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The Electricity Industry
Under Part IIIB, section 24C of the Electricity Industry Act 2002, the Electricity Supply Industry is declared to be a regulated industry for the purposes of the ICCC Act 2002. PNG Power Limited (‘PNG Power’) is declared by the Treasurer to be a regulated entity under section 32 of the ICCC Act 2002. PNG Power is licensed under the Electricity Industry Act 2002 (EI Act) to generate, transmit, distribute and sell electricity in Papua New Guinea.
Thus PNG Power has three main licences under the EI Act and these are;
- Electricity Generation Licence;
- Electricity Transmission Licence; and,
- Electricity Distribution Licence.
In fact, PNG Power has exclusivity to supply electricity throughout PNG.
As being a regulated entity, an Electricity Regulatory Contract (‘Regulatory Contract’) exists that binds PNG Power and the Commission pursuant to the provisions of the ICCC Act 2002 and the EI Act. This Regulatory Contract regulates the prices that PNG Power may charge for the Supply and Sale of the electricity, the Scheduled Services and the Excluded Services. The Supply and Sale of electricity, the Scheduled Services and the Excluded Services which are the subject of the Regulatory Contract are declared by the Treasurer to be regulated services under section 32 of the ICCC Act 2002. The Commission adjusts tariff in a bundle pricing under the current regulatory arrangement.
PNG Power is regulated under a form of price control mechanism known as the maximum average price (‘MAP’), thus, for each of the tariffs that PNG Power charges to their different classes of consumers (Industrial, General Supply, Domestic Customers and Public Lighting) the average price of those tariffs must not exceed the MAP that the Commission determines. In considering tariff submissions from PNG Power, the Commission is mindful of the regulatory contract requirements and the price path for the regulatory period. When reviewing the tariffs the Commission is required to ensure that charges for each service complement the level of service that is expected to be provided.
With respect to the level of service provided, if PNG Power does not meet certain service level requirements stipulated within the regulatory contract, customers must be informed about their eligibility for rebates under clause 6 of the regulatory contract.