SUPREME COURT OF QUEENSLAND
PARTIES: | BRAEMAR POWER PROJECT PTY LTD REGULATOR UNDER THE ELECTRICITY ACT 1994 |
FILE NO/S: | SC No 11789 of 2007 |
Court of Appeal | |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | |
DELIVERED ON: | 12 June 2009 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 17 April 2009 |
JUDGES: | Muir and Chesterman JJA and White J Separate reasons for judgment of each member of the Court, each concurring as to the order made |
ORDER: | Appeal dismissed with costs. |
CATCHWORDS: | ADMINISTRATIVE LAW – JUDICIAL REVIEW – REVIEWABLE DECISIONS AND CONDUCT – DECISIONS TO WHICH JUDICIAL REVIEW LEGISLATION APPLIES – DECISIONS OF AN ADMINISTRATIVE CHARACTER – where the appellant, in his capacity as the regulator under the Electricity Act 1994 (Qld), was the respondent to an application to review his decision concerning the fixing of Queensland Usage Factors ("QUFs") – where the primary judge held the decision was of an administrative character – whether the decision was of administrative character and therefore amenable to judicial review ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – RELEVANT CONSIDERATIONS – where the appellant used out of date forecasts and data when making the decision – where the primary judge ordered that the decision be set aside and that the appellant fix the annual QUFs according to law – whether the decision was an improper exercise of power in that the appellant failed to take a relevant consideration into account ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – UNREASONABLENESS – where the appellant used out of date forecasts and data when making the decision – whether decision was an improper exercise of power in that the appellant exercised the power unreasonably Electricity Act 1994 (Qld), s 135CM, s 135CP(3), s 135CP(4), s 135CP(5) Judicial Review Act 1991 (Qld), s 23(g), s 33 Attorney-General (NSW) v Quin (1990) 170 CLR 1; [1990] HCA 21, cited Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; [1990] HCA 33, cited Chan Yee Kin v Minister for Immigration and Ethnic Affairs (1989) 169 CLR 379; [1989] HCA 62, cited Hamblin v Duffy (1981) 34 ALR 333, cited Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40, considered Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; [1996] HCA 6, cited Minister for Immigration v Eshetu (1999) 197 CLR 611; [1999] HCA 21, cited Queensland Medical Laboratory v Blewett (1988) 84 ALR 615, distinguished SAT FM Pty Ltd v Australian Broadcasting Authority (1997) 75 FCR 604; [1997] FCA 647, cited Sean Investments Pty Ltd v MacKellar (1981) 38 ALR 363, cited |
COUNSEL: | M Hinson SC, with M Plunkett, for the appellant Dr M Spry for the respondent |
SOLICITORS: | Crown Law for the appellant Minter Ellison for the respondent |
[1] MUIR JA: Introduction
The appellant was the respondent to an application to review his decision in his capacity as the regulator under the Electricity Act 1994 (Qld), to fix the annual Queensland Usage Factors ("QUFs") for the 2007 – 2008 financial year for the south-west transmission zone as 0.7598 ("peak QUF") and 0.6622 ("off-peak QUF") pursuant to s 135CM of the Electricity Act. The respondent is and was an accredited generator under the Electricity Act for the Braemar Power Station, which is located and operates in the south-west transmission zone.
[2] The primary judge ordered that the Decision be set aside and that the appellant be ordered to fix the annual QUFs for 2007 – 2008 according to law.
[3] The appellant appeals on the grounds that the primary judge erred in:
(a)Holding that the Decision was of an administrative character and thus amenable to judicial review;
(b)Finding that the Decision was an improper exercise of power in that the appellant failed to take a relevant consideration into account; and
(c)Finding that the Decision was an improper exercise of the power in that the appellant exercised the power unreasonably.
The legislative scheme
[4] Before stating and considering the parties' respective contentions, it is necessary to explain the relevant legislative framework and the terminology which it uses. Those matters are helpfully explained in the primary judge's reasons as follows:
"[5]The object of the scheme is to promote the use of gas in the generation of electricity. Section 135A provides that the main purposes of Chapter 5A are to reduce the growth in greenhouse gases, contribute to the diversification 'of the State’s energy mix towards the greater use of gas in electricity generation' and 'to encourage the development of new gas sources and gas infrastructure to meet the State’s future energy requirements'. Those purposes are to be achieved by a scheme under which accredited generators which use gas to generate electricity (such as Braemar) can create GECs which they can sell (or mortgage),[1] and those who are defined as 'liable persons', most of whom are retailers of electricity in Queensland, must buy GECs and surrender them to the regulator. A GEC is created for each megawatt hour of 'eligible gas-fired electricity' generated by a power station.[2] Liable persons must surrender the number of GECs that, generally speaking, equates to 13 per cent of the electricity sold or used by them in each year. By s 135AA(5) it is stated to be:
'Parliament’s expectation that income earned from the sale of GECs will help gas fired electricity to compete with electricity generated from other more greenhouse-intensive energy sources.'
[6]If a power station’s 'nameplate capacity' is more than 500 megawatts, ordinarily the amount of its eligible gas-fired electricity is calculated by the formula set out in s 135CC. If the nameplate capacity is less than 500 megawatts, the amount of eligible gas-fired electricity may be prescribed by regulation or absent such a regulation, the regulator may approve a method for working it out.[3] But if there is no method so prescribed or approved, it is calculated by the formula in s 135CC. Braemar’s nameplate capacity is 450 megawatts, but there has been no regulation or method approved by the regulator. Accordingly, as is common ground, Braemar’s eligible electricity is worked out by the formula under s 135CC, which is as follows:
'EE = (SO Gen x % EF x QUF x LF) – BL
Where –
EE is the eligible gas-fired electricity, measured in MWh [megawatt hours].
SO GEN is electricity sent out from the power station, less electricity imported into the power station, measured in MWh.
%EF is the proportion of electricity generated from an eligible fuel.
QUF is the power station’s annual QUF.
LF is the power station’s annual loss factor.
BL is the baseline for the baseline customer of the power station.'
[7]The 'baseline' represents the amount of gas-fired electricity generated as at a certain date (24 May 2000), so that the formula has the result that GECs are earned only on the amount by which a power station’s generation of electricity has increased from that date.
[8]The term QUF stands for Queensland Usage Factor. There is a national electricity grid covering all States (save for Western Australia) and Braemar Power Station is connected to that grid. Under the scheme, an accredited generator becomes entitled to GECs only for its electricity which is used in Queensland. Accordingly, under the formula in s 135CC the eligible gas-fired electricity of a power station is also a function of the proportion of electricity sent out from the power station which will be used for Queensland’s electricity load.
[9]A power station’s annual QUF is determined by the Chief Executive as the regulator pursuant to s 135CM, which provides as follows:
'135CM Annual QUFs
(1)Subject to section 135CP, the regulator must, for each financial year during which a power station is accredited, fix an estimated proportion of electricity sent out from the power station that will be used during that year for the State’s electricity load and not the electricity load of any other State.
(2)The estimated proportion is the power station’s annual QUF.
(3)The annual QUF must be fixed by gazette notice.
(4)Until the notice is gazetted, the last annual QUF fixed for the power station continues to apply.'
[10]This is qualified by s 135CP(1), which provides that the same annual QUF must be fixed for each power station which is connected to the national grid and which supplies electricity into the same transmission grid or supply network within the same transmission zone.
[11]The Act permits a regulation to prescribe areas as transmissions zones.[4] The Braemar Power Station is within the prescribed south west transmission zone. There are seven power stations within that zone, of which three are gas-fired power stations. The total of the nameplate capacities for those seven power stations is 4250.4 megawatts, of which Tarong and Tarong North power stations together account for 1843 megawatts. That large contribution by Tarong and Tarong North is significant for the present case as I will discuss.
[12]By s 135CQ, it is provided that in fixing an annual QUF, the regulator may fix a 'different proportion for different periods'. It is common ground that this permits the regulator to fix a different QUF for different parts of a day, and in particular for 'peak' and 'off-peak' periods, as was done in the present case.
[13]In the Queensland Government Gazette published on 21 September 2007, the respondent gave notice that the annual QUF which would apply to the Braemar Power Station for the financial year 2007-2008 would be 0.7598 as the peak QUF[5] and 0.6622 as the off-peak QUF.[6] Within the same Gazette, the respondent published notifications in identical terms for the other gas-fired power stations within the south west zone.
…
(3)In fixing the annual and baseline QUF, the regulator must consider each of the following matters –
(a)the electricity generated within the transmission zone;
(b)the electricity imported into the transmission zone;
(c)electricity sent out of the transmission zone and the relevant annual or baseline QUFs of the transmission zones to which it is initially sent out;
(d)the electricity load and losses within the transmission zone;
(e)whether end users in the transmission zone are located in the State or another State.
(4)In considering the matters for fixing the annual QUF, the regulator must use estimates or forecasts of relevant data for the next financial year.
(5)However, the regulator may use data for the previous financial year if –
(a)the estimates or forecasts are not available to the regulator; or
(b)the regulator considers the estimates or forecasts are inconsistent with the basis on which the transmission zone was prescribed."
The primary judge's findings
[5] The primary judge held that the Decision was "of an administrative character" principally because of the "absence of policy considerations in fixing a QUF" and because the appellant was not required to have regard to "wide policy considerations" in making the determination. Rather, in his Honour's opinion, his role was "largely a mathematical exercise, in which the regulator must assess what is likely to happen".
[6] The discretion to be exercised by the appellant in fixing a QUF is one "as to the execution of law rather than a discretion to decide what the law shall be".[7]
[7] It was held that the appellant exercised his power improperly:
(a)In failing to take into account a relevant and necessary consideration, namely, that the NEMMCO[8] forecasts were out of date, having regard to what was known of the drought by September 2007; and
(b)By fixing the QUFs in the face of advice that the reality of the drought would result in the QUFs being underestimates.
[8] In the latter respect, the primary judge concluded that the appellant "exercised the power unreasonably in the sense of s 23(g) of the Judicial Review Act".
[9] The primary judge found that the estimates or forecasts referred to in s 135CP(4) were estimates or forecasts current at the time of the appellant's decision and that the forecasts used by the appellant "were not current because they had been overtaken by events, and in particular the impact of the drought upon the largest generators in the zone". It followed from this finding that "the decision was not made according to s 136CP(4)".
The appellant's submissions on the application of the Judicial Review Act 1991 (Qld)
[10] The arguments advanced by counsel for the appellant at first instance were repeated on appeal. They are set out as follows in paragraph [24] of the primary judge's reasons:
"The respondent argues that a fixing of a QUF is a decision of a legislative character because:
(a)it is said to be a formulation of a new rule of general application 'rather than applying existing rules to a particular case';
(b)it must be publicly notified in the Gazette;
(c)it is said to incorporate or have regard to wide policy considerations;
(d)a QUF cannot be amended for the year for which it is made;
(e)a QUF 'cannot be varied or amended by the Government as a whole';
(f)the decision is not subject to a merits review in any tribunal;
(g)the decision has a binding effect."
[11] Particular emphasis was placed by the appellant's counsel on the power conferred on the appellant as an industry regulator to fix a price. The crucial feature of the fixing, according to counsel's submissions, is that it has a general rule-like quality of binding legal effect mainly involving broad questions of policy, some of which are of a complex and detailed nature.[9]
[12] The argument was developed in the following way. The decision was akin to a decision to substitute a new table of fees for an existing table in the schedule to an enactment. Such a decision was held to be of a legislative character in Queensland Medical Laboratory v Blewett.[10] The fixing of QUFs is "the formulation of new rules of law having general application" (Hamblin v Duffy)[11] or, as they do from year to year, having the effect of "changing the content of the law": Queensland Medical Laboratory v Blewett.[12] This fixing is done in the context of a general application where the function involves a broad area of government activity[13] which is statutory, not administrative in nature.[14]
[13] While Chapter 10 and Schedule 1 of the Electricity Act set out very elaborate mechanisms for internal review and appeals to Supreme, District and Magistrates Courts of some decisions made under that Act, a decision to fix QUFs is – quite significantly – not included in the decisions which may be reviewed or appealed.
[14] The power conferred by the Act on the appellant is the delegation of a law-making power as the utility regulator, empowering him, in that capacity, to have regard to a myriad of detailed factors to fix a future usage unit going to a price of a GEC traded in a national market. The fixing is legislative rather than administrative.
The appellant's submissions on the validity of the decision under review
[15] The appellant's task as decision maker was a relatively complex one. He was entitled to rely on assistance from various advisors. A working group was established and forecasts were received from NEMMCO which, in turn, had engaged Roam Consulting Pty Ltd ("Roam") to provide data relevant to fixing QUFs for the 2007 – 2008 year.
[16] The appellant also had regard to "Departmental Policy No. 13/01 (Queensland Usage Factors)" which had previously adopted a methodology for calculating the annual QUFs. NEMMCO's forecasts were revised under this methodology and two issues arose:
(a)The calculated QUF for the projected year being lower was the effect of a new power station at Kogan Creek;
(b)The impact of the drought on the Tarong and Tarong North power stations.
[17] The primary judge's conclusions set out in [7], [8] and [9] above were influenced by his findings that "Current forecasts could have been procured from NEMMCO, upon varying hypotheses as to the duration of the drought". How the appellant regulator used information, data, estimates and forecasts, analysed and weighed these and determined the merits of any estimate of the prediction, was a matter for him. Predictions about the impact of the drought, necessarily, would be inherently unreliable. The fact that it had not rained in a particular period says nothing about whether or when it may rain in the future.
[18] The power imposed on the regulator is analogous to decisions which "[involve] mixed subjective and objective elements".[15] The appellant was aware of the drought and its impact and clearly had regard to it, although not in the manner preferred by the primary judge. To the extent that such an assessment involved an error of fact, the existence of the error is no basis for setting the decision aside. Factfinders commit no legal error simply by getting their facts wrong, even drastically wrong.[16]
[19] In Bond, Mason CJ (with whom Brennan, Toohey and Gaudron JJ agreed) strictly limited the review of the findings of fact to "error of law" on the ground "that there was no evidence or other material to justify the making of the decision".[17] The weight to be accorded to a relevant consideration by an administrative decision maker is generally a question for the decision maker and not the Court.[18] It was a matter for the appellant to make of the facts what he (not unreasonably) wished: Minister for Immigration v Eshetu[19] per Gummow J, referring to Buck v Bavone,[20] where it was said by Gibbs J:[21]
"[W]here the matter of which the authority is required to be satisfied is a matter of opinion or policy or taste it may be very difficult to show that it has erred in one of these ways, or that its decision could not reasonably have been reached."
[20] In Eshetu,[22] Gummow J said:
"[W]here the criterion of which the authority is required to be satisfied turns upon factual matters upon which reasonable minds could reasonably differ, it will be very difficult to show that no reasonable decision-maker could have arrived at the decision in question."
[21] Reference was made to other decisions in which warning was given against trespassing upon the merits of the decision in the course of judicial review.[23]
[22] In stating that the consideration of the drought was necessary, the primary judge trespassed upon a consideration of the merits of the decision which was an impermissible intrusion into the merits of administrative decision making. The fact that there was more current data for one part of the year did not mean that the Chief Executive's decision "was not an informed decision".[24] The fact of the drought cannot be said to be a "jurisdictional fact". Hence there is no error of law, let alone a jurisdictional error, in the Chief Executive making, what his Honour said, in effect, was a wrong finding of fact.[25]
The respondent's submissions on the validity of the decision under review
[23] It was submitted by counsel for the respondent that the tests for whether data was relevant for the purposes of s 135CP(4) is an objective one. The appellant was aware at the time of his decision that the data upon which he relied was out of date. It was submitted, by reference to a schedule of relevant evidence, that the evidence clearly established that the appellant "completely disregarded" the effect of the drought and the evidence relating to it and that his decision necessarily miscarried.
[24] In oral argument it was submitted that the matters taken into account by the appellant had to be determined by reference to the appellant's reasons and that a perusal of the reasons revealed that the effects of the drought had not been considered.
Relevant facts found by the primary judge
[25] There was no challenge to the primary judge's findings of fact and it is convenient to refer to them in order to ascertain the facts relevant to the contest between the parties. Many of those facts were extracted by the primary judge from the appellant's statement of reasons dated 27 November 2007. The National Electricity Market Management Company Limited (NEMMCO):[26]
"[29] … supplied the Department with forecasts of relevant data, using information compiled by NEMMCO in November 2006. It is NEMMCO's practice to compile such information each November and the Department's practice to rely upon NEMMCO for it. The information provided by NEMMCO was checked by an engineer employed by the Department, and as some anomalies were identified, NEMMCO was asked to review the information which it did by providing revised forecasts to the Department.
[30]NEMMCO's forecasts took into account the increased capacity from the introduction of the Kogan Creek power station, 'but did not take the impact of the drought [on the generation capacity of] the Tarong and Tarong North power stations into account', an impact which 'became apparent in approximately mid-2007'.[27]
[31]The Department had previously adopted a methodology for the calculation of annual QUFs which was contained in a document called Departmental Policy No. 13/01 (Queensland Usage Factors) … 'the QUF Policy'. An employee of the Department applied that methodology to the revised forecasts of NEMMCO, which resulted in proposed annual QUFs for this zone being considerably lower than for the previous year, primarily because the forecasts took into account the expected effect of the new power station at Kogan Creek.
[32]A group of Departmental officers was convened to review whether an appropriate alternative methodology could be developed to fix the annual QUFs which would take into account the impact of the drought on the Tarong and Tarong North power stations. After several meetings, the group recommended to the respondent that the Department's 'ordinary practice'[28] should be followed, which, it was thought, would not take into account the effect of the drought …
…
[34]The advice to the [appellant] is contained in a briefing note dated 3 September 2007. That document made it clear that the NEMMCO data was compiled in November 2006 and before the impact of the drought was known. But the authors wrote:
'While the inclusion of the changed circumstances at Tarong and Tarong North may have altered the 2007-08 QUFs, the calculation of the QUFs follows the method published in the QUF Policy. The QUF Policy clearly indicates the particular data to be used to calculate the QUFs for the zones.
The QUF Policy is also a general policy, designed to provide a clear method to calculate QUFs. It is not recommended that the policy be changed to try to reflect any specific circumstances.'
…
[36] … one factor in the calculation is the expected generation of electricity within the zone. The higher the number attributed to that factor, the lower would be the annual QUF calculated according to the formula. This is simply because as the output within the zone increases, a higher proportion of the electricity generated is exported from the zone, and as some of that is exported to New South Wales, a higher proportion of the total output would be used outside Queensland. In this respect the formula was consistent with s 135CP(3)(a). … By the time the formula was applied, it was known that NEMMCO's estimate for this factor was out of date, because it was prepared prior to the impact of the drought. The application of the QUF Policy would have involved the used figure which was the then expected generation within the zone."
[26] The respondent accepted Departmental advice and on 12 September 2007 decided that the proposed QUFs, calculated according to the QUF Policy, should be accepted. They became the QUFs which were fixed by notice in the Gazette on 21 September 2007.
Other evidence including the evidence of Departmental officers
[27] The appellant's counsel explained in their outline of submissions [reply], by reference to the affidavit of Mr Millis, Deputy Director General of the Department of Mines and Energy:
"The estimates or forecasts of relevant data for the next financial year used by the [appellant] for setting the 2007/2008 QUF were data supplied by NEMMCO. NEMMCO, under the National Electricity Rules, estimates loss factors for the National Electricity Market. This data is used on information provided by all power stations operating in the National Electricity Market. This information includes the expected bidding behaviour of power stations, NEMMCO's forecast of electricity demand and NEMMCO's knowledge of the electricity grid throughout the electricity market. The National Electricity Rules require NEMMCO to annually prepare and publish a set of intra-regional loss factors for the following financial year. NEMMCO performs simulations of the operation of the National Electricity Market covering the full range of expected load and generation combinations to calculate loss factors in accordance with its obligations under the National Electricity Rules. This process generates estimates of the amount of electricity expected to be generated in, and to flow between, transmission zones in the subject year."
[28] As the Reasons reveal, checks made by Departmental Officers of the calculations, data and assumptions provided by NEMMCO, including the report of Roam, revealed a material reduction in the QUF for the Zone for 2007 – 2008 compared with 2006 – 2007. The Working Group set up to discuss the reasons for the reduction in the QUF held extensive discussions and considered, in particular, the effect on the calculation of the QUF of the commissioning of Kogan Creek Power Station in the latter half of 2007 and the impact of the drought.
[29] Mr Church, then the Department's Principal Policy Officer and a member of the Working Group, prepared a "desktop analysis" in which he calculated the possible impact of the drought on the QUF. The content of the document was informed by a number of Working Group discussions. Mr Church explained that the analysis was "only ever intended to be a rough calculation" and was not an alternative calculation taking into account all of the matters prescribed by the Electricity Act and the QUF Policy. The analysis concluded that if the drought was taken into account on the basis of the assumptions made by him, the QUFs would be decreased.
[30] The analysis, however, advised against changing or updating the 2007 – 2008 QUFs on the grounds that:
"
[31] Mr Stabler, an employee of a related company of the respondent, explained the meaning and role of MLFs as follows:
"… the reference to 'MLFs' is a reference to Marginal Loss Factors. They are used to determine electricity flows because they allow for losses in the flows that are experienced through transmission. MLFs and electricity flows are outputs that are calculated based on the same input data set … Therefore if the data set upon which electricity flows and MLFs are calculated are incorrect, the QUFs will be incorrect."
[32] In his affidavit Mr Church explained that the content of the fifth bullet point in the analysis "was intended to reflect the working party's view that it was not known when the current dry conditions would abate and whether the … dam catchment areas would experience a more typical summer rainy season, with a consequent lifting of water restrictions" affecting the Tarong and Tarong North Power Stations.
[33] A joint media release dated 8 March 2007 by the Deputy-Premier of Queensland and the Minister for Mines and Energy stated that because of drought conditions, the volume of water to be supplied to Tarong North and Swanbank power stations would be reduced from 10 April 2007 until 1 September 2007 when water supply from the Western Corridor Recycled Water pipeline would commence. A media release dated 22 May 2007 by the Minister for Mines and Energy advised that Tarong Power Station had reduced its generation by 70 per cent; Tarong North Power Station would reduce its generation by 40 per cent and Swanbank Power Station would reduce its power generation by 25 per cent. The release confirmed that the "recycled water pipeline will provide recycled water to Tarong and Swanbank". Another such release of 25 May 2007 listed power stations in South East Queensland which were unaffected by water restrictions. That release stated that those power stations would be joined "later this year … by the new 750MW Kogan Creek Power Station …".
[34] Mr Sorbello, an electrical engineer, whose duties included the provision of technical support to the Departmental Officers responsible for administering the 13 per cent Gas Scheme was another member of the Working Group. He also explained considerations relevant to the matters listed in the desktop analysis. In respect of the first two bullet points he said that "… if the QUFs were to be calculated when some initiating event occurred, consideration would have to be given to what is an appropriate initiating event and what forecast data to use … and that these considerations would involve DME staff members making decisions and assumptions about the possible operation of participants, which was beyond the responsibilities of the DME".
[35] Mr Sorbello observed in respect of the point, "For a proper re-calculation, the … (MLFs) would also need to be updated," that NEMMCO had responsibility for updating these and that no member of the Working Group had been involved previously in setting MLFs. He stated that he had discussed the possibility of recalculating the MLFs with an employee of Roam and that person"… agreed that initiating a recalculation was deviating from the established process and that considering different generation profiles would introduce additional uncertainty in the results of the recalculation".
[36] Mr Sorbello said of the item, "May run into market issues if updated MLFs are known to the market", "I can recall from the Working Group discussions that updating the MLFs was considered to have impacts that would potentially affect participants in the entire National Electricity Market, not just Queensland generators participating in the 13% Gas Scheme. To my knowledge, the Working Group was very uncertain in relation to initiating a recalculation of MLFs without fully understanding the potential impacts of the recalculation."
[37] Mr Church further swore in relation to bullet points 9 to 12 in the desktop analysis:
"21.… a formal re-calculation of the QUF would require a re-forecast and subsequent re-calculation of the MLFs. The Department would need to provide a full set of generation profiles from across the National Electricity Market to enable this re-forecast. This would require a number of highly uncertain assumptions to be made, including how other power stations might react to the reduced output from, in this instance, the TPS and the TNPS.
22.In addition, a re-forecast would be a very problematic exercise since the original MLFs were still in use by the National Electricity Market. If new MLFs were calculated, some market participants would be better off under the new MLFs and some would be worse off. My understanding is that ROAM would be in an uncomfortable position if the market became aware of the new MLF figures, and there would be potential impacts for NEMMCO and on the operation of the National Electricity Market from new MLF figures.
…
24.As can be seen from the QUF formulae, the QUF is a proportion. As demonstrated in the desktop analysis, the values for the power generated within the South West Transmission Zone, the power sent into the South West Transmission Zone from the Central Transmission Zone, and the QNI flows are all critical to the value of the QUF. In the present case, the reduction in the QNI flows were balanced somewhat by an accompanying reduction in total power generated within the South West Transmission Zone."
The appellant's statement of reasons and the briefing note on which he acted
[38] The statement of reasons provided by the appellant pursuant to s 33 of the Judicial Review Act 1991 relevantly stated:
"…
13.The impact of the drought on the generation capacity of the Tarong and Tarong North Power Stations, which are also in the South West Transmission Zone but which are not accredited power stations, became apparent in approximately mid-2007. However, as the forecasts provided by NEMMCO were based on input data compiled in November 2006, those forecasts did not take the impact of the drought on the Tarong and Tarong North Power Stations into account.
14.A working group of departmental officers was convened to review whether Policy No. 13/01 (Queensland Usage Factors) should be applied to fix the annual QUFs for the South West Transmission Zone in accordance with the Department of Mines and Energy's ordinary practice, or whether an appropriate alternative methodology could be developed to fix the annual QUFs which would take into account the impact of the drought on the Tarong and Tarong North Power Stations.
15.The working group, which included a further two electrical engineers, met on several occasions over a two to three month period. The working group recommended to me that Policy No. 13/01 (Queensland Usage Factors) should be applied to fix the annual QUFs for the South West Transmission Zone in 2007-08.
16.On 12 September 2007, I determined the annual QUFs for all power stations in the South West Transmission Zone, including the Braemar Power Station, and approved that the annual QUFs be fixed by gazette notice.
…
Evidence or other materials on which findings of fact were based
In arriving at my decision, I had before me for consideration a briefing note dated 3 September 2007 from the Department of Mines and Energy in relation to fixing annual QUFs for all accredited power stations. (emphasis added)
Findings on material questions of fact
I made the following findings of fact:
…
4.NEMMCO's forecasts took into account the increased generation capacity in the South West Transmission Zone from the introduction of the Kogan Creek Power Station, but did not take into account the drought on the generation capacity of the Tarong and Tarong North Power Stations.
Reasons for the decision
I made the decision for the following reasons –
1.Departmental officers with relevant professional expertise had calculated the annual QUFs for the South West Transmission Zone by applying the forecasts supplied by NEMMCO to the methodology set out in Policy No. 13/01 (Queensland Usage Factors). I accepted those calculations.
2.Departmental officers with relevant professional expertise had recommended to me that the methodology set out in Policy No. 13/01 (Queensland Usage Factors) should be applied to the calculation of annual QUFs for the South West Transmission Zone, even though this meant the impact of the drought on the Tarong and Tarong North Power Stations would not be taken into account. I accepted the recommendation that this was not an appropriate instance to depart from the general application of Policy No. 13/01 (Queensland Usage Factors)."
[39] The briefing note referred to in the statement of reasons included the following:
"Issues
6.The 2007-08 QUFs for the South West Zone are considerably lower than the 2006-07 QUFs. Peak QUFs have fallen from 0.8679 to 0.7598, with off peak QUFs falling from 0.8410 to 0.6622.
…
10.However, there is a potential concern with the data used to calculate the 2007-08 QUFs. The Department of Mines and Energy calculates the annual QUFs from data supplied by National Electricity Market Management Company Ltd (NEMMCO). The data to be used is identified in the QUF Policy. The data is compiled a number of months before the next financial year, and includes forecasts of generator availability and flows of electricity. For the 2007-08 QUFs, the NEMMCO data was compiled in November 2006.
11.This data takes into account the increased generation capacity in the South West Zone from the introduction of the Kogan Creek Power Station. This increased capacity will result in greater flows along the inter-connector from the South West zone into New South Wales, effectively leading to a decrease in the QUFs for the power stations in the South West Zone.
12.However, the NEMMCO data doesn't include the expected impact of the drought on the availability of the Tarong and Tarong North Power Stations. The official announcement of reduced capacity was made after the NEMMCO data was compiled.
13.While the inclusion of the changed circumstances at Tarong and Tarong North may have altered the 2007-08 QUFs, the calculation of the QUFs follows the method published in the QUF Policy. The QUF Policy clearly indicates the particular data to be used to calculate the QUFs for the zones.
14.The QUF Policy is also a general policy, designed to provide a clear method to calculate QUFs. It is not recommended that the policy be changed to try to reflect any specific circumstances." (emphasis added)
[40] A copy of the desktop analysis was an exhibit to the affidavit of Mr Stabler, an employee of a related company of the respondent, who gave evidence on the respondent's behalf. Paragraph 65 of this affidavit relevantly states, "The Department's Desk Top Analysis included in the Briefing Note (exhibit 'JTS35') includes the following reasons …". Mr Millis, the Deputy Director-General of the Department, swore to discussing the desktop analysis but said nothing about the inclusion of that document with the briefing note, even though he swore that it was his role to consider "the briefing note and its recommendations and, if satisfied, sign off on it before submitting it to the Regulator …" Mr Church, however, confirmed in his affidavit that Exhibit JTS35 to Mr Stabler's affidavit "is the Briefing Note and attachments provided to the Regulator prior to his decision …". Evidence to like effect was given by Mr Sorbello. The Briefing Note lists three attachments. The desktop analysis is not one of them.
The construction of sections 135CP(3), (4) and (5)
[41] Section 135CM contemplates that a QUF will be set in respect of a financial year which has not commenced, or if commenced has not finished, on the basis of estimates. Section 135CP(3) prescribes the matters which the regulator must consider in fixing the QUF. Section 135CP(4) requires the regulator in considering such matters "for fixing the annual QUF" to use "estimates or forecasts of relevant data for the next financial year".
[42] Section 135CP does not require that the regulator consider any particular estimates or forecasts. Its focus is on the requirement, subject to the exceptions in sub-section (5), that the regulator will use estimates or forecasts. The adjective "relevant" before "data" merely states the obvious. Presumably, any data will be "relevant" if it bears upon or assists the regulator in his consideration of the matters specified in section 135CP(3).
[43] Subsection (4) directs that "estimates or forecasts of relevant data" must be used "in considering the matters" in subsection (3). Data may be used in "considering" a prescribed matter, even if, ultimately, that data does not form the basis of its calculation or assessment. The weight the regulator gives some of the data in comparison with other parts or aspects of the data is, generally speaking, a matter for the regulator.[30]
[44] It is relevant also that the regulator's task was not to produce a QUF by calculations made from objectively ascertainable figures so that the accuracy of the final determination could be proved or disproved by mathematical analysis. It was to make estimates based on predictions. The task had to be performed even if estimates or forecasts were not available. In that event subsection (5) permitted the regulator to use data from the previous year.
Did the appellant fail to take into account that the NEMMCO forecasts were out of date, having regard to what was known of the drought by September 2007?
[45] It is not suggested that the appellant failed to consider the matters listed in subsection (3). The error held to have occurred was the use of "estimates or forecasts" which, although when obtained by the regulator, were of relevant data, by the time of the decision, in the judge's view, they had ceased to comply with subsection (4) because they were "not current". They were not current because they failed to allow for "the impact of the drought upon the largest generators in the zone".
[46] The decision was made on 12 September 2007, two months and 12 days into the 2007 – 2008 year at a time when information was available to the appellant which demonstrated that drought conditions were reducing power generation at two major power stations. That consideration weighed heavily in the primary judge's reasoning.
[47] Estimates or forecasts which were relevant when obtained do not cease to be relevant or "current" merely because after they are obtained other relevant material comes to light which materially affects one or more of the assumptions on which the original estimates or forecasts were based. The material which becomes known to the regulator latterly may be such that minds may differ as to its effect on relevant calculations or its use may necessitate the making of assumptions which introduce unacceptable levels of uncertainty. In this case, for example, the regulator was entitled to have in mind the possibility that the drought may end suddenly or that its relevant adverse effects could be avoided or mitigated by the provision of alternative water supply sources.
[48] Apart from those considerations, the earlier NEMMCO material remained relevant if it continued to be capable of being used in the determination of the QUFs, even if supplemented by other more up to date data. The data was in respect of a wide range of relevant matters extending far beyond power generation in the two most drought affected Queensland power stations.
[49] Also, the data held by the regulator would continue to be relevant, and able to be used by the regulator, to the exclusion of more up to date data, if the regulator reasonably concluded that more up to date data which could be acquired would have defects or limitations which would render its use inadvisable. The earlier discussion of the evidence of the departmental officers shows that the Working Group did give careful consideration to the effect of the drought in relation to the matters the regulator was bound to consider. After that consideration the Working Group decided against obtaining fresh data to permit the recalculation of the QUFs so as to make specific provision for the impact of the drought.
[50] The general principle that an administrative decision-maker is required to make his decision on the basis of material available to him at the time the decision is made[31] does not mean that the appellant was bound to incorporate all reasonably obtainable material into his calculations regardless of his opinions as to the advisability of so doing. After the Working Group had concluded its work, subject to the question of the reasonableness of the determination in this regard, it was for the appellant to determine, by reference to relevant considerations, whether such further data should be obtained.[32]
[51] The technical and complex nature of the calculations to be made and assessments involved in assembling the materials necessary to determine QUFs make it apparent that the Legislature did not have in mind any requirement that the regulator himself make the calculations and conduct the underlying assessments. The appellant in arriving at his decision "had before [him] for consideration [the] briefing note". In making his determination he was entitled to rely on the advice of his departmental officers and the information they presented to him.[33] Had the appellant adopted a recommendation of the Working Group based on the considerations taken into account by the Working Group and which are referred to in paragraphs [32] to [37] above, it seems to me that the Decision would not have been vulnerable to challenge. The following passage from the reasons of Deane J in Sean Investments Pty Ltd v MacKellar[34] supports that conclusion:
"… the Minister was, in my view, fully entitled to decide to accept and adopt the report and recommendations of the Committee without examining for himself the evidence and the factual material upon which that report and those recommendations were based. He was also, as I see the matter, entitled to accept, as the basis for his decision, particular conclusions and recommendations of the Committee established to inquire into, and report upon applications for increases in fees."
[52] The evidence, however, does not show that the appellant, while knowing of the likely effects of the drought on the calculation of QUF, decided not to take those effects into account for reasons duly considered by his departmental officers but not referred to in the briefing note.
[53] The statement of reasons refers to the appellant's acceptance of the recommendation that there be no departure from the QUF policy. The briefing notes did not draw the attention of the appellant to any reason for not taking the effects of the drought into account other than that to do so would be inconsistent with QUF policy. Although the desktop analysis accompanied the briefing notes, the evidence does not establish, on the balance of probabilities, that the appellant had regard to it. There was nothing in the briefing note to draw attention to it, it was not listed as one of the briefing note's enclosures and it was not referred to in the appellant’s reasons. But even if the appellant did peruse the desk top analysis, his reasons do not suggest that his decision was taken by reference to considerations beyond the desire to conform to the QUF policy.
[54] Counsel for the appellant, in oral submissions, relied on the following passage from the joint reasons in Minister for Immigration and Ethnic Affairs v Wu Shan Liang:[35]
"It was said that a court should not be 'concerned with looseness in the language … nor with unhappy phrasing' of the reasons of an administrative decision-maker.[36] The Court continued:[37] 'The reasons for the decision under review are not to be construed minutely and finely with an eye keenly attuned to the perception of error.'
These propositions are well settled. They recognise the reality that the reasons of an administrative decision-maker are meant to inform and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed.[38] In the present context, any court reviewing a decision upon refugee status must beware of turning a review of the reasons of the decision-maker upon proper principles into a reconsideration of the merits of the decision."
[55] However generously the appellant's reasons are construed, it is not possible to find in them any suggestion that the appellant acted on the basis of views and conclusions of the Working Group referred to in paragraph [30] and discussed under the next heading.
[56] In those circumstances, the primary judge's findings that the appellant failed to take a relevant matter into account must be sustained.
Was there an unreasonable exercise of power by the appellant?
[57] Having regard to the foregoing conclusion, it is unnecessary to decide this ground and I will content myself with making some brief observations.
[58] The decision will be vulnerable to challenge if it constitutes "an exercise of a power that is so unreasonable that no reasonable person could so exercise the power".[39] It does not appear to me that the failure to update the NEMMCO forecasts to take into account anticipated impacts of drought on the calculation of the QUFs could have been so described, had the appellant acted with regard to the considerations referred to in paragraphs [32] to [37] above. The Working Group was set up to consider that very matter and the consequences of the expected commissioning of the Kogan Creek Power Station in 2007. Both matters were given extensive consideration. As part of that consideration the feasibility of obtaining updated forecasts from NEMMCO was explored. Mr Millis pointed out the delays inherent in recalculating QUFs based on a full year's data which had already been subjected to "a process of analysis".
[59] It was determined that new data could only be obtained if NEMMCO was provided with "a full set of generation profiles from across the National Electricity Market" upon which to basis their calculations. Provision of these required "highly uncertain" assumptions to be made. New MLFs would need to be calculated and that process would be productive of its own difficulties. The appellant was also entitled to take into consideration the uncertainty about the continuation of dry conditions and the extent and duration of the impact of those conditions on relevant power generation and usage. Mr Church explained in that regard that "the magnitude of the change, as indicated by the desk top analysis, was not in relative terms and having regard to the relevant QUF for the previous three years, of such size as to alone justify changing the standard policy used in calculating the current QUF." Mr Millis, in a similar context swore, that "changing the process would not actually improve the precision of the estimation for the following year".
[60] The evidence referred to in paragraphs [32] to [37], [58] and [59] above was not challenged in cross-examination and it was not suggested to any witness called by the appellant that the failure to recalculate the QUFs on the basis of certain assumptions about the effects of the drought rendered the QUFs patently and materially erroneous. Those considerations, in my view, substantially increased the respondent's burden in establishing that the appellant's exercise of his power was so unreasonable that no reasonable person could have exercised it in the same way. The respondent's arguments however were greatly strengthened by the content of the appellant's reasons and the Briefing Note.
The amenability of the Decision to judicial review
[61] I respectfully agree with the primary judge's views stated in paragraphs [5] and [6] above, except that I would characterise the regulator's role as essentially that of calculation and evaluation rather than "largely mathematical".
[62] I am unable to accept the appellant's submissions that:
(a)the fixing of the QUF is "the formulation of new rules of law having general application";
(b)the fixing is done in the context of a general application where the function involves a broad area of government activity;
(c)"A crucial feature of the fixing is that it has a general rule-like quality of binding legal effect involving broad questions of policy …".
[63] The role of the regulator in fixing annual QUFs involves no "broad questions of policy". The task is to estimate the "proportion of electricity sent out from [an accredited] power station that will be used during that year for the State's electricity load and not the electricity load of any other State".[40] That direction cannot be taken literally as "the same annual QUF must be fixed for each power station that supplies electricity into the same transmission grid or supply network within the same transmission zone…".[41]
[64] Nevertheless, in making his determination, the regulator must consider each of the matters in s 135CP(3) and in so doing, must use "estimates or forecasts of relevant data for the next financial year",[42] except where subsection (5) applies. There is nothing about this process of arriving at QUFs through the use of estimates or forecasts when considering prescribed matters which involves "broad questions of policy" or "changes the content of the law". If there is any discretion involved it is in applying the law as it stands, not in making or changing it. That is strongly suggestive of an administrative character.[43]
[65] The relevant role of the regulator is markedly different from that of the Minister in Queensland Medical Laboratory v Blewett.[44] The decision under consideration there was that of a Minister and had the effect of substituting a new table of benefits for that set out in a schedule to the Health Insurance Act 1973 (Cth). Gummow J remarked that, "The result is the same as if the Schedule has been changed by an amending statute." There is nothing of that nature involved in the regulator's role under s 135CP.
Conclusion
[66] For the above reasons I would order that the appeal be dismissed and that the appellant pay the respondent's costs of the appeal.
[67] CHESTERMAN JA: The factual and legislative context necessary to understand the appeal are set out in the reasons for judgment of Muir JA. I gratefully adopt his Honour’s exposition which it is unnecessary to repeat or expand.
[68] I respectfully agree with his Honour’s conclusion, and the reasons for it, that the appellant’s decision under review was one of an administrative character and was therefore amenable to the jurisdiction of the Judicial Review Act 1991 (Qld).
[69] Although I agree that the appeal should be dismissed I offer my own analysis of the principal point.
[70] Section 135CM of the Electricity Act 1994 (Qld) ("the Act") provides that:
"(1)Subject to section 135CP, the regulator must, for each financial year during which a power station is accredited, fix an estimated proportion of electricity sent out from the power station that will be used during that year for the State’s electricity load and not the electricity load of any other State.
(2) The estimated proportion is the power station’s annual QUF.
(3) The annual QUF must be fixed by gazette notice.
(4) ..."
[71] Section 135CP provides relevantly:
"(3)In fixing the annual and baseline QUF, the regulator must consider each of the following matters –
(a)the electricity generated within the transmission zone;
(b)the electricity imported into the transmission zone;
(c)electricity sent out of the transmission zone and the relevant annual or baseline QUFs of the transmission zones to which it is initially sent out;
(d)the electricity load and losses within the transmission zone;
(e)whether end users in the transmission zone are located in the State or another State.
(4)In considering the matters for fixing the annual QUF, the regulator must use estimates or forecasts of relevant data for the next financial year."
[72] The respondent’s gas fired power generating station is located in the South West Transmission Zone. The electricity generated within that zone was affected by the deep and prolonged drought which afflicted much of eastern Australia in the years 2004 – 2007. The greatly reduced dam capacities resulted in regulatory action to restrict the amount of water made available to power generating plants in the zone. A consequence was that the generating capacity of some power stations in the zone was halved. Other power stations were affected to a lesser extent.
[73] The question for the appeal is whether the appellant, in fixing the annual QUF for the financial year July 2007 – June 2008, properly considered the electricity generated in the zone as required by s 135CP of the Act. The question in turn comes down to whether the appellant considered the effect of the drought on the electricity to be generated in that year.
[74] The learned trial judge thought that he had not taken the drought into account and that the failure constituted a reviewable error on the basis that the decision was not authorised by the section which required particular consideration be given to the question of electricity generated in fixing the QUF. Alternatively his Honour found that the decision was an improper exercise of the power conferred by s 135CP because the appellant failed to take a relevant consideration into account, or that, by fixing the QUF without considering the drought, the appellant had acted unreasonably. Section 20(2)(d) and (e) together with s 23(b) and (g) of the Judicial Review Act 1991 respectively provide the grounds for review.
[75] The appellant contends that the learned trial judge erred in this conclusion and that a perusal of the relevant evidence shows that the appellant did, in fact, consider the effects of the drought when considering "the electricity generated" in the relevant zone for the year in question.
[76] It is appropriate to start, as the trial judge did, with the statement of reasons given by the appellant for his decision. He said:
"8.... (NEMMCO) supplied the Department ... with forecasts of relevant data required to calculate the annual QUFs, using input data compiled by NEMMCO in November 2006. NEMMCO compiles the input data in November of each year.
9.The Department ... has no direct access to the input data, or to the relevant information, required to prepare the forecasts. It relies on NEMMCO for the ... information.
…
13.The impact of the drought on the generation capacity of the Tarong and Tarong North Power Stations, which are also in the South West Transmission Zone ... became apparent in approximately mid-2007. However, as the forecasts provided by NEMMCO were based on input data compiled in November 2006, those forecasts did not take the impact of the drought on the Tarong and Tarong North Power Stations into account.
14.A working group of departmental officers was convened to review whether Policy No. 13/01 (Queensland Usage Factors) should be applied to fix the annual QUFs for the South West ... Zone in accordance with ... ordinary practice, or whether an appropriate alternative methodology could be developed to fix the annual QUFs which would take into account the impact of the drought ... .
15.The working group ... recommended ... that Policy No. 13/01 ... should be applied ... .
I made the following findings of fact:
…
3.NEMMCO had supplied the Department ... with forecasts ... required to calculate the annual QUFs ... using ... data compiled ... in November 2006.
4.NEMMCO’s forecasts ... did not take into account the drought on the generation capacity of the Tarong and Tarong North Power Stations.
I made the decision for the following reasons -
1.Departmental officers ... had calculated the annual QUFs ... by applying the forecasts supplied by NEMMCO to the methodology set out in Policy No. 13/01 ... . I accepted those calculations.
2.Departmental officers ... had recommended ... that the methodology set out in Policy No. 13/01 ... should be applied ... even though this meant the impact of the drought on the Tarong and Tarong North Power Stations would not be taken into account. I accepted the recommendation that this was not an appropriate instance to depart from the general ... Policy". (emphasis added)
[77] Only Appendix C of the Policy is relevant to the calculation of QUFs. The appendix is headed "QUFs for Zones – Detailed Methodology" and provides that:
"All input data for the formulae is prepared by NEMMCO for consideration by the regulator. The data is derived from the same underlying data used by NEMMCO to generate MLFs for the relevant financial year."
The appendix then sets out a number of formulae, one for each transmission zone in the State. It is not necessary to reproduce the formula for the south-west zone. It is enough to note that one of the elements in the formula is the local generation in the zone.
[78] Despite the appellant’s emphatic statement that he did not consider the effect of the drought upon electricity generation for the south-west zone, it was argued on his behalf that the Departmental working party set up to advise the appellant had taken the drought into consideration and concluded that its effect would be offset by countervailing factors and/or was so uncertain as to preclude any qualification so that it should be ignored.
[79] The working party prepared a briefing note which was sent to the appellant to provide the basis for his statutory decision. The briefing note is said to show that the impact of the drought was considered but rejected as a relevant factor.
[80] A perusal of the briefing note shows the opposite: that the officers recommended that the drought not be taken into account.
[81] The note reads:
"6.The 2007-08 QUFs for the South West Zone are considerably lower than the 2006-07 QUFs. ...
10.... there is a potential concern with the data used to calculate the 2007-08 QUFs. The Department ... calculates the annual QUFs from data supplied by ... [NEMMCO]. The data to be used is identified in the QUF Policy. The data is compiled a number of months before the next financial year, and ... was compiled in November 2006.
11.This data takes into account ... increased generation capacity in the South West Zone from the introduction of the Kogan Creek Power Station. ...
12.However, the NEMMCO data doesn’t include the expected impact of the drought on the availability of the Tarong and Tarong North power stations. The official announcement of reduced capacity was made after the NEMMCO data was compiled.
13.While the inclusion of the changed circumstances ... may have altered the 2007-08 QUFs the calculation of the QUFs follows the method published in the QUF Policy. The ... Policy clearly indicates the particular data to be used to calculate the QUFs for the zones.
14.The QUF Policy is also a general policy, designed to provide a clear method to calculate QUFs. It is not recommended that the policy be changed to try to reflect any specific circumstances."
[82] The note is unequivocally clear that the data on which the QUFs were calculated did not include any estimate or forecast of the reduction in electricity generation caused by the drought. Indeed it is obvious (from paragraph 13) that the authors of the note thought Departmental policy precluded the use of any data other than that compiled by NEMMCO in November the previous year. This is a clear misunderstanding of the policy. It requires only that the data to be used in the calculation be provided by NEMMCO. Nowhere does the Policy require that the data be compiled in any particular month or that additional data not be obtained when circumstances indicate the appropriateness of that course. Another comment is called for. The authors of the note in paragraph 14 eschew any departure from what they understood to be the Policy which might produce a calculation which reflected "specific circumstances". This approach may lead to bureaucratic convenience but s 135CP requires a particular calculation: the forecast electricity generation each year. It does not authorise calculation or estimation of that generation by reference to a Policy which, on a particular occasion, can be seen to be inappropriate.
[83] Attached to the briefing note was what was called a "desk top analysis" undertaken by one of the working group, Dr Church. This too was said to show that the effects of the drought had been looked at. It read:
"... the available data suggests that recalculating QUFs to account for drought impacts would increase the [south-west] QUFs.
...
However: we should not change or update the 2007-08 QUFs or any future QUFs
•Changing the method would set a precedent for future years
•The current method is established, relies on published policy and on 3rd party data, and would be more defendable
•Any new method would involve decisions being made by DME (ie the appellant)
•DME would then be in control of QUF values rather than a 3rd party
…
•Rain in November and December for Boondooma Dam?
•The data for the 2008-09 QUFs will include some drought impacts ...
•The QUFs are a forecast, and reality will always be different
•A recalculation would cost more than $20,000 …
•We would need to provide a full set of generation profiles for Qld generators
•For a proper re-calculation, the MLFs would also need to be updated
•[the consultants] were very reluctant to do this work ...
•May run into market issues if updated MLF’s are known to the market."
The appeal was argued on the basis that the analysis was attached to the briefing note and was sent with it to the appellant. My reasons adopt that convention which Muir JA points out may be incorrect.
[84] Far from showing that the working party and Dr Church’s analysis investigated whether the impact of the drought would have any discernible effects on the valuation of QUFs, or whether it was possible to measure its effect the documents show that the working party recommended to the appellant that drought effects not be considered. A number of reasons were given for that course which may or may not be valid from the Departmental point of view but it is not possible to read the documents as constituting any consideration of the effect of drought on electricity generation. The documents are concerned with why that effect should not be considered.
[85] It is worth digressing to examine the reasons given for this course because they demonstrate a misunderstanding by the Departmental officers of what would have been involved in the consideration required by the Act and reveal a bureaucratic motive for not undertaking an investigation of the drought’s effects.
[86] The reasons fall into four categories. The first is that an investigation into the impact of the drought would involve a departure from the established policy that NEMMCO compile the data and would require the Department, rather than an independent third party, to compile data. That would expose the Department to complaints of partisanship.
[87] The misunderstanding here is that because there was no updated NEMMCO data the Department would have to compile "drought" data itself. But such data could have been obtained from NEMMCO, as the evidence established, and there was no need for the Department to attempt its own compilation. The fear that the Department would be both author and analyser of data was misplaced, as was the apprehension that any change in policy was required. The policy, as I mentioned, only required that NEMMCO data should be used, and it could have been.
[88] The second category is that the drought might have come to an early end. So it might but, equally, it might not. Hope was not a basis for not undertaking an investigation which a present reality suggested was necessary.
[89] The third category was that in succeeding years QUF values would reflect the drought’s impact. The section requires an annual calculation. It does not permit averaging over years.
[90] The fourth category is a collection of collateral reasons why the Department did not want to be involved in a fresh compilation of data and new analyses: cost, inconvenience and possible commercial embarrassment. These are not valid reasons for disregarding the Act, but show a motive for doing so.
[91] The appellant filed affidavits from two of the members of the working party, Dr Church and Mr Sorbello, as well as one from the Deputy Director General of the Department, Mr Millis. The burden of the affidavits is that, contrary to the contemporaneous documents, the officers did give consideration to the drought and whether it might affect electricity generation in the zone for the year.
[92] The affidavits provide little support for the appellant. Mr Sorbello said that he:
"... was aware that Mr ... Church performed a desktop analysis of the impacts of updating generation profiles related to the drought ... [but did] not recall any details of these discussions."
He said also that the working group:
"... devoted considerable discussion to the impacts of the drought on the 2007-08 QUFs. The desktop analysis conducted by Mr ... Church ... demonstrates the extent to which the Working Group considered the effects of updated generation profiles."
[93] Mr Sorbello’s affidavit then offers an expansion of some of the "dot point" reasons contained in Dr Church’s analysis. He does not in terms say that his colleagues in the working group made any estimate of the effect of the drought on the forecast electricity generation in the South West Transmission Zone for the year in question. Instead his affidavit confirms that the working group was reluctant to undertake such an investigation. By way of example:
"... changing the method referred to would require recalculating QUFs in response to certain events and potentially on a more frequent basis than once a year. I was aware from discussions ... within the Working Group that if the QUFs were to be calculated when some initiating event occurred, consideration would have to be given to what is an appropriate initiating event and what forecast data to use.
... the Working Group understood that these considerations were not outlined in the ... Act or Policy ... and that these considerations would involve DME ... making decisions and assumptions ... beyond the responsibilities of the DME.
…
... no members of the Working Group had the necessary experience or qualifications to undertake [a full set of generation profiles for Qld generators]. In addition, I was not aware of anyone within DME capable of undertaking this work."
[94] Dr Church said that the magnitude of the change between the QUF which he derived from his desktop analysis compared to the value obtained by Mr Sorbello from the NEMMCO data:
"... was not in relative terms and having regard to the relevant QUF for the previous three years, of such size as to alone justify changing the standard policy used in calculating the current QUF. [He] formed this view following discussions within the working group and consideration of various factors and uncertainties which were identified by it and which mitigated against altering the QUF, particularly having regard to the potential magnitude of the change in the QUF."
[95] It will be noted that there is no such exposition in the briefing note.
[96] Dr Church also said that he believed that the use of NEMMCO’s forecasts was appropriate and that changing the published method (a reference to the Policy) "would set a precedent". Dr Church thought the precedent would be:
"... less than satisfactory and ... would introduce a great deal of uncertainty to the QUF calculation. There would have to be new forecasts ... the Department would also have to advise the Regulator as to when new forecasts should be developed. This would introduce a qualitative element and possible source of bias to the QUF calculation and would require the types of decisions listed under dot point 4 to be made. ... this would not be a satisfactory situation".
[97] This passage merely reinforces the advice contained in the briefing note that there were thought to be good reasons for not undertaking an analysis of the drought’s effects on electricity generation.
[98] Mr Millis’ affidavit can be ignored. It contains a number of ex post facto justifications for ignoring the effects of the drought and contains what Mr Millis said were his reasons for thinking it "appropriate to proceed on the basis of the methodology in Policy 13/01". However, Mr Millis did not communicate these reasons to the Regulator prior to his decision. His role was limited to receiving the briefing note and analysis, and sending them on to the appellant without amendment or comment.
[99] Much, if not most, of the appellant’s submissions were directed to the contents of the affidavits with a view to showing that the drought and its effects on electricity generation were carefully considered by the working party. The trial judge did not refer to them. His Honour’s judgment instead analysed the terms of the appellant’s stated reasons for his decision and the briefing note, including the "desktop analysis".
[100] The approach of the trial judge was, with respect, clearly right for several reasons. The first is that the Deputy Director General, Mr Millis, to whom the working group reported, candidly admitted in cross-examination that the drought had been ignored. There was this question and its answer:
"... you made a decision not to take that into account. That’s quite clear, is it not, the briefing note recognises … the impact of the drought and then says ‘We wouldn’t take it into account’. That’s correct isn’t it? – That’s correct." (R22)
[101] Dr Church when cross-examined was asked why the 50 per cent reduction in the Tarong power stations’ generating capacity was not taken into account in the calculation of the QUF. The effect of his answer was that NEMMCO was in the best position to compile the necessary data for the calculation required by s 135CP and that it did so before the reduction occurred or was known about (R25). The answer, consistently with the briefing note, explains why the drought was not considered.
[102] The second reason is that the members of the working group were not, individually or collectively, the decision-maker. Their opinions and statements to each other were irrelevant except to the extent they were communicated to the appellant. The Regulator acted on what the working group advised him, not on what its members thought or said to each other. The terms of their communication appear in the briefing note and attachment. The advice they in fact gave was that the drought should be ignored. It is clear from the appellant’s stated reasons for his decision that he took their advice and ignored the drought.
[103] The third reason is that the affidavits of Sorbello and Church do not support the appellant’s contention. Their contents do not, in fact, tend to prove that the drought was considered and found to be immaterial or irrelevant. They corroborate the tenor of the briefing note that there were reasons for disregarding the drought’s effects.
[104] Fourthly, there are substantial reasons for thinking that the affidavits of the working party’s deliberations are a reconstruction influenced by wishful thinking. The affidavits were filed a month after the commencement of legal proceedings. There is a marked discrepancy between what the deponents, especially Mr Millis, say they thought and what they actually advised the Regulator. There was no explanation, when a compelling one was necessary, to show why the members of the working group advised contrary to what they thought. The concession made by Mr Millis, as well as Dr Church’s answer, provide additional grounds for doubting the affidavits’ accuracy.
[105] The trial judge did not embark upon an examination of their accuracy and it is not necessary, and is inappropriate, for that task to be assayed on appeal.
[106] The contemporaneous documents, the appellant’s reasons and the briefing note, written before there was any need for self-serving affidavits, plainly establish that when considering electricity generation for the year July 2007 – June 2008 the appellant did not take into account the effects of the drought then having a significant impact on that generation.
[107] Section 135CP(4) obliged the appellant to use estimates or forecasts of relevant data for the year, 2007-08, when considering the electricity generated within the south-west transmission zone. By the time the officers prepared their briefing note in September 2007 and the appellant fixed the QUF, the NEMMCO data compiled in November 2006 which formed the basis for the appellant’s decision was obsolescent and was known to be so. An important natural phenomenon had intervened. It had a potential to affect significantly the electricity to be generated in the South West Transmission Zone in the year in question. Data compiled before the onset of the phenomenon and which did not notice it cannot be regarded as "relevant" for the purposes of the fixation required by s 135CM.
[108] Senior counsel for the appellant did not seriously contend that the effect of the drought was not a factor affecting the estimation of future electricity generation in the South West Transmission Zone. Nor did he argue that data which did not include any reference to the effects of the drought was "relevant data" as the Act required. This stance was clearly correct. Mason J said in Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 45:
"It would be a strange result indeed to hold that the Minister is entitled to ignore material on which he has actual, or constructive knowledge and which may have a direct bearing on the justice of making the land grant, and to proceed instead on the basis of material that may be incomplete, inaccurate or misleading. In one sense this conclusion may be seen as an application of the general principle that an administrative decision-maker is required to make his decision on the basis of material available ... at the time the decision is made. But that principle is itself a reflection of the fact that there may be found in the subject-matter, scope and purpose of nearly every statute conferring power to make an administrative decision an implication that the decision is to be made on the basis of the most current material available to the decision-maker."
[109] A relevant fact in the consideration that the Act required to be undertaken as part of the process of fixing the QUF was deliberately ignored. The appellant’s decision was not made in accordance with the Act and was an improper exercise of the statutory power as the trial judge found.
[110] The appeal should be dismissed with costs.
[111] WHITE J: The facts and relevant legislative provisions and issues are set out in the reasons for judgment of Muir JA. They are supplemented in the reasons for judgment of Chesterman JA. There is no dispute between the parties about the principles to be derived from the authorities and these appear in their Honours’ reasons and I need not do so again.
[112] The principal issue is factual, that is, whether a departmental decision-maker took into account a relevant matter which the legislation required him to consider.
[113] Whether the decision of the appellant Chief Executive ("the regulator") was administrative, and thus amenable to judicial review pursuant to the Judicial Review Act 1991 (Qld), or legislative in character, was a threshold question decided by the primary judge in favour of review. Muir JA has set out the features of the regulator’s role which make plain that the primary judge was correct to characterise the appellant’s function as administrative and not legislative.
[114] The important provisions of the Electricity Act 1994 (Qld) for this appeal are ss 135CM and 135CP which provide relevantly:
"135CMAnnual QUFs
(1)Subject to section 135CP, the regulator must, for each financial year during which a power station is accredited, fix an estimated proportion of electricity sent out from the power station that will be used during that year for the State’s electricity load and not the electricity load of any other State.
(2)The estimated proportion is the power station’s annual QUF. [Queensland Usage Factor]
(3)The annual QUF must be fixed by gazette notice.
(4)Until the notice is gazetted, the last annual QUF fixed for the power station continues to apply."
"135CP Power stations connected to national grid within same transmission zone
…
(3)In fixing the annual and baseline QUF, the regulator must consider each of the following matters –
(a)the electricity generated within the transmission zone;
(b)the electricity imported into the transmission zone;
(c)electricity sent out of the transmission zone and the relevant annual or baseline QUFs of the transmission zones to which it is initially sent out;
(d)the electricity load and losses within the transmission zone;
(e)whether end users in the transmission zone are located in the State or another State.
(4)In considering the matters for fixing the annual QUF, the regulator must use estimates or forecasts of relevant data for the next financial year.
…"
[115] The central question on the appeal and below was the meaning and effect of s 135CP. It mandated the use by the regulator of "estimates or forecasts of relevant data for the next financial year" when fixing the annual QUF.
[116] As the evidence revealed, by the time the regulator came to fix the annual QUF for the financial year July 2007 – June 2008, relevant areas of South East Queensland had been seriously affected by prolonged drought from 2004 – 2007. The shortage of water in that area prompted the government to restrict the amount of water available to certain power stations in the South West Transmission Zone where the subject power station was located, with the consequence that their output was significantly reduced. The amount of electricity generated in the relevant transmission zone was a factor which the regulator was required to consider. The regulator contends that, contrary to the conclusion reached by the primary judge, he did consider the effect of drought on the amount of electricity generated in the transmission zone.
[117] The appropriate starting point is the regulator’s statement of reasons provided pursuant to s 33 of the Judicial Review Act (although maintaining that his decision was not reviewable). After setting out some preliminary matters the reasons state:
"…
7.Departmental Policy No. 13/01 (Queensland Usage Factors) sets out the methodology ordinarily used by the Department of Mines and Energy to calculate the annual QUFs for transmission zones. This methodology takes into account the matters for which consideration is required under section 135CP(3) of the Act.
8.The National Electricity Market Management Company Ltd (NEMMCO) supplied the Department of Mines and Energy with forecasts of relevant data required to calculate the annual QUFs, using input data compiled by NEMMCO in November 2006. NEMMCO compiles the input data in November of each year.
9.The Department of Mines and Energy has no direct access to the input data, or to the relevant information, required to prepare the forecasts. It relies on NEMMCO for the provision of this information.
10.The information provided by NEMMCO was checked by an electrical engineer employed by the Department of Mines and Energy. As anomalies were identified, NEMMCO was asked to review the information. NEMMCO subsequently provided revised information to the Department of Mines and Energy.
…
13.The impact of the drought on the generation capacity of the Tarong and Tarong North Power Stations, which are also in the South West Transmission Zone but which are not accredited power stations, became apparent in approximately mid-2007. However, as the forecasts provided by NEMMCO were based on input data compiled in November 2006, those forecasts did not take the impact of the drought on the Tarong and Tarong North Power Stations into account.
14.A working group of departmental officers was convened to review whether Policy No. 13/01 (Queensland Usage Factors) should be applied to fix the annual QUFs for the South West Transmission Zone in accordance with the Department of Mines and Energy’s ordinary practice, or whether an appropriate alternative methodology could be developed to fix the annual QUFs which would take into account the impact of the drought on the Tarong and Tarong North Power Stations.
15.… The working group recommended to me that Policy No. 13/01 (Queensland Usage Factors) should be applied to fix the annual QUFs for the South West Transmission Zone in 2007-08."
[118] The regulator made the following findings on material questions of fact:
"1.Braemar Power Station is an accredited power station under Chapter 5A of the Act.
2.Braemar Power Station is connected to the South West Transmission Zone.
3.NEMMCO had supplied the Department of Mines and Energy with forecasts of relevant data required to calculate the annual QUFs for the South West Transmission Zone, using input data compiled by NEMMCO in November 2006.
4.NEMMCO’s forecasts took into account the increased generation capacity in the South West Transmission Zone from the introduction of the Kogan Creek Power Station, but did not take into account the drought on the generation capacity of the Tarong and Tarong North Power Stations."
[119] The regulator stated that he reached his decision for the following reasons:
"1.Departmental officers with relevant professional expertise had calculated the annual QUFs for the South West Transmission Zone by applying the forecasts supplied by NEMMCO to the methodology set out in Policy No. 13/01 (Queensland Usage Factors). I accepted those calculations.
2.Departmental officers with relevant professional expertise had recommended to me that the methodology set out in Policy No. 13/01 (Queensland Usage Factors) should be applied to the calculation of annual QUFs for the South West Transmission Zone, even though this meant the impact of the drought on the Tarong and Tarong North Power Stations would not be taken into account. I accepted the recommendation that this was not an appropriate instance to depart from the general application of Policy No. 13/01 (Queensland Usage Factors)."
[120] The Reasons display no consideration of the effect of drought on the calculation of the annual QUFs for the subject zone. A departmental briefing note was provided to the regulator. It set out Policy No. 13/01, Queensland Usage Factors (QUF Policy):
"•The detailed method for the calculation of annual QUFs, for each transmission zone;
•Confirmation of the transmission zones for fixing QUFs;
•QUFs for peak (between 7am and 10pm on Queensland working weekdays) and off-peak times (all other hours); and
•The gazetted QUFs for each financial year."
[121] The briefing note explained that there was a "potential concern" with the data used to calculate the 2007 – 08 QUFs. This was because the data was compiled a number of months before the next financial year and included forecasts of generator availability and flows of electricity. For the relevant financial year the NEMMCO data was compiled in November 2006. The author of the briefing note stated that the Department took into account the increased generation capacity of the Kogan Creek Power Station in the South West Zone but:
"12.… the NEMMCO data doesn’t include the expected impact of the drought on the availability of the Tarong and Tarong North Power Stations. The official announcement of reduced capacity was made after the NEMMCO data was compiled.
13.While the inclusion of the changed circumstances at Tarong and Tarong North may have altered the 2007-08 QUFs, the calculation of the QUFs follows the method published in the QUF Policy. The QUF Policy clearly indicates the particular data to be used to calculate the QUFs for the zones.
14.The QUF Policy is also a general policy, designed to provide a clear method to calculate QUFs. It is not recommended that the policy be changed to try to reflect any specific circumstances."
[122] Not only did the regulator state unequivocally that the impact of drought on the generation capacity of the Tarong and Tarong North Power Stations was not taken into account, it is clear from the briefing note upon which he relied that he understood his departmental advice to be that it should not be taken into account apparently because the NEMMCO data was not current. I agree with Chesterman JA’s comment that this reveals a misunderstanding of the policy which did not require that the data be compiled at any particular time or that further data could not be sought when conditions dictated that that would be appropriate. Section 135CP(3)(a), in terms, requires the regulator to consider when making his calculations, the electricity generated each year within the zone.
[123] Dr Church, who was one of the working group charged to review the calculation of the annual QUFs, prepared a desk top analysis said to have been included in the briefing materials for the regulator although it is not identified in the Reasons as having been provided. The regulator was at pains to show on appeal that this analysis supported the contention that the effect of the drought had been considered by him. The document begins:
"A desk top analysis of the available data suggests that recalculating QUFs to account for drought impacts would increase the SW QUFs".
After some calculations the following appears:
"However: we should not change or update the 2007-08 QUFs or any future QUFs".
[124] The reasons were:
"•Changing the method would set a precedent for future years
•The current method is established, relies on published policy and on 3rd party data, and would be more defendable
•Any new method would involve decisions made being by DME [the Department]
•DME would then be in control of QUF values rather than a 3rd party
•Rain in November and December for Boondooma Dam?
•The data for the 2008-09 QUFs will include some drought impacts; NEMMCO will be forecasting less energy being sent out from the SEQ power stations
•The QUFs are a forecast, and reality will always be different
•A recalculation would cost more than $20,000 (the current QUF cost)
•We would need to provide a full set of generation profiles for Qld generators
•For a proper re-calculation, the MLFs would also need to be updated
•ROAM were very reluctant to do this work, especially updating the MLFs
•May run into market issues if updated MLF’s are known to the market".
[125] The analysis undertaken by Dr Church for the working party did not consider what effect the drought would have on the generation of electricity but, rather, concluded that it should not be taken into account for reasons that had nothing to do with the generation of electricity that year.
[126] The affidavits which were filed by certain departmental officers who were responsible for briefing the regulator attempted to demonstrate that the effects of the drought upon electricity generation were taken into account in preparing that note for the regulator. They may or may not have analysed the effect of the drought in the manner to which they depose, but the fact remains that the advice which they gave the regulator did not include that kind of analysis. Those charged with advising the regulator knew that as a consequence of government directive, water to the power stations in the zone had been cut thus reducing the generation of electricity. That was relevant data which, at the very least, required consideration whether or not it was a factor which caused a different calculation.[45] This was an obligation imposed upon the regulator by s 135CP(4). That being so, the regulator’s decision was not made in accordance with the requirements of the Electricity Act and was an improper exercise of the statutory power conferred upon him.
[127] The appeal should be dismissed.
[1] s 135AT.
[2] s 135AA(3)(a).
[3] s 135CI.
[4] s 135CO.
[5] To apply from 7.00am to 10.00pm on working week days.
[6] Applying for other hours.
[7] See JW Hampton & Co v United States of America (1928) 276 US 394, cited by Sundberg J in SAT FM Pty Ltd v Australian Broadcasting Authority (1997) 75 FCR 604 at 608.
[8] National Market Management Company Limited.
[9] Queensland v Central Queensland Land Council Aboriginal Corporation (2002) 125 FCR 89.
[10] (1988) 84 ALR 615.
[11] (1981) 34 ALR 333 at 338.
[12] (1988) 84 ALR 615.
[13] See the objects in s 63(2) and s 135A.
[14] Woolf, Jowell and Le Sueur (eds.), De Smith's Judicial Review (6th ed. 2007) at 979 – 982.
[15] Chan Yee Kin v Minister for Immigration and Ethnic Affairs (1989) 169 CLR 379 at 389, 398, 406 and 429.
[16] Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355 – 356; Waterford v Commmonwealth (1997) 163 CLR 54 at 77.
[17] Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355.
[18] Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 at 41.
[19] (1999) 197 CLR 611 at 653.
[20] (1976) 135 CLR 110.
[21] (1976) 135 CLR 110 at 118 – 119.
[22] (1999) 197 CLR 611 at 654.
[23] Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35 – 36; Peko-Wallsend (1986) 162 CLR 24 at 40 – 41 and Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272.
[24] Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 67.
[25] Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35 – 36.
[26] Braemar Power Project Pty Ltd v The Chief Executive, Department of Mines and Energy in his Capacity as the Regulator Under Electricity Act 1994 (Qld) [2008] QSC 241.
[27] Statement of Reasons paragraph 13.
[28] As it was described in the Statement of Reasons paragraph 14.
[29] The Department of Mines and Energy.
[30] Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40 – 41.
[31] Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40 – 41.
[32] Compare Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR 24 at 61 per Brennan J and per Deane J at 70.
[33] c.f. Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 30 – 31 and 65 – 66.
[34] (1981) 38 ALR 363 at 372 – 373.
[35] (1996) 185 CLR 259 at 272.
[36] Pozzolanic (1993) 43 FCR 280 at 287.
[37] Pozzolanic (1993) 43 FCR 280 at 287.
[38] See McAuliffe v Secretary, Department of Social Security (1992) 28 ALD 609 at 616.
[39] Judicial Review Act 1991 (Qld), s 23(g).
[40] Electricity Act 1994 (Qld), s 135CM(1).
[41] Electricity Act 1994 (Qld), s 135CP(2).
[42] Electricity Act 1994 (Qld), s 135CP(4).
[43] Commonwealth v Grunseit (1943) 67 CLR 58 at 82.
[44] (1988) 84 ALR 615.
[45] Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 45 per Mason J.
