's electricity supply industry: towards 2000. Energy Projects Division, Melbourne, 1997, (http://www.energy.dtf.vic.gov.au/domino/web_notes/energy/dtf_epd_www.nsf/WebPages/Stage+Four+Publication).

Western Australia, Minister for Energy, Ministerial Statement Collie Power station. 22 March 1994, (http://www.wa.gov.au/cabinet/barnett/minstat/minsta11.html).

Western Australia, Minister for Resources Development, Ministerial Statement Ord hydro scheme, 26 October 1994, (http://www.wa.gov.au/cabinet/barnett/minstat/minsta12.html).

Western Australia, Minister for Energy, Ministerial Media Statement, 1 July 1997, (http://www.wa.gov.au/cabinet/mediast/dg97-27/barelect.html).

Western Power, (http://wpcorp.com.au).

Glossary

Commercialisation

Applying commercial principles to a government business enterprise as far as possible.

Corporatisation

Subjecting government business enterprise's to the principles of the corporatisation law. Often accompanied by a range of other initiatives, including providing greater management autonomy and clear commercial objectives, performance monitoring and competitive neutrality.

Distribution

The process of transferring electricity from the transmission system to final users. Electricity is distributed along local networks of overhead and/or underground power lines.

Generation

The process of converting primary energy (mostly coal, gas, oil, stored water and to a lesser extent wind and solar) into electricity.

Gigawatt (GW)

One gigawatt equals 1 billion watts, 1 million kilowatts or 1 thousand megawatts.

Gigawatt-hour (GWh)

One gigawatthour equals one billion watthours.

Grid

The high voltage transmission network.

Interconnection

High voltage transmission lines linking states.

Load

The rate at which energy is delivered to or by a system, part of a system, or a piece of equipment. It is expressed in kilowatts or other suitable units at a given indtant or averaged over any designated period of time.

Megawatt (MW)

One megawatt equals one million watts.

Megawatthour(MWh)

One megawatthour equals one million watthours.

National electricity market (NEM)

A competitive market for electricity between all the eastern Australian regional electricity systems that could be interconnected following the year 2000.

Pool

The spot market for electricity where sellers bid into the Pool the advance prices of quantities of electricity, and generators are dispatched to meet the demand.

Retail supply business

The business of purchasing electricity at bulk supply points and selling it to retail customers. The electricity may be physically transported over a distribution system owned by another party, and payments made for the use of that system.

States

The six States and two Territories of Australia.

Transmission

The process of transporting electric energy in bulk from a source of supply to other parts of the system or to other utility systems.

Watt

The electrical unit of real power or rate of doing work. The rate of energy transfer equivalent to one ampere flowing under an electrical pressure of one volt at unity power factor. One watt is equal to one joule per second.

Watthour

The total amount of energy used in one hour by a device that uses one watt of power for continuous operation. Electric energy is commonly sold by the kilowatthour.

 

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