BULLETIN
Limited Merits Review Regime
BULLETIN SIX / 6 JUNE 2013
THE STANDING COUNCIL ON ENERGY AND RESOURCES (SCER) HAS AGREED TO
IMPORTANT POLICY CHANGES IN RELATION TO REFORM OF THE LIMITED MERITS
REVIEW REGIME. SCER HAS PROVIDED DETAILS ON THIS POLICY AND ITS REASONS
FOR ADOPTING THIS APPROACH IN A DECISION REGULATION IMPACT STATEMENT
(RIS).
THESE REFORMS WILL ENSURE THAT THE LIMITED MERITS REVIEW REGIME WILL
DELIVER THE OUTCOMES SPECIFIED IN THE STATEMENT OF POLICY INTENT,
PUBLISHED BY SCER ON 19 DECEMBER 2012. SPECIFICALLY, THE CHANGES
CLARIFY THAT CONSIDERATION OF THE LONG TERM INTERESTS OF CONSUMERS IS
A REQUIREMENT OF BOTH THE INITIAL ECONOMIC REGULATORY PROCESS AND
ANY SUBSEQUENT REVIEWS.
The full decision RIS is now available on the SCER website. Officials will soon
release for consultation a legislative package, including amendments to the
National Electricity Law and National Gas Law, to give effect to this policy. The
key policy changes are summarised below.
SCER intends to keep the Australian Competition Tribunal (the Tribunal) as the
review body and maintain the limited nature of merits review. However, SCER is
introducing much clearer links to the long term interests of consumers through a
series of changes to the national energy laws and rules which modify the test for
initiation, processes, and roles of participants in a review process.
Limited Merits Review Test
Limited merits review will be based on the following processes:
1. the applicant must demonstrate that the original decision-maker made an
error of fact, an incorrect exercise of discretion or was unreasonable in its
original decision and make a prima facie case that addressing this would lead
to a materially preferable outcome in the long term interests of consumers;
and
2. the Tribunal assesses whether, taking into account any interlinked matters,
addressing the grounds and the interlinked matters would deliver a materially
preferable outcome (in the context of the overall decision) in the long term
interests of consumers, as set out in the National Electricity Objective (NEO)
or National Gas Objective (NGO).
The Role of the Regulator
For regulatory determinations, the regulator must:
 develop a record of its regulatory process to be made available to the Tribunal
for reviews; and
 include in its final determination an explanation of the interlinkages between
different component parts of its decision and how its overall decision is in the
long term interests of consumers, in accordance with the NEO or NGO.
In addition, the regulator, in regulatory determination processes, and the
Tribunal, in review processes, must:
 where there is discretion around a range of decisions, make the overall
decision that, on balance, it considers is materially preferable in terms of
serving the long term interests of consumers as set out in the NEO or NGO;
and
 undertake appropriate consultation with relevant users or consumer groups
served by the network business that is the subject of the regulatory
determination.
Seeking Leave to Appeal
In applying for leave to appeal, applicants will be required to establish:
 an error of fact, incorrect exercise of discretion or unreasonableness in the
original decision; and
 that there is a prima facie case that correcting the alleged error, incorrect use
of discretion or unreasonableness will result in a materially preferable
outcome compared to the original decision for delivering the long term
interests of consumers as set out in the NEO and NGO. In doing so, the
applicant must identify any interlinked areas of the original decision that
contribute to the overall decision.
In assessing an application for leave to appeal, the Tribunal will determine
whether the applicant has established an error of fact, incorrect exercise of
discretion or unreasonableness and made a prima facie case that addressing
these and any interlinked issues will result in a materially preferable overall
decision in the long term interests of consumers.
The Role of the Tribunal in Undertaking a Review
In making its decision, the Tribunal must:
 demonstrate that it provides, compared to the original decision, a materially
preferable outcome in the long term interests of consumers as set out in the
NEO and NGO;
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 seek guidance from the parties to the review and any interveners on
interlinked areas;
 demonstrate how it has taken into account interlinked areas when determining
whether a materially preferable overall decision in the long term interests of
consumers as set out in the NEO and NGO exists;
 remit decisions to the original decision-maker routinely and only vary
decisions where these are not of a highly technical nature; and
 remit decisions to the original decision-maker where there is likely to be a
materially preferable outcome in the long term interests of consumers as set
out in the NEO and NGO, but where establishing this would require redoing
the entire, or a significant proportion of, the original decision-making process.
The Tribunal would be generally limited to the information that was before the
original decision-maker and, in the case of decisions by the regulator that must
include, but is not limited to, the record of the regulator and relevant final
determination. If a party wishes to submit new information, it must demonstrate
that it:
 is pertinent to the matter being heard;
 was not unreasonably withheld from the original decision-maker; and
 could reasonably be expected to have been considered by the regulator in its
regulatory determination process.
Parties to Reviews, Costs, and Consumer Participation
All participants in reviews will generally be required to bear their own costs
associated with participation in a review process. Network businesses will not be
able to pass costs associated with reviews through to consumers as part of their
regulated revenues, either prospectively or following a review.
Barriers to user and consumer participation will be addressed in the following
ways:
 the record of the regulator will include any submissions that were received
from user and consumer groups;
 the Tribunal will be required, as the regulator is required, to consult with users
and consumers as part of its review process;
 lowering of the risk that users and consumers may have legal costs incurred
by network businesses or the regulator awarded against them; and
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
removal of the provision that small users and consumers may have costs
awarded against them on the basis that they conducted their case without due
regard to submissions or arguments made to the Tribunal by another party.
Changes to the Tribunal’s Functions in Legislation beyond the National
Energy Laws
The Competition and Consumer Regulations 2010 will be amended to ensure the
provisions that apply to the energy sector allow the Tribunal to take a less formal
and more investigative process and that it act as speedily as a proper
consideration of the matter allows, having regard to the scope of the issues being
reviewed.
Review of the Tribunal’s Role in Energy Matters
A review of the Tribunal’s performance under these reformed arrangements will
commence no later than the end of 2016. This review is intended to establish
whether there is a requirement for future additional amendments to the structure
of the Tribunal or the establishment of a new review body to ensure delivery of
the policy intent.
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