Moorabool and Central Highlands Power Alliance Incorporated v Minister for Energy and Resources

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2024 0019

MOORABOOL AND CENTRAL HIGHLANDS POWER ALLIANCE INCORPORATED	Applicant
v
MINISTER FOR ENERGY AND RESOURCES	Respondent

---

JUDGES:	EMERTON P, WALKER and OSBORN JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	7, 8 August 2024
DATE OF JUDGMENT:	13 September 2024
MEDIUM NEUTRAL CITATION:	[2024] VSCA 201
JUDGMENT APPEALED FROM:	[2023] VSC 774 (McDonald J)

---
JUDICIAL REVIEW – Minister made orders pursuant to s 16Y of the National Electricity (Victoria) Act 2005 which disapplied or modified certain provisions of the National Electricity Law (‘Law’) and National Electricity Rules (‘Rules’) in respect of the Australian Energy Market Operator’s (‘AEMO’) declared network functions in relation to two transmission line augmentation projects – Effect of orders was that AEMO was not required to apply the Regulatory Investment Test for Transmission (‘RIT-T’) process – Applicant’s challenge to validity of Minister’s orders rejected by trial judge – Whether trial judge erred in finding Minister’s orders were made under or supported by s 16Y(1) – Whether Minister’s power to disapply the Law under s 16Y(1)(a) should be construed as confined to provisions within pt 5 div 2 sub-div 3 of the Law which sets out AEMO’s declared network functions – Where ss 49(2)(a) and (e) of the Law, which confer functions on AEMO as National Transmission Planner with respect to the preparation, maintenance and publication of an Integrated System Plan (‘ISP’) in accordance with the Rules, fall outside the relevant subdivision of the Law – Where r 5.22 provides for the making of ISPs and r 5.16A requires the application of the RIT‑T process to actionable ISP projects – Whether Minister’s orders disapply or modify ss 49(2)(a) or (e), read together with the Rules – Whether trial judge erred in finding Minister had power to direct AEMO together with a statutory body in NSW to publish a particular report – Whether trial judge erred in finding one of the Minister’s orders was not inconsistent with s 49(3) of the Law which requires AEMO in carrying out its functions to have regard to the national electricity objective – Leave to appeal refused.

National Electricity (Victoria) Act 2005, ss 3, 6, 7, 16X, 16Y, 16ZC, 16ZG, 30, 32; 33, pt 3 div 7, pt 5 div 2 sub-div 3.

National Electricity Law, ss 2, 7, 49, 50C, 50F, 50H.
National Electricity Rules, rr 5.15, 5.15A, 5.16, 5.16A, 5.16B, 5.22, 8.11, sch 8.11, sch 11, ch 10.

Cumerlong Holdings v Dalcross Properties (2011) 243 CLR 492; Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1; Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672, applied.

ADCO Constructions Pty Ltd v Goudappel (2014) 254 CLR 1, considered.

---

Counsel
Applicant:		Mr NM Wood SC with Mr CN Viney
Respondent:		Mr DJ Batt KC with Mr J Blaker
Solicitors
Applicant:	Thomson Geer Lawyers
Respondent:	Victorian Government Solicitor

TABLE OF CONTENTS

Introduction

National Electricity Law

National Electricity (Victoria) Act 2005

AER and AEMO

Augmentations

The RIT-T process

Expediting the decision-making process

Challenge to the Orders

Summary of conclusions

Background Facts

The Orders

Proposed Ground 1

Principles of Statutory Construction

Sections 16Y(1), (2) & (5)

Section 16Y(4)

Section 16ZC

The applicant’s step 1: Is there an implied limitation on the Minister’s power to disapply or modify a provision of the Law?

The applicant’s step 2: How do ss 49(2)(a) and (e) interact with the Rules concerning preparation of an ISP?

The applicant’s step 3: Do the Orders ‘modify’ s 49(2)(a) or s 49(2)(e)?

Proposed Ground 1 – Conclusion

Proposed Ground 2

The trial judge’s decision

Submissions

Consideration – The direction to act ‘with Transgrid’

Consideration – Section 49(3)

Conclusion

Annexure 1

Annexure 2

EMERTON P
WALKER JA
OSBORN JA:

Introduction

This proceeding concerns the regulatory framework for two substantial projects designed to augment Victoria’s electricity transmission system: the Western Renewables Link (‘WRL’) and the Victoria–New South Wales Interconnector West (‘VNI West’). The WRL project involves the construction of 500kV transmission lines running westward from Sydenham to Bulgana. The VNI West project involves the construction of transmission lines connecting with the WRL project at Bulgana, which then run northeast via Kerang and cross the Murray River to connect with a substation at Dinawan in New South Wales.
In order to expedite the two projects, the Minister for Energy and Resources made two orders pursuant to s 16Y of the National Electricity (Victoria) Act 2005 (‘NEVA’). Those orders removed or modified certain regulatory requirements in relation to the two projects.
The applicant, the Moorabool and Central Highlands Power Alliance Incorporated, challenged the validity of the Minister’s orders. The trial judge rejected that challenge. The applicant now seeks leave to appeal from the trial judge’s decision. For the reasons that follow, we will refuse leave to appeal.

National Electricity Law

The regulatory scheme governing the national energy market is the complex product of the National Energy Market Agreement — an agreement made by the Commonwealth, State and Territory governments. Under this agreement the energy market is governed by legislation passed at State level. As part of this scheme, the national system of electricity supply is substantially regulated by the National Electricity Law (‘Law’), provisions of which are adopted by participating States and the Territories. The Law is contained in the schedule to the National Electricity (South Australia) Act 1996 (‘NESA’).
Sections 11 and 12 in pt 4 of the NESA provide for the making of regulations under the Law as are contemplated by, or necessary, or expedient for, the purposes of the Law.
Part 7 of the Law further provides for the making of the National Electricity Rules (‘Rules’) under processes initiated either by the South Australian Minister or the Australian Energy Market Commission. Section 9 of the Law provides that the Rules have the force of law ‘in this jurisdiction’.
Section 5(1)(b) of the Law provides that the Law may be applied in whole or in part in a participating jurisdiction. Section 5(2) provides that a participating jurisdiction may withdraw and cease to be part of the scheme.

National Electricity (Victoria) Act 2005

Sections 6 and 7 of the NEVA apply the Law and regulations made under the Law for the time being as a law of Victoria and as regulations in force for the purposes of the NEVA.[1] In turn, pt 3 of the NEVA provides for modification of the application of the Law and the Rules within Victoria in a series of respects.
[1]National Electricity (Victoria) Act 2005 (‘NEVA’), ss 6 and 7:
6Application in Victoria of the National Electricity Law
The National Electricity Law set out in the Schedule to the National Electricity (South Australia) Act 1996 of South Australia, as in force for the time being—
(a)applies as a law of Victoria; and
(b)as so applying may be referred to as the National Electricity (Victoria) Law.
7Application of Regulations under National Electricity Law
The Regulations in force for the time being under Part 4 of the National Electricity (South Australia) Act 1996 of South Australia—
(a)apply as Regulations in force for the purposes of the National Electricity (Victoria) Law; and
(b)as so applying may be referred to as the National Electricity (Victoria) Regulations.
Consistently with this overall scheme, s 3(1) of the NEVA defines the ‘National Electricity (Victoria) Law’ as meaning ‘the provisions applying because of s 6 of the [NEVA]’. Section 3(2) provides that words and expressions used in the National Electricity (Victoria) Law and the NEVA have the same respective meanings in the NEVA as they have in that law.[2]

AER and AEMO

[2]Section 3(3) of the Schedule to the National Electricity (South Australia) Act 1996 (‘Law’) provides that ‘[s]ub-section (2) does not apply to the extent that the context or subject matter otherwise indicates or requires’.

The Australian Energy Regulator (‘AER’) is established under s 44AE of the Competition and Consumer Act 2010 (Cth). Under the Law, the AER is granted a series of regulatory functions and powers relating to the National Electricity Market,[3] which comprises the power network connecting Queensland, New South Wales, the Australian Capital Territory, Victoria, Tasmania and South Australia.
[3]See Law, s 15.
The Australian Energy Market Operator (‘AEMO’) is a public company limited by guarantee, created in 2009 pursuant to an agreement of the Council of Australian Governments. As its name suggests, its principal function is the supervision of the operation of the National Electricity Market in the States and Territories referred to above. AEMO also regulates gas markets within these jurisdictions.
AEMO is given a series of functions under the Law. In the first instance these comprise general statutory functions set out in div 1 of pt 5 of the Law. Section 49(1) provides:
(1)      The following functions are conferred on AEMO:
(a)      to operate and administer the wholesale exchange;
(b)to promote the development and improve the effectiveness of the operation and administration of the wholesale exchange;
(c)      to register persons as Registered participants;
(d)to exempt certain persons from being registered as Registered participants;
(e)      to maintain and improve power system security;
(f)to facilitate retail customer transfer, metering and retail competition;
(fa)any functions of a data holder under the Competition and Consumer Act 2010 of the Commonwealth for CDR data relating to a designated energy sector;
(g)for an adoptive jurisdiction—the additional advisory functions or declared network functions (as the case requires);
(h)any functions conferred by jurisdictional electricity legislation or an application Act;
(i) any other functions conferred under this Law or the Rules.
Section 49(2) gives AEMO an additional specific role as National Transmission Planner:
(2)In its role as National Transmission Planner, AEMO has the following functions:
(a)to prepare, maintain and publish a plan for the development of the national transmission grid (the National Transmission Network Development Plan) in accordance with the Rules;
(b)to establish and maintain a database of information relevant to planning the development of the national transmission grid and to make the database available to the public;
(c)to keep the national transmission grid under review and provide advice on the development of the grid or projects that could affect the grid;
(d)to provide a national strategic perspective for transmission planning and coordination;
(e)any other functions conferred on AEMO under this Law or the Rules in its capacity as National Transmission Planner.
Section 49(3) requires AEMO in carrying out its functions to have regard to the National Electricity Objective, which is stated in s 7 of the Law:
7—National electricity objective
The objective of this Law is to promote efficient investment in, and efficient operation and use of, electricity services for the long term interests of consumers of electricity with respect to—
(a)price, quality, safety, reliability and security of supply of electricity; and
(b)the reliability, safety and security of the national electricity system; …
As part of its functions as National Transmission Planner, AEMO must produce an Integrated System Plan (‘ISP’) every two years in accordance with r 5.22.1 of the Rules. The purposes of an ISP are
to establish a whole of system plan for the efficient development of the power system that achieves power system needs for a planning horizon of at least 20 years for the long term interests of the consumers of electricity.[4]
[4]National Electricity Rules, r 5.22.2 (‘Rules’).
As contemplated by s 49(1)(g) of the Law, in Victoria, as an adoptive jurisdiction, AEMO further exercises additional advisory functions and declared network functions.[5]
[5]See NEVA, s 32.
Importantly, these include functions under s 50C of the Law, which provides for declared network functions with respect to augmentation and operation of the electricity network.[6]
[6]The Victorian electricity transmission network is a declared shared network for the purposes of s 50C.
50C—AEMO’s declared network functions
(1) AEMO’s declared network functions are as follows:
(a)to plan, authorise, contract for, and direct, augmentation of the declared shared network;
(b)to provide information about the planning processes for augmentation of the declared shared network;
(c)to provide information and other services to facilitate decisions for investment and the use of resources in the adoptive jurisdiction’s electricity industry;
(d)to provide shared transmission services by means of, or in connection with, the declared shared network;
(e)any other functions, related to the declared transmission system or electricity network services provided by means of or in connection with the declared transmission system, conferred on it under this Law or the Rules;
(f)any other functions, related to the declared transmission system or electricity network services provided by means of or in connection with the declared transmission system, conferred on it under a law of the adoptive jurisdiction.
(2) AEMO—
(a)is not limited in planning augmentation of the declared shared network to its role as National Transmission Planner; and
(b)may make or issue market information instruments as may be necessary or expedient for that or any other declared network function.[7]
[7]Emphasis added.
In consequence, in Victoria AEMO acts as a Transmission Network Services Provider (‘TNSP’) and as such may engage in the activity of owning, controlling or operating a transmission system.[8]

Augmentations

[8]Rules, ch 10 (definition of ‘transmission network services provider’).

The Law and the Rules regulate the procedures governing the augmentation of declared transmission systems. Section 50F of the Law provides:
50F—Augmentation
(1)A declared transmission system operator must not augment the declared shared network, or any part of the declared shared network, unless—
(a)AEMO authorises or directs the operator to carry out the augmentation; or
(b)the operator wins a competitive tender conducted by AEMO to carry out the augmentation; or
(c)the augmentation is authorised by the Rules.
(2)In deciding whether a proposed augmentation to the declared shared network should proceed, AEMO—
(a)must undertake a cost benefit analysis; and
(b)must apply a probabilistic (as distinct from a deterministic) approach to determining the benefit of an augmentation unless—
(i)a probabilistic approach will not produce a materially different result; or
(ii)it is not reasonably practicable to use a probabilistic approach; or
(iii)a probabilistic approach is, for some other reason, inappropriate.
Example—
Probabilistic planning is not relevant to negotiated network services. Hence, if the services to be provided as a result of the augmentation are negotiated network services, a probabilistic approach would be inappropriate.
(3)Subject to the Rules, AEMO must conduct a competitive tender to determine who will carry out an augmentation to a declared shared network.
(4) A declared transmission system operator—
(a)must do anything required by the Rules to facilitate the planning, construction or operation of an augmentation; and
(b)must, at AEMO’s request, do anything else reasonably required by AEMO to facilitate the planning, construction or operation of an augmentation.
Example—
A declared transmission system operator will be required by the Rules to enter into an augmentation connection agreement with the person responsible for operation of an augmentation to connect the augmentation with the declared shared network.
(5)A declared transmission system operator must not engage in conduct that has the effect of preventing or hindering the planning, construction or operation of an augmentation.
Note—
Subsections (1), (4) and (5) are civil penalty provisions: See the definition of civil penalty provision in section 2AA(1).

The RIT-T process

In turn, the Rules require the assessment of the optimal form of a proposed augmentation in accordance with a form of cost benefit analysis known as the Regulatory Investment Test for Transmission (‘RIT-T’) which has been formulated by the AER — together with guidelines as to its application — with respect to what are respectively called actionable and not actionable ISP projects, being forms of augmentation defined in the ISP.
Rule 5.15A.1 provides:
5.15A.1 General principles and application
(a)The AER must develop and publish the regulatory investment test for transmission in accordance with the transmission consultation procedures and this rule 5.15A.
(b)The regulatory investment test for transmission will apply to RIT-T projects which are not actionable ISP projects (in accordance with rule 5.16) and to RIT-T projects which are actionable ISP projects (in accordance with rule 5.16A) but will differ in its application to each of those types of projects.
(c)The purpose of the regulatory investment test for transmission in respect of its application to both types of projects is to identify the credible option that maximises the present value of net economic benefit to all those who produce, consume and transport electricity in the market (the preferred option). For the avoidance of doubt, a preferred option may, in the relevant circumstances, have a negative net economic benefit (that is, a net economic cost) to the extent the identified need is for reliability corrective action or the provision of inertia network services required under clause 5.20B.4.
(d)The regulatory investment test for transmission application guidelines under clause 5.16.2 apply to RIT-T projects which are not actionable ISP projects.
(e)The Cost Benefit Analysis Guidelines under clause 5.22.5 apply to RIT‑T projects which are actionable ISP projects.
The Rules go on to state the principles applicable respectively to RIT-T projects which are not actionable ISP projects[9] and those which are actionable ISP projects.[10] They then provide for the application of the RIT-T process, first to projects which are not actionable ISP projects,[11] and secondly, to actionable ISP projects.[12]
[9]Rules, r 5.15A.2.
[10]Rules, r 5.15A.3.
[11]Rules, r 5.16.
[12]Rules, r 5.16A.
The application of the RIT-T process requires the iterative assessment of the preferred option to meet the identified need for a proposed augmentation of the transmission network.
The RIT-T process potentially consists of three stages:
(a)the publication of a Project Specification Consultation Report (‘PSCR’) which is required for not actionable projects only;[13]
(b)the publication of a Project Assessment Draft Report (‘PADR’); and
(c)the publication of a Project Assessment Conclusions Report (‘PACR’).
[13]The Rules seek to expedite actionable projects.
The PSCR identifies the need sought to be addressed and all ‘credible options’ the RIT‑T proponent is aware of that would address the need. The RIT-T proponent is then required to make the PSCR available to all ‘Registered Participants’, AEMO, and other ‘interested parties’.[14] A PSCR summary must then be provided to AEMO, which publishes the PSCR summary on its website. The RIT-T proponent must then seek submissions on the ‘credible options’ presented in the PSCR from all ‘Registered Participants’, AEMO, and ‘interested parties’. The consultation period is at least 12 weeks from the date of publication of the PSCR summary by AEMO.
[14]Relevantly, defined in r 5.15.1 as ‘as an end user or its representative who, in the AER’s opinion, has the potential to suffer a material and adverse [National Energy Market] impact from the investment identified as the preferred option in the [PACR] or the final project assessment report (as the case may be)’.

The PADR must be prepared within 12 months after the end of the consultation period or such longer period allowed by the AER. The PADR identifies the ‘preferred option’ from the ‘credible options’ discussed in the PSCR, taking into account matters raised in the PSCR consultation. The PADR is then made available to ‘Registered Participants’, AEMO, and ‘interested parties’. As with the PSCR, a summary of the PADR is provided to AEMO for publication on its website. The RIT-T proponent then seeks submissions on the ‘preferred option’ presented in the PADR and the consultation period is at least six weeks from the date that AEMO publishes the PADR summary. Within four weeks of the conclusion of the consultation period, ‘Registered Participants’, AEMO, and ‘interested parties’ have a right to request a meeting with the relevant TNSP.
As soon as practicable after the PADR consultation period, the RIT-T proponent must prepare and publish a PACR detailing the RIT-T proponent’s response to any of the submissions raised during the PADR consultation period. The end result of the publication of a PACR is the identification of a ‘preferred option’ to meet the ‘identified need’.
The RIT-T proponent must reapply the RIT-T if it is of the reasonable opinion that there has been a ‘material change in circumstances’, subject to the AER determining otherwise.[15]

Expediting the decision-making process

[15]Rules, r 5.16.4(z3).

In March 2020, the NEVA was amended.[16] Relevantly for present purposes, these amendments included the insertion of div 7 of pt 3 and, in particular, s 16Y. Section 16Y, among other things, enables the responsible Minister to truncate and expedite the RIT-T process by making an order or orders to disapply or modify the application of provisions of the Law and the Rules which would otherwise apply to the process of implementing a specified augmentation.
[16]See National Electricity (Victoria) Amendment Act 2020.
The stated purposes of the amending Act and the extrinsic materials relating to it made clear that the amendment was intended to enable the Minister to disapply or modify aspects of the Law and the Rules, including the RIT-T process, in order to overcome delays in the augmentation of the electricity network by way of projects such as those which are the subject of this proceeding.[17]
[17]National Electricity (Victoria) Amendment Act 2020, s 1; Explanatory Memorandum, National Electricity (Victoria) Amendment Act 2020; Victoria, Parliamentary Debates, Legislative Assembly, 19 February 2020, 376–8 (Lily D’Ambrosio, Minister for Energy, Environment and Climate Change).
New South Wales has also implemented legislation which allows for the application of the RIT-T process to be bypassed in what are called renewable energy zones.[18]
[18]Electricity Infrastructure Investment Act 2020 (NSW), ss 31(1), (2).
If given its plain meaning, s 16Y of the NEVA enables the Minister to make special provision with regard to a specified augmentation of the transmission network and disapply or modify provisions of the Law and the Rules which would otherwise require the augmentation to be assessed in accordance with the general scheme of those provisions, including the application of the RIT-T process.
This proceeding concerns the validity of two orders made by the Minister under s 16Y of the NEVA, first on 20 February 2023 (the ‘February Order’) and secondly, on 27 May 2023 (the ‘May Order’) (collectively, the ‘Orders’) relating to two RIT-T projects: the WRL and the VNI West. An ISP issued by AEMO in June 2022 identified VNI West as an actionable ISP project. The ultimate effect of the Orders was to disapply the provisions of the Law and the Rules relevantly governing the assessment of the preferred option for the VNI West project and to direct AEMO to proceed with a particular option known as ‘Option 5A’.
The Minister further directed AEMO to publish with Transgrid[19] a PACR identifying Option 5A as the preferred option for VNI West. The Minister’s stated reasons for taking this course emphasised the urgency of the need to upgrade the transmission system in the face of increasing stress to it and the need to accommodate new sources of renewable energy. The ultimate choice of route also had regard to environmental and other concerns of the public interest as relevant considerations.
[19]The relevant New South Wales TNSP for the interstate connection.
The PACR subsequently published by AEMO summarised the advantages of Option 5A as follows:
This PACR finds that the preferred option is a 500 kilovolt (kV) double-circuit overhead transmission line between Victoria and New South Wales, connecting Western Renewables Link (WRL) (at Bulgana) with EnergyConnect (at Dinawan) via a new terminal station near Kerang, and crossing the Murray River north of Kerang – ‘Option 5A’.
The preferred Option 5A is a variant identified through responses to the additional Consultation Report published in February 2023 (‘Additional Consultation Report’). Option 5A is electrically similar to Option 5, but with higher hosting limits for renewable generation, and covering a different area of interest in the north of Victoria and the south of New South Wales. It crosses the Murray River north of Kerang, whereas Option 5, the proposed preferred option in the Additional Consultation Report, crosses the Murray River near Echuca.
Option 5A was recommended by AEMO Victorian Planning (AVP) to the Victorian Minister for Energy and Resources as it is considered most likely to facilitate and expedite delivery, in that:
•The net benefits from the economic modelling under the Australian Energy Regulator’s (AER’s) Cost Benefit Analysis (CBA) Guidelines for both options evaluated in this PACR are very close (within 1%).
•Councils have indicated there is broader social licence for VNI West crossing the Murray River north of Kerang, and therefore more likelihood of timely implementation.
•The multi-criteria analysis (MCA) used to broadly identify potential environmental, social and engineering constraints that may impact timely project delivery shows that both options perform similarly and are superior to the alternatives considered in the Additional Consultation Report.
•Option 5A presents fewer environmental constraints and avoids intercepting the Patho Plains, an area of significant grassland habitat known to support the endangered Plains-wanderer.
•Option 5A avoids passing near Ghow Swamp, a place of national cultural significance.
•Option 5A is expected to harness more renewable generation in Victorian renewable energy zones (REZs) than Option 5.

Challenge to the Orders

The applicant objects to the form of the proposed transmission links and initiated judicial review proceedings against the Minister challenging the Orders. A wide range of grounds were pursued over a four day hearing before McDonald J. The grounds pursued at the hearing were in summary:
(a)the Minister’s reasons accompanying the Orders were inadequate (grounds 1 and 8);
(b)the Minister’s reasons demonstrated unreasonableness (grounds 2 and 9);
(c)the Minister failed to exercise the power conferred by s 16Y of the NEVA because the Orders inadequately ‘specify’ the augmentation to which the Orders applied (ground 3);
(d)the February order was invalid by reason of uncertainty (ground 4);
(e)the May Order was invalid because the Minister had no power to require AEMO to publish ‘with Transgrid’ the PACR identifying Option 5A as the ‘preferred option’ for VNI West (ground 6);
(f)the May Order was invalid because the Minister acted with two improper purposes (ground 7); and
(g)the Orders were invalid because:
(i)the decisions to publish the Orders were affected by jurisdictional error because the Minister had no power to disapply or modify s 49 of the Law or therefore r 5.22 of the Rules (relating to AEMO’s functions as National Transmission Planner);
(ii)in any event, the Minister did not disapply or modify s 49 of the Law or r 5.22 of the Rules;
(iii)the scheme of r 5.22 of the Rules providing for the making of ISPs is predicated on there being an RIT-T for the relevant process; and
(iv)both of the Orders, by purporting to disapply the RIT-T requirements for VNI West, are not supported by s 16Y(1) and are repugnant to and inconsistent with s 6 of the NEVA (applying s 49 of the Law and r 5.22 of the Rules) (ground 10).
In a careful and comprehensive judgment delivered on 20 December 2023, McDonald J accepted that the applicant had standing to agitate its case but rejected each of these grounds.[20] The applicant now seeks leave to appeal his Honour’s conclusions with respect to grounds 10 and 6 only. For the reasons that follow, we would refuse leave to appeal. In our view, his Honour’s conclusions were correct.

Summary of conclusions

[20]Moorabool and Central Highlands Power Alliance v Minister for Energy and Resources [2023] VSC 774 (McDonald J) (‘Reasons’).

In summary, the content of the Law and the Rules as they apply to a particular augmentation are controlled by the provisions of the NEVA. The critical provisions requiring application of the RIT-T process have been disallowed insofar as they would otherwise govern the specified augmentation. The application of the Law and the Rules are subject to the Orders made by the Minister.
Further, there is no inconsistency between the Orders and the functions of AEMO as National Transmission Planner.
Judicial review ground 6 is also misconceived. The Orders bound AEMO but not Transgrid. The stipulation of a preferred option fell within the terms of the Minister’s powers. Furthermore, compliance with the May Order did not require AEMO to carry out a function inconsistent with s 49(3) of the Law.

Background Facts

The history of the development of the WRL and VNI West proposals is set out in the trial judge’s reasons at [69]–[83] and [84]–[91]. The background to the making of the Orders is further detailed in [92]–[100]. We adopt that summary which was not the subject of challenge.
It is sufficient for our purposes first to note that:
(a)In its final form, the WRL project provides for an augmentation of the Victorian energy grid by way of 500kv transmission lines running westward from Sydenham to Bulgana, west of Ballarat, together with terminal station works.
(b)In its final form, the VNI West project proposes a connection between the WRL project at Bulgana running north-east to a new terminal located near Kerang and then north to the NSW border.
(c)Each project has emerged from a series of procedural steps taken as part of a RIT-T planning process. Ultimately, however, this process led to a political decision to materially modify the VNI West route, which was then taken outside the framework of the RIT-T planning process.
It is desirable to summarise the context in which the Orders were made.
AEMO and Transgrid are joint RIT-T proponents for the VNI West project, with Transgrid (as NSW TNSP) being responsible for the NSW aspect of the project, and AEMO (as Victorian TNSP) having carriage of the Victorian aspect.
In December 2019, AEMO and Transgrid published the VNI West PSCR, setting out the ‘identified need’ as the ‘additional transfer capacity between New South Wales and Victoria to realise net market benefits’. Six ‘credible options’ for a new interstate connection were identified. Each adopted a different regional route.
The 2020 ISP expressed the identified need for the project in the following terms (repeated in the 2022 ISP):
To increase transfer capacity between New South Wales and Victoria to realise net market benefits by:
•efficiently maintaining supply reliability in Victoria following the closure of further coal-fired generation and the decline in aging generator reliability – including mitigation of the risk that existing plant closes earlier than expected,
•facilitating efficient development and dispatch of generation in areas with high quality renewable resources in Victoria and southern New South Wales through improved network capacity and access to demand centres, and
•enabling more efficient sharing of resources between NEM[21] regions.
[21]National Electricity Market.
AEMO published the 2022 ISP in June of that year. The 2022 ISP identified the VNI West project as an actionable ISP project, bringing it within the RIT-T process under r 5.16A of the Rules.
The VNI West PADR was published in July 2022 following a period of consultation. Two credible options were identified in the PADR[22] and the ‘preferred option’ was a new high capacity 500kV double-circuit overhead transmission line to connect the Western Renewables Link (north of Ballarat) with Project EnergyConnect (at Dinawan) via new stations near Bendigo and near Kerang.[23]
[22]Described in Reasons, [89].
[23]Reflecting the proposal described in the ISP.
After the PADR was published, AEMO and Transgrid published a project update for VNI West on 2 December 2022, indicating that AEMO and Transgrid were considering changing the route, so that the VNI West project would intersect with the WRL project in Bulgana, rather than at the proposed North Ballarat station.
After AEMO and Transgrid published their project update, stating that they were investigating an alteration to the route of the preferred option, the Minister exercised her powers under s 16Y of the NEVA to permit AEMO and Transgrid to consider alternative options to those identified in the VNI West PADR.
The February Order permitted AEMO and Transgrid to select a new preferred option for the VNI West project, without having to restart the RIT-T process.
After the February Order was made, AEMO and Transgrid published, on 23 February 2023, a document titled, ‘VNI West Consultation Report – Options Assessment’, in which AEMO and Transgrid considered seven credible options, comprising two options already considered in the VNI West PADR, alongside five new options.
AEMO and Transgrid selected Option 5, which addressed concerns noted in the December 2022 project update, regarding land use between Ballarat and Bendigo.
Rather than connecting with the WRL project at the proposed terminal station in North Ballarat, Option 5 connected the VNI West project with the WRL project at Bulgana.
Following the publication of the Options Assessment, AEMO and Transgrid engaged in further stakeholder consultation and various issues were raised with respect to Option 5, leading to AEMO and Transgrid investigating further options.
On 3 May 2023, the CEO of AEMO (Mr Daniel Westerman) wrote to the Minister, requesting the Minister to make an order pursuant to s 16Y of the NEVA to permit AEMO to select proposed Option 5A as the preferred option. The letter attached a draft PACR, which identified Option 5A as the preferred option.
On 22 May 2023, a second letter was sent to the Minister, attaching a final draft of the VNI West PACR.
On 27 May 2023, the Minister made a further order under s 16Y(1) of the NEVA. The effect of the May Order was to require AEMO to publish a PACR identifying Option 5A as the preferred option, without Option 5A going through the RIT-T process. AEMO and Transgrid published the VNI West PACR that same day, selecting Option 5A as preferred option.
Options 5 and 5A both begin at Bulgana and run north-east, via a proposed station at Kerang, across the Murray River to Dinawan, NSW, but Option 5A crosses the Murray River further to the north-west. However, the VNI West PACR did not set the precise route for the VNI West project, but only established an area of interest to be refined by further process, as follows.

A significant change between Option 5 as outlined in the VNI West PADR and Option 5A in the PACR was the relocation of the connection point between the VNI West and WRL projects, from the proposed terminal station at North Ballarat to the terminal station at Bulgana.
The adoption of Option 5A as the preferred option removed the need to build a new terminal station at North Ballarat. However, it is common ground that the adoption of Option 5A did not alter the route of the WRL project.
Option 5A also affected the kind of transmission lines running between Bulgana and Sydenham on the WRL project. The preferred option of the WRL project PACR only required 500kV transmission lines between Sydenham and the North Ballarat station. However, due to the May Order, the entirety of the transmission lines to be constructed for the WRL project will be 500kV transmission lines.
As the applicant emphasised in submissions, a consequence of Option 5A is that the route proposed for VNI West differs materially in its end points from the route proposed in the 2022 ISP. We observe, however, that it is plain that Option 5A is intended to meet the same identified need.

The Orders

Copies of the Orders are annexed to this judgment.
Each order:
(a)specified the augmentations to which it applied;
(b)conferred functions on AEMO in respect of the specified augmentations; and
(c)disapplied a number of provisions of the Law and the Rules insofar as they applied to the specified augmentations.
In terms of functions, cl 6.1(a) of the February Order required AEMO to assess alternative options to the preferred option which had been described in the VNI West PADR published in July 2022 and the WRL PACR. The February Order further confirmed in cl 6.9 that AEMO was to prepare and publish a PACR in respect of VNI West ‘with Transgrid’.
The May Order revoked a number of AEMO’s functions provided for in the February Order, including the functions in cls 6.1(a) and 6.9 to assess alternative options and produce a PACR.[24] These functions were replaced by obligations which required AEMO to prepare and publish a PACR with Transgrid identifying the VNI West augmentation specified in the order as the preferred option.[25] The May Order also conferred a series of functions on AEMO with respect to the WRL augmentation.[26]
[24]Clause 4.7.
[25]Clauses 4.4, 4.5.
[26]Clauses 4.2, 4.6.
Each of the Orders disapplied provisions of the Law and the Rules which would otherwise have governed the process of implementation of the specified augmentations.
(a)Sections 50F(2), 50F(3) and 50H of the Law, which respectively require AEMO to take into account certain matters in deciding whether to proceed with an augmentation to the declared shared network (ie cost benefit analysis, application of probabilistic approach, competitive tender) and the resolution of dispute arising from attempts to negotiate a network agreement or augmentation connection agreement:
(b)Rules 5.15A, 5.16, 5.16A and 5.16B of the Rules, which provide for general and specific RIT-T principles and the application of the RIT-T to both actionable and not actionable ISP projects, and disputes in relation to the application of the RIT‑T.
(c)Rules 8.11.4, 8.11.6, 8.11.7, 8.11.8, 8.11.9 and sch 8.11 of the Rules, which govern the procurement, contractual and planning processes for augmentation of declared transmission systems in an adoptive jurisdiction. Rule 8.11 has the following objective:
8.11.2 Object
The objects of this rule are:
(1)    to establish the distinction between contestable augmentations and augmentations that are not contestable; and
(2)    to regulate the process for calling, receiving and evaluating tenders for the construction and operation of a contestable augmentation; and
(3)    to facilitate the construction and operation of augmentations; and
(4)    to provide guidance on risk allocation and other commercial principles to be reflected in network agreements and augmentation connection agreements; and
(5)    to make provision for certain matters with respect to AEMO’s planning of the declared shared network.
(d)Lastly, AEMO’s planning criteria published in accordance with r 8.11.4 are specifically disapplied.

The effect of the Orders was, in the first instance, to disapply provisions of the generally applicable law in Victoria with respect to augmentations. The proposed augmentation must still comply with s 50F(1) of the Law but, by removing the requirement that AEMO undertake a cost benefit analysis under s 50F(2) and conduct a competitive tender under s 50F(3), the relevant requirements are materially diluted.
Secondly, the Orders provide that the proposed augmentations are not governed by a series of rules which would otherwise provide for the application of the RIT–T to the projects:
(a)the publication of the RIT-T and the principles governing the application of the RIT-T to both not actionable and actionable ISP projects — r 5.15A;
(b)the application of RIT-T to projects which are not actionable ISP projects — r 5.16;
(c)the application of RIT-T to projects which are actionable ISP projects — r 5.16A; and
(d)disputes in relation to the application of RIT-T — r 16B.
The effect of (a) is that there is no authority to publish the RIT-T and the RIT-T is not made under the Rules for the purposes of the law of Victoria.
The effect of (b) is that there is no basis for the RIT-T to be applied to the WRL project.
The effect of (c) is that there is no basis for the RIT-T to be applied to the VNI West project.
The terms of the RIT-T itself confirm that it falls to be applied under the Rules which have been disapplied. Under the heading ‘Application’, the RIT-T states:
Application
For a RIT–T project that is not an actionable Integrated System Plan (ISP) project, the RIT–T proponent must apply the RIT–T in accordance with clause 5.15A.2:
(a)to the proposed transmission investment as required by clause 5.16.3;
(b)in accordance with the requirements relating to the credible option set out at clause 5.15.2;
(c)as required by the procedures set out at clause 5.16.4; and
(d)to a level of analysis which is proportionate to the scale and likely impact of each credible option being implemented, as set out in clause 5.15A.2(b)(2).
Note: The RIT–T application guidelines provide guidance on the operation and application of, and the process to be followed in applying the RIT–T to projects that are not actionable ISP projects.
For an actionable ISP project, the RIT–T proponent must apply the RIT–T in accordance with clause 5.15A.3:
(a)to the identified need associated with the actionable ISP project except if, in accordance with clause 5.16A.3(a), the circumstances set out in clause 5.16.3(a) apply to that actionable ISP project;
(b)in accordance with the requirements relating to the credible option set out at clause 5.15A.3(b)(7)(iii) — and clause 5.15.2 where the RIT–T proponent is considering new credible options under clause 5.15A.3(b)(7)(iii)(C);
(c)as required by the procedures set out at clause 5.16A.4; and
(d)to a level of analysis which is proportionate to the scale and likely impact of each credible option being implemented, as set out in clause 5.15A.3(b)(2).
Note: The cost benefit analysis guidelines provide guidance on the operation and application of, and the process to be followed in applying the RIT–T to actionable ISP projects. The RIT–T proponent must comply with the binding requirements and considerations set out in the cost benefit analysis guidelines when applying the RIT–T to an actionable ISP project.
Next, the Orders disapply parts of the Rules relating to augmentation that:
(a)provide for planning criteria relating to augmentations — r 8.11.4;
(b)define contestable augmentations — rr 8.11.3 and 8.11.4;
(c)govern the tender process with respect to contestable augmentations and the alternative documentary requirements in the case of funded augmentations — rr 8.11.7 and 8.11.8; and
(d)govern network agreements and augmentation agreements relating to contestable augmentations — r 8.11.9 and sch 11.
In consequence of these provisions, the planning criteria outlining the principles governing the cost benefit analysis which would generally be required under s 50F are deprived of authority — r 8.11.4. Further, the tender process for the construction and operation of contestable augmentations is not required to be applied.

Proposed Ground 1

The applicant’s primary case before this Court comprised in proposed ground 1 was directed toward ground 10 of judicial review.
Ground 10 (February and May Orders) – incompatibility with 2022 ISP
78.Section 49(2)(a) of the Law, which is applied inter alia by the NEVA and the [National Electricity (New South Wales) Act 1997], provides that in its role as the ‘National Transmission Planner’, AEMO’s functions include ‘to prepare, maintain and publish a plan for the development of the national transmission grid (the National Transmission Network Development Plan) in accordance with the Rules.
79.Clause 5.22 of the Rules makes provision for the preparation, maintenance and publication of an ‘integrated system plan’ (ISP), which fulfils the requirements of a ‘National Transmission Network Development Plan’ as required by section 49(2) of the Law.
80.In June 2022, in discharge of its function under section 49(2)(a) of the Law described above, and of the requirements of clause 5.22 of the Rules, AEMO published the 2022 ISP, which identifies the VNI West project as an ‘actionable ISP project’.
81.The Minister has no power, under section 16Y of the NEVA, to disapply or modify section 49 of the Law.
82.The Minister has no power, under section 16Y of the NEVA, to disapply or modify clause 5.22 of the Rules. In any event, the Minister has not, in either the February Order or the May Order, purported to disapply clause 5.22 of the Rules.
83.The:
(a)scheme in clause 5.22 of the Rules; and
(b)the 2022 ISP published by AEMO under section 49(2)(a) of the Law and clause 5.22 of the Rules,
are predicated on an RIT-T being conducted for actionable ISP projects, including the VNI West project.
84.In the premises:
(a)the Minister has no power under section 16Y of the NEVA to disapply clauses 5.15A and 5.16A of the Rules to the VNI West project, being an ‘actionable ISP project’;
(b)alternatively, the outcome of the purported exercise of the Minister’s power under section 16Y to make the February Decision and the May Decision is legally unreasonable, as the Decisions result in incoherence in the law of Victoria.
85.Accordingly:
(a)both the February Decision and the May Decision are affected by jurisdictional error such that it they are amenable to being quashed by an order in the nature of certiorari; and
(b)if the decisions are quashed, or is affected by jurisdictional error, then the February Order and the May Order have no legal effect.
In summary, the applicant’s argument involves three steps:
(a)The scope of the Minister’s power to disapply the Law under s 16Y(1)(a) is confined to matters relating to ‘declared transmission systems’ and is confined to a particular subdivision of the Law. The Minister’s power should be strictly construed.
(b)Sections 49(2)(a) and (e) of the Law fall outside the relevant subdivision and confer functions on AEMO as National Transmission Planner with respect to the preparation, maintenance and publication of an ISP in accordance with the Rules.
(c)The Orders disapply or modify s 49(2) read together with the Rules and in particular r 5.22, which provides for the making of ISPs, and r 5.16A, which requires the application of the RIT-T process to actionable ISP projects. In consequence, the Orders are not supported by s 16Y(1).
Amongst other things, the respondent Minister contends that:
(a)the Rules are not paramount over orders made under s 16Y of the NEVA;
(b)the reference to the Rules in s 49(2) is relevantly to be understood as a reference to the Rules as they are applicable as part of the law of Victoria;
(c)the Minister’s powers under s 16Y are not subject to any implied limitation that operates so as ‘not to allow the Minister to interfere with AEMO’s functions as [National Transmission Planner]’;
(d)section 16Y expressly contemplates the displacement of the general application of the RIT-T process to a specified augmentation;
(e)the relevant extrinsic materials make clear that a basic purpose of the introduction of s 16Y was to enable the Minister to avoid the RIT-T process; and
(f)there is, in any event, no conflict between the Orders and the operation of r 5.22.
At first instance, the trial judge held that:
(a)the June 2022 ISP is not a National Transmission Network Development Plan (‘NTNDP’) within the meaning of s 49(2)(a) of the Law;[27]
(b)there is no conflict between the Orders and r 5.22 because none of the rules referred to by the applicant impose an obligation to apply the RIT-T process to specified augmentations;[28]
(c)insofar as the provisions of r 5.22 operate in respect of actionable ISP projects, that assumption only applies to the extent that the RIT-T rules apply to a specific actionable ISP project;[29] and
(d)to the extent that there is any inconsistency between the Orders and r 5.22, the Orders prevail by reason of ss 16ZC(1), 16ZC(3) and 16Y(4) of the NEVA.[30]
[27]Reasons, [265].
[28]Reasons, [268].
[29]Reasons, [268].
[30]Reasons, [269]–[283].
In order to resolve the fundamental question of whether the Orders were made under or were supported by s 16Y(1), it is necessary to turn in detail to the terms and proper construction of s 16Y and s 16ZC of the NEVA.

Principles of Statutory Construction

The starting point in any exercise of statutory construction is the text of the provision. However, the text is to be considered in light of its context and purpose.[31] Context includes the legislative context, because the meaning of a provision must be determined by reference to the entire Act.[32] Consideration of purpose is further reinforced by s 35(a) of the Interpretation of Legislation Act 1984, which in summary provides that a construction that would promote the purpose of the Act (whether or not that purpose is expressly stated) shall be preferred to a construction that would not promote that purpose or object.
[31]SAS Trustee Corporation v Miles (2018) 265 CLR 137, 149 [20] (Kiefel CJ, Bell and Nettle JJ); see also 157 [41] (Gageler J), 162–3 [64] (Edelman J); [2018] HCA 55. And see Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27, 46–7 [47] (Hayne, Heydon, Crennan and Kiefel JJ) and the cases there cited at n 105, n 108 and n 109; [2009] HCA 41; AB (a pseudonym) v Independent Broad-Based Anti-Corruption Commission (2024) 98 ALJR 532, 537–8 [21] (Gageler CJ, Gordon, Edelman, Steward, Gleeson, Jagot and Beech-Jones JJ); [2024] HCA 10.
[32]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 381 [69] (McHugh, Gummow, Kirby and Hayne JJ); [1998] HCA 28 (‘Project Blue Sky’). See also Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v Moorcroft (2021) 273 CLR 21, 35–6 [15] (Kiefel CJ, Keane, Gordon, Steward and Gleeson JJ); [2021] HCA 19.
Identification of the statutory purpose may appear from an express statement in the statute or by reference to, or inference from, its language. Discernment of purpose may be aided by reference to any relevant extrinsic materials, in particular those that identify the mischief to which it is directed.[33] It is also permissible to have regard to extrinsic materials in resolving the meaning of the text, particularly in cases of ambiguity.[34] However, legislative history and extrinsic materials cannot displace the meaning of the statutory text.[35] Finally, it is permissible, in determining which of two competing interpretations of a statute ought to be adopted, to have regard to the consequences of each interpretation.[36]

Sections 16Y(1), (2) & (5)

[33]Lacey v Attorney-General (Qld) (2011) 242 CLR 573, 592 [44] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ); [2011] HCA 10. See also Port of Newcastle v Glencore Coal (2021) 274 CLR 565, 594 [87] (Kiefel CJ, Gageler, Gordon, Steward and Gordon JJ); [2021] HCA 39.

[34]Interpretation of Legislation Act 1984, s 35(b).

[35]Commissioner of Taxation (Cth) v Consolidated Media Holdings Ltd (2012) 250 CLR 503, 519 [39] (French CJ, Hayne, Crennan, Bell and Gageler JJ); [2012] HCA 55.

[36]R v Young (1999) 46 NSWLR 681, 687–8 [15] (Spigelman CJ); [1999] NSWCCA 166. See also Project Blue Sky (1998) 194 CLR 355, 384 [78] (McHugh, Gummow, Kirby and Hayne JJ); [1998] HCA 28; CTM v The Queen (2008) 236 CLR 440, 509 [237] (Heydon J); [2008] HCA 25. See generally the discussion in Dennis Pearce, Statutory Interpretation in Australia (LexisNexis, 10^th ed, 2024) 79–85 [2.61]–[2.65].

Section 16Y falls within pt 3 of the NEVA, which modifies the application of the Law within the State of Victoria. Part 3 provides successively for general modifications, modification of the provisions with respect to feed-in tariffs, modification of the provisions with respect to metering, modification of the f-factor scheme, modification of the pre-2011 service adjustment scheme and efficiency carryover mechanism, modification of provisions with respect to distribution network connections and retail customer connection arrangements, modification of provisions with respect to wholesale electricity markets and network service providers, modification of distribution determination arrangements, and modification of regulatory arrangements for specified declared transmission system augmentations and related services. It is with this last category of modification of the Law that we are concerned.
Section 16Y(1)(a) provides:
16Y Order modifying regulatory arrangements relating to declared transmission system augmentations and related services
(1)Subject to this Division, the Minister, by Order published in the Government Gazette, may do any one or more of the following—
(a) specify, for the purposes of the Order—
(i)the carrying out of, or operation of, an augmentation of the declared transmission system as a specified augmentation;
(ii)services provided or to be provided in relation to or by means of a specified augmentation as specified augmentation services;
(iii)non-network services as specified non-network services;
Section 16Y(1)(a) is clear in its terms and its construction was not the subject of any dispute between the parties: it enables the Minister to specify — that is, identify — an augmentation of the declared transmission system as a ‘specified augmentation’. ‘Declared transmission system’ is defined in s 33 of the NEVA to mean a transmission system or a part of a transmission system declared by order of the Minister under s 30 to be the declared transmission system. Section 30 further requires that that system (or part) be ‘wholly or substantially in Victoria’. Pursuant to s 30, the Minster has declared the transmission system situated in Victoria to be the declared transmission system. Thus, s 16Y(1)(a) permits the Minister to specify an augmentation of Victoria’s transmission system as a specified augmentation. (As discussed further below, the Orders in this case specified the WRL project and the VNI West project as specified augmentations, and there was no challenge to that aspect of the Orders.)
Section 16Y then enables the Minister to take various steps with respect to a specified augmentation.
Two subsections of s 16Y(1) empower the Minister, by order, to affect the operation of certain provisions of the Law by disapplying it or modifying its application.
(a)Section 16Y(1)(b)(i) empowers the Minister, by order, to ‘provide that Subdivision 3 of Division 2 of Part 5 of the Law, or a specified provision of that Subdivision, does not apply as a law in Victoria in respect of … a specified augmentation’. (That subdivision is headed ‘AEMO’s declared network functions’ and we will refer to it as the ‘declared network functions subdivision’.)
Put another way, s 16Y(1)(b)(i) permits the Minister to disapply the declared network functions subdivision, or a provision thereof, in relation to a particular, identified augmentation. But it does not permit the Minister to disapply a provision of the Law that falls outside the declared network functions subdivision.
(b)Section 16Y(1)(c)(i) empowers the Minister, by order, to ‘modify the application of a specified provision of [the declared network functions subdivision] as it applies as a law in Victoria in respect of … a specified augmentation’.
Put another way, 16Y(1)(c) permits the Minister to modify the application of a provision within the declared network functions subdivision to a particular, identified augmentation. But it does not permit the Minister to modify a provision of the Law that falls outside the declared network functions subdivision.
We return below to the meaning of ‘modify’.
Subsections 16Y(1)(d) and (e) empower the Minister to affect the operation of the Rules generally:
(a)Section 16Y(1)(d)(i) empowers the Minister, by order, to ‘provide that a specified provision of the Rules does not apply in respect of … a specified augmentation’.
(b)Section 16Y(1)(e)(i) empowers the Minister, by order, to ‘modify the application of a specified provision of the Rules to … a specified augmentation’.
It is notable that these two powers in respect of the Rules are not textually constrained in the way that ss 16Y(1)(b) and (c) are constrained in respect of the Law. That is, ss 16Y(1)(d) and (e) permit the Minister to disapply or modify any provision of the Rules, whereas ss 16Y(1)(b) and (c) only permit the Minister to disapply or modify provisions of the declared network functions subdivision.
Subsections 16Y(1)(f)(i) and (g)(ii) empower the Minister to disapply or modify a specified definition in the Rules (including ch 10 of the Rules) to a specified augmentation.
Subsection 16Y(1)(i)(i) empowers the Minister to ‘regulate … a specified augmentation’.
Subsection 16Y(2) then sets out various things that an order under s 16Y(1) may do (without limiting sub-ss (1)(d), (e), (f), (g) or (i)). These include:
(a)modify the application of standards, procedures or guidelines published under the Rules to—
(i)a specified augmentation;
…
(b)modify the application of a specified provision of the Rules to the provision of reserve in respect of—
(i)a specified augmentation;
…
(c)specify matters or things that are to apply in relation to—
(i)a specified augmentation;
…
(d)specify a test, examination or assessment to apply in relation to a specified augmentation or specified augmentation services in place of the regulatory investment test for transmission (an alternative regulatory investment test);
(e)specify guidelines for the purposes of an alternative regulatory investment test;
…
The fact that s 16Y(2)(d) expressly provides that the Minister’s order may specify ‘a test, examination or assessment to apply in relation to a specified augmentation … in place of the regulatory investment test for transmission’ confirms the plain meaning of ss 16Y(1)(d) and (e) and makes clear that the Minister may, by order, disapply the application of the RIT-T in relation to a specified augmentation.
The provisions of ss 16Y(2)(i) and (k) should also be noted. An order made under s 16Y(1) may:
(i)require AEMO to carry out a declared network function or a function referred to in section 16X(2)(b) in relation to—
(i)a specified augmentation;
…
(k)require a declared transmission system operator or prospective declared transmission system operator to—
(i)plan the carrying out of a specified augmentation;
(ii)carry out a specified augmentation;
(iii)operate a specified augmentation;
(iv)facilitate the planning, carrying out or operation of a specified augmentation;

Section 16X, to which reference is made in 16Y(2)(i), confers functions upon AEMO in addition to those provided for in s 50C of the Law.
16X Additional AEMO functions
(1)For the purposes of section 50C(1)(f) of the Law, AEMO is conferred the following functions—
(a)to contract for augmentation related services or specified non-network services;
(b)to conduct competitive tenders in respect of augmentation related services and specified non-network services.
(2)In addition—
(a)a function conferred on AEMO under an Order under section 16Y that is related to the declared transmission system, or electricity network services provided by means of or in connection with the declared transmission system, is taken to be conferred by this Act for the purposes of section 50C(1)(f) of the Law; and
(b)a function conferred on AEMO under an Order under section 16Y (other than a function referred to in paragraph (a)), or a power conferred on AEMO under an Order under that section, is taken to be conferred on AEMO by this Act.
The provisions of s 16Y(2) are further amplified by s 16Y(5) which provides as follows.
(5)An Order under subsection (1) may—
(a)be of limited or general application;
(b)differ according to time, place or circumstances;
(c)confer functions and powers on, or leave any matter or thing to be decided by, AEMO;
(d)apply, adopt or incorporate any matter contained in any document, whether—
(i)wholly or partially or as amended by the Order; or
(ii)as existing at the time the Order is made or at any time before then; or
(iii)as existing from time to time;
(e)contain provisions of a savings or transitional nature on the making of the Order;
(f)provide for any matter that is incidental to a matter set out in the Order or necessary to give effect to a matter set out in the Order.[37]

Section 16Y(4)

[37]Emphasis added.

The next relevant provision is s 16Y(4). It provides for the consequential disapplication or modification of the Law or Rules, as follows:
(4)Without limiting subsection (1), an Order under that subsection may—
(a)disapply, or modify the application of a provision of, the Law as a consequence of a provision of the Order that disapplies or modifies the application of another provision of the Law in respect of—
(i)a specified augmentation; or
…
(b)disapply, or modify the application of a provision of, the Rules as a consequence of a provision of the Order that disapplies or modifies the application of another provision of the Rules in respect of—
(i)a specified augmentation; or
…
Section 16Y(4) was the subject of some dispute as to its proper construction.
The applicant contended that s 16Y(4) operated so as to authorise the Minister to specify a provision of the Law or the Rules (as the case may be) that was to be disapplied or modified as a consequence of the disapplication or modification of another provision of the Law or the Rules. That is, s 16Y(4) did not operate automatically to cause such consequential disapplication or modification, it required an express identification of the provision by the Minister in the order.
In contrast, the Minister contended that s 16Y(4) operated in an automatic manner and did not require the Minister to expressly specify a particular provision of the Law or the Rules (as the case may be) in order for that provision to be disapplied or modified as a consequence of the disapplication or modification of another provision.
We consider that the proper understanding of the role s 16Y(4) plays in the scheme is that it is intended to operate in an automatic manner. That is, if a provision of the Minister’s order modifies a provision of the Law or the Rules, s 16Y(4) operates to ensure that the operation and efficacy of the order is not defeated or undermined by a failure on the part of the Minister to foresee that it would also be necessary for some other provision of the Law or the Rules to be consequentially disapplied or modified. The regime in which s 16Y operates is particularly complex. The Rules, in particular, are long and the interactions between particular rules may not be easily discerned or appreciated in advance of the time for their application. Thus, instead of requiring the Minister to specify every provision that might require disapplication or modification in order to achieve the Minister’s objective in relation to a specified augmentation, s 16Y(4) causes such consequential disapplication or modification as may be required to give effect to the order.[38]
[38]We note for completeness that the applicant also contended that s 16Y(4)(a) was subject to the limitation found in ss 16Y(1)(b) and (c), by the operation of the Anthony Hordern principle discussed below (see [112]–[113]). Thus although s 16Y(4)(a) refers in terms to ‘a provision of the Law’, it is to be understood as confined, by implication, to a provision of the Law within the declared network functions subdivision. The Minister disputed this construction. It is unnecessary for this Court to resolve this issue of construction because, for the reasons which follow, no question of consequential disapplication or modification of the Law as distinct from the Rules arises in the present case. Thus, s 16Y(4)(a) has no work to do in relation to the Orders in issue. Nonetheless, having regard to the terms of s 16ZC to which we next come, we doubt that the applicant is correct.
Thus, in this case, the Minister having disapplied rr 5.15A and 5.16.A, amongst others, the effect of s 16Y(4) is to potentially disapply or modify the application of other rules as a consequence. In particular, that would extend to the disapplication or modification of r 5.22, where such disapplication or modification was a necessary consequence of the disapplication or modification of rr 5.15A and 5.16A.
The contrary view effectively deprives s 16Y(4)(b) of any utility. On this view, it adds nothing to ss 16Y(1)(d) and (e).

Section 16ZC

Section 16ZC provides for the interaction between an order made under s 16Y on the one hand, and the Law and the Rules on the other hand. It relevantly provides as follows:
16ZC Effect of Order
(1)An Order under section 16Y has effect according to its tenor in relation to the following despite anything to the contrary in this Act or in any agreement or contract—
(a)a specified augmentation;
...
(2)To avoid doubt, section 32 applies subject to an Order under section 16Y.
(3)In addition—
(a)the Law applies as a law of Victoria in relation to—
(i)a specified augmentation subject to the Order under section 16Y specifying that augmentation; and
…
(b)the Rules have the force of law in Victoria in relation to—
(i)a specified augmentation subject to the Order under section 16Y specifying that augmentation; and
…
This section provides for an order made under s 16Y(1) to prevail over a provision in the Law (or the Rules). That outcome is achieved in interrelated ways:
(a)First, s 16ZC(1) provides for the effect of an order made under s 16Y(1), namely that it ‘has effect according to its tenor’, despite anything in the Law or the Rules.
(b)Secondly, s 16ZC(2) provides that, ‘for the avoidance of doubt, s 32 applies subject to an Order under s 16Y(1)’. Section 32 provides for the operation of AEMO’s declared network functions under the Law within Victoria.[39] These include augmentation functions under s 50F.
(c)Thirdly, s 16ZC(3) provides that the Law applies as a law of Victoria ‘subject to’ an order under s 16Y(1), and likewise the Rules have the force of law in Victoria subject to such an order.
[39]Section 32 of the NEVA provides:
32 Application of AEMO's declared network functions
Subdivision 3 of Division 2 of Part 5 of the National Electricity (Victoria) Law applies in this jurisdiction.
Note
See section 50(2) of the National Electricity (Victoria) Law.
These provisions make it abundantly clear that an order may displace the operation of the Law or the Rules in relation to a specified augmentation.
For completeness, we note that there was some dispute as to the meaning of the phrase ‘according to its tenor’. We accept the Minister’s submission that the phrase means ‘according to its drift’.[40]
[40]Cumerlong Holdings v Dalcross Properties (2011) 243 CLR 492, 501 [21] (Gummow A-CJ, Hayne, Crennan and Bell JJ); [2011] HCA 27.
The applicant submitted that s 16ZC(3) was, like s 16ZC(2), an ‘avoidance of doubt’ provision. We doubt that that is correct. But even if that were so, s 16ZC(3) makes clear the Parliament’s intention concerning the manner in which the Law and an order under s 16Y(1) relate to each other.
The applicant further submitted that s 16ZC operates only on an order ‘under s 16Y(1)’ — that is, on a valid order under that section. Thus, it said, s 16ZC was not to the point in the present case. The question in the present case is whether the Orders were authorised by s 16Y, so as to be capable of having the effects set out in s 16ZC. So much may be accepted; but that does not render s 16ZC irrelevant to the construction and operation of the legislation. In particular, s 16ZC is relevant to the construction of ss 49(2) and (3) of the Law, as applied in Victoria by the NEVA, and to which we now turn.
We have set out the steps in the applicant’s path of reasoning to contend that the Orders are invalid at [78] above. We turn to consider those individual steps.

The applicant’s step 1: Is there an implied limitation on the Minister’s power to disapply or modify a provision of the Law?

It is convenient now to turn to what the applicant identified as step 1 in its argument: namely that the power conferred on the Minister by s 16Y to disapply or modify the application of a provision of the Law extends only to those provisions in the declared network functions subdivision, and not to any other provisions of the Law. Thus, it was said, if the Minister, by order, has modified a provision outside the declared network functions subdivision, the order will be beyond power and invalid to that extent.
It is clear that the powers conferred on the Minister by ss 16Y(1)(b) and (c) to disapply or modify the Law are limited to those provisions of the Law found in the declared network functions subdivision. In light of that, we accept the applicant’s submission that s 16Y(1)(i), which confers the power to ‘regulate’ a specified augmentation, could not be used to modify a provision of the Law falling outside the declared network functions subdivision. That is because, as Gavan Duffy CJ and Dixon J explained in Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia:
When the Legislature explicitly gives a power by a particular provision which prescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power.[41]
[41]Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1, 7 (Gavan Duffy CJ and Dixon J); [1932] HCA 9.
Or, as Mason J put it more pithily in Leon Fink Holdings Pty Ltd v Australian Film Commission, ‘when a statute confers both a general power, not subject to limitations and qualifications, and a special power, subject to limitations and qualifications, the general power cannot be exercised to do that which is the subject of the special power’.[42]
[42]Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672, 678 (Mason J); [1979] HCA 26.
In this case, s 16Y(1)(i) confers a general power to regulate, which is not subject to limitation and which might, on its face, extend to disapplying or modifying the application of a provision of the Law. However, ss 16Y(1)(b) and (c) confer special powers to modify or disapply the Law, both of which are subject to a limitation concerning the particular set of provisions that may be so affected. As a consequence of the limitation within ss 16Y(1)(b) and (c), the general power in s 16Y(1)(i) cannot be exercised to disapply or modify the Law or a provision thereof.
This construction is reinforced by the fact that ss 16Y(1)(b) and (c), particularly when read with s 16ZC, which provides for the effect of orders made under s 16Y, are clauses that permit the executive to override or displace the terms of an Act of Parliament. Such clauses are often described as ‘Henry VIII clauses’. Whether ss 16Y(1)(b) and (c) are properly described as Henry VIII clauses, or as merely analogous to such a clause, is in our view neither here nor there. The real point is that these are statutory provisions that permit the executive to override the provisions of an Act. The authorities, both of the High Court and of this Court, make clear that Acts with such an effect are to be construed strictly, or narrowly, insofar as their terms permit of such a construction.[43]
[43]See, eg, Public Service Association and Professional Officers’ Association Amalgamated (NSW) v Director of Public Employment (2012) 250 CLR 343, 355 [18] (French CJ); [2012] HCA 58; Cvetanovski v The Queen (2015) 250 A Crim R 191, 200–1 [53] (Priest JA, Weinberg and Beach JJA agreeing); [2015] VSCA 65; Public Service Association and Professional Officers’ Association Amalgamated Union (NSW) v New South Wales (2014) 242 IR 338, [103]–[108] (Basten JA); [2014] NSWCA 116. See also the discussion in Perry Herzfeld and Thomas Prince, Interpretation (Thomson Reuters, 2^nd ed, 2020) 294–5 [11.40]; Dennis Pearce and Stephen Argument, Delegated Legislation in Australia (LexisNexis, 6^th ed, 2023) 411–12 [19.8].
The Minister pointed to the remarks of Gageler J in ADCO Constructions Pty Ltd v Goudappel (‘ADCO’), as follows:
The underlying legislative purpose [of the provision there in issue] is evidently to provide a flexible means of making adjustments to the savings and transitional provisions otherwise contained in Pt 19H which does not require those adjustments to be embodied in further amendments to the Act. The flexible means provided is the conferral on the executive of permission to make regulations containing such other provisions of a savings or transitional nature as may be considered by the executive to be appropriate, subject to disallowance of any provision of a regulation so made by resolution of either House of Parliament under s 41 of the Interpretation Act. That parliamentary oversight is facilitated by the requirement of s 40 of the Interpretation Act for written notice of the regulations to be tabled in both Houses of Parliament, and is enhanced by the requirement under s 4 of the Legislation Review Act 1987 (NSW) for the existence of a joint committee of members of Parliament … the functions of which include, under s 9 of that Act, considering all regulations while they are subject to disallowance and considering whether the special attention of Parliament should be drawn to any such regulation on any ground. That parliamentary oversight, together with the scope for judicial review of the exercise of the regulation-making power, diminishes the utility of the pejorative labelling of the empowering provisions as ‘Henry VIII clauses’. The empowering provisions reflect not a return to the executive autocracy of a Tudor monarch, but the striking of a legislated balance between flexibility and accountability in the working out of the detail of replacing one modern complex statutory scheme with another.[44]
[44]ADCO Constructions Pty Ltd v Goudappel (2014) 254 CLR 1, 25 [61] (Gageler J) (emphasis added); [2014] HCA 18.
It may be accepted that Gageler J there suggested that the strict approach to construction of Henry VIII clauses was of diminished utility in that case. However, we consider that his Honour’s remarks have limited application to the provision in issue in the present case. That is because the provision in issue in ADCO was subject to significant Parliamentary oversight through the mechanism of disallowance by one House of the Parliament. In contrast, the Orders in issue in the present case are not subject to such oversight because s 16ZG provides that an order under s 16Y ‘is not a legislative instrument for the purposes of the Subordinate Legislation Act 1994’.
Thus, we accept what the applicant characterised as ‘step 1’ of its argument.

The applicant’s step 2: How do ss 49(2)(a) and (e) interact with the Rules concerning preparation of an ISP?

We now turn to the second step in the applicant’s argument concerning s 49 of the law, which confers various functions on AEMO. Step 2, it may be recalled, was that ss 49(2)(a) and (e) of the Law fall outside the declared network functions subdivision and that they confer functions on AEMO as National Transmission Planner with respect to the preparation, maintenance and publication of an ISP in accordance with the Rules.
Relevantly, s 49(2) confers functions on AEMO in its role as National Transmission Planner, including:
(a)to prepare, maintain and publish a plan for the development of the national transmission grid (the National Transmission Network Development Plan) in accordance with the Rules;
…
(e)any other functions conferred on AEMO under this Law or the Rules in its capacity as National Transmission Planner.
There was no dispute that s 49 is outside the declared network functions subdivision. Rather, this aspect of the applicant’s argument focused on the functions conferred on AEMO by ss 49(2)(a) and (e), and the relationship of those functions with the function of preparing, maintaining and publishing an ISP, found in r 5.22.
The applicant contended that the function of preparing, maintaining and publishing a ‘plan for the development of the national transmission grid’, which was defined as the NTNDP, is now properly understood as the function of preparing, maintaining and publishing an ISP pursuant to r 5.22. That is because, it submitted, the term NTNDP has been replaced by the term ISP in the Rules; but, in substance, an ISP is a ‘plan for the development of the national transmission grid’, and the change in language is immaterial. The applicant relied on the terms of the new Rules in support of this contention, and on extrinsic materials. In effect, it submitted, r 5.22 and its sub-rules, which requires and regulates the preparation of an ISP, are the rules to which s 49(2)(a) refers. In this regard we note that r 5.22.18 provides:
5.22.18 [National Transmission Planner] Functions
(a)Paragraph (b) has effect for the purposes of section 49(2)(e) of the [National Electricity Law].
(b)The [National Transmission Planner] functions also include the following:
(1)developing any forecasts of electricity demand at a regional or connection point level; and
(2)AEMO’s functions relating to an Integrated System Plan under clause 5.14.4 and rules 5.16A, 5.22 and 5.23.
(c)AEMO’s preparation and publication of Integrated System Plans is undertaken pursuant to, and in satisfaction of, AEMO’s [National Transmission Planner] functions under sections 49(2)(a) to (d) of the [National Electricity Law].[45]
[45]Emphasis in original.
We accept the applicant’s submission that the function of preparing, maintaining and publishing a ‘plan for the development of the national transmission grid’ is now properly understood as the function of preparing, maintaining and publishing an ISP pursuant to r 5.22. Alternatively, if this conclusion is incorrect, then the preparation and publication of an ISP are functions performed under s 49(2)(e).
More importantly, the applicant contended that the word ‘Rules’, when used in these paragraphs of s 49(2)(a) and (e), relevantly means the Rules as made or amended by the South Australian Minister from time to time (and to that extent — but that extent only — accepted that the term ‘Rules’ is ambulatory). That submission was based on the definition of the Rules in s 2 of the Law.[46] As a consequence of that definition, the applicant contended that the Rules referred to in s 49(2) are not the Rules in force in Victoria as modified by reason of s 16ZC(3) of the NEVA.
[46]Section 2 of the Law provides:
National Electricity Rules or Rules means—
(a)the initial National Electricity Rules; and
(ab)additional Minister initiated Rules; and
(b)Rules made by the AEMC under this Law, including Rules that amend or revoke—
(i) the initial National Electricity Rules or additional Minister initiated Rules; or
(ii) Rules made by it;

It follows that proposed ground 1 must fail.

Proposed Ground 2

Proposed ground 2 of appeal relates to judicial review ground 6:
Ground 6 (May Order) – no power to require AEMO (with Transgrid) to publish a ‘PACR’ that deviates from the ordinary requirements of clause 5.16A.4 of the Rules; no power to dictate or direct what AEMO (or Transgrid) must assess or identify to be the ‘preferred option’
54.Clause 4.4 of the May Order provides that ‘AEMO is conferred the function of preparing and publishing a PACR with Transgrid for VNI West’, where ‘PACR’ is defined in clause 2 as meaning ‘a project assessment conclusions report setting out an assessment of the options for VNI West required to be published under clause 4.4 of this Order’.
55.Clause 4.5 of the May Order provides that ‘[f]or the purposes of the PACR for VNI West to be published under clause 4.4, AEMO is required to identify the augmentation specified in clause 3.2 as the preferred option’.
56.However, the Minister has no power, whether under section 16Y of the NEVA or otherwise:
(a)to require AEMO ‘with Transgrid’ to publish a ‘PACR’, insofar as ‘PACR’ is defined in clause 2 of the May Order in terms that deviate from what would be the ordinary requirements of clause 5.16A.4 of the Rules for the publication of a ‘project assessment conclusions report’ as applied by both the NEVA and the NENA; or
(b)to dictate that AEMO (whether alone or with Transgrid) must assess that the works specified in Schedule 1 (where Schedule 1 describes works that were described as ‘Option 5A’ and the ‘preferred option’ in the VNI West PACR later published by AEMO with Transgrid) are ‘the preferred option’, or to direct that AEMO (whether alone or with Transgrid) must identify such work as ‘the preferred option’,
including in circumstances where the VNI West is identified in the 2022 ISP as a single project with AEMO and Transgrid as co-proponents, and where AEMO and Transgrid have together published the VNI West PSCR and VNI West PADR in accordance with the Rules as applied by both the NEVA and the NENA.
57.Accordingly:
(a)the May Decision is affected by a jurisdictional error such that it is amenable to being quashed by an order in the nature of certiorari; and
(b)if the May Decision is quashed, or is affected by jurisdictional error, then the May Order has no legal effect.
Proposed ground 2 is that the trial judge erred:
(a)in rejecting the applicant’s contention that, in relation to the May Order, the Minister had no power to dictate that AEMO ‘with Transgrid’ must publish a certain document defined as a ‘PACR’ by the May Order;
(b)in rejecting the applicant’s further contention that, in relation to the May Order, the Minister had no power to dictate that AEMO, in publishing the so-called ‘PACR’, must identify what was set out in Schedule 1 of the May Order as the ‘preferred option; and
(c)in rejecting the applicant’s contention that the May Order was inconsistent with/repugnant to s 49(3) of the Law.
The May Order identified the augmentation that it sought to regulate in the following terms:
3.1 The carrying out of all works to construct a new high-capacity transmission line between Victoria and New South Wales connecting the Western Renewables Link with Project Energy Connect to meet the identified need described in the VNI West PADR and all associated works, insofar as such works are an augmentation of the declared transmission system, is a specified augmentation for the purposes of Division 7 of Part 3 of the Act (VNI West).
3.2 Without limiting clause 3.1, the carrying out of all works specified in Schedule 1 is a specified augmentation for the purposes of Division 7 of Part 3 of the Act, insofar as such works are an augmentation of the declared transmission system.
The works referred to in clause 3.2 are specified in Schedule 1. Schedule 1 describes works to be undertaken entirely within Victoria as part of the VNI West project as follows:
SCHEDULE 1
PREFERRED OPTION – VNI WEST
Construction of a new 500 kV double-circuit overhead line from a new terminal station near Kerang to Dinawan crossing the Murray river north of Kerang to Bulgana Terminal Station (BGTS), including series compensation on the line near Kerang and 500 kV line shunt reactors at both ends of each 500 kV line segment.
Construction of a new terminal station near Kerang, with two 500/220 kV 1,000 MVA transformers and up to +/- 400 MVAr dynamic reactive compensation on the 220 kV network.
Construction of 220 kV connections from the new terminal station near Kerang to the existing 220 kV lines near Kerang.
Construction of two new 500 kV bays and line exits with a total of two 500 kV line shunt reactors at the BGTS.
Modular power flow controllers or other equipment to prevent overloading on 330 kV lines between Upper/Lower Tumut and South Morang and 220 kV lines between Dederang and Thomastown.
Minor augmentations at existing terminal stations impacted by the above works.
Refinement to the works specified above required as a result of further investigation, design and planning.
Any works consequential, or related, to those specified above.
The May Order requires AEMO to do the following:
4.1 AEMO must carry out the functions in respect of VNI West conferred on it by this Order under clause 4.4.
…
4.4 AEMO is conferred the function of preparing and publishing a PACR with TransGrid for VNI West.
4.5 For the purposes of the PACR for VNI West to be published under clause 4.4, AEMO is required to identify the augmentation specified in clause 3.2 as the preferred option.
In other words, AEMO, which is an RIT-T proponent of the VNI West augmentation, is required to prepare and publish a ‘PACR’ identifying Option 5A as the preferred option for the Victorian section of the VNI West augmentation. It must do so ‘with Transgrid’ as co-proponent.
However, the May Order does not purport to confer any function on Transgrid or to require Transgrid to do anything in particular.

The trial judge’s decision

At trial, the applicant submitted that:
(a)the Minister did not have the power to make an order in the terms of cls 4.1 and 4.5, as the NEVA does not permit the Minister to require AEMO and Transgrid to adopt a PACR that does not conform with the requirements of the National Electricity Rules;
(b)s 16Y(1) does not confer power on the Minister to make an order directing AEMO to select Option 5A as the preferred option in the VNI West PACR; and
(c)by specifying Option 5A as the preferred option, the Minister required AEMO to act in a manner repugnant to its duty to consider the National Electricity Objective.
The trial judge accepted the Minister’s submission that there were a number of sources of power to make an order that AEMO prepare a ‘PACR’ and directing AEMO to select Option 5A as the preferred option. The power in s 16Y(1)(i) of the NEVA enabled the Minister to make an order to ‘regulate’ a specified augmentation. This included a power to make an order stipulating the preferred option to be selected in relation to that augmentation. Sections 16Y(2)(c) and 16Y(5)(c) also conferred power on the Minister to stipulate a preferred option in relation to a specified augmentation. Section 16Y(2)(c), by using the words ‘matters or things’, encompassed the power to make an order specifying option 5A as applying in relation to the VNI West project. Furthermore, the reference to the ‘conferral of a function’ in contradistinction to ‘leav[ing] any matter or thing to be decided by AEMO in s 16Y(5)(c) indicated that the conferral of a function may include a mandatory function.[56]
[56]Reasons, [251]–[254].
As to whether the Minister could require AEMO and Transgrid to publish the VNI West PACR specifying Option 5A as the preferred option, the trial judge accepted the Minster’s submission that it was always within Transgrid’s power to elect not to publish the VNI West PACR with AEMO. The consequence of such a decision would be that AEMO could not fulfil its obligation under cls 4.1 and 4.5 of the May Order. However, that was not what occurred. Transgrid elected to publish the VNI West ‘PACR’ with AEMO.[57] The trial judge recognised that the practical effect of the May Order on Transgrid was that Option 5A was the only option which could be selected as the preferred option in the VNI West PACR. This affected the circumstances in which Transgrid’s obligations under the law of New South Wales had to be exercised. However, it did not alter Transgrid’s obligation to apply the law of New South Wales in discharging its functions.[58]
[57]Reasons, [247].
[58]Reasons, [248].
As to whether the directive in the May Order was inconsistent with AEMO’s obligation to consider the National Electricity Objective, the applicant submitted that s 49(3) required AEMO ‘in carrying out the functions referred to in [that] section’ to ‘have regard to the [National Electricity Objective]’, and that a relevant function in s 49(1)(h) was a function ‘conferred by jurisdictional electricity legislation or an application Act’. However, while AEMO, in carrying out its functions under the May Order, had to have regard to the National Electricity Objective, cl 4.5 of the May Order precluded AEMO from having regard to any evaluative matter. In this way, the directive in the May Order was inconsistent with AEMO’s obligation under s 49(3) to ‘have regard to’ the National Electricity Objective in carrying out its functions.[59]
[59]Reasons, [246].
The trial judge rejected this submission. His Honour held that the obligation under s 49(3) was to ‘have regard to’ the National Electricity Objective in the exercise of functions limited to functions involving evaluative decision‑making undertaken by AEMO. The stipulation in cl 4.5 of the May Order requiring AEMO to select Option 5A as the preferred option did not require AEMO to undertake any evaluation. There was therefore no conflict between AEMO’s obligation under s 49(3) to consider the National Electricity Objective.[60]

Submissions

[60]Reasons, [247].

On the application for leave to appeal, the applicant submitted that the May Order is invalid because the Minister had no power to require AEMO ‘with Transgrid’ to publish a so‑called ‘PACR’ that deviates from the ordinary requirements of r 5.16A.4 of the Rules and, in any event, had no power to dictate what AEMO must assess or identify as the ‘preferred option’ in that ‘PACR’. It submitted that the Rules operate such that VNI West is a single ‘actionable ISP project’ for which AEMO and Transgrid together constitute a single ‘RIT‑T proponent’. However, the May Order only confers a function on AEMO and not Transgrid. Notwithstanding this, the Minister has purported to give AEMO the function of preparing a so‑called ‘PACR’ (not being a PACR as defined in the Rules) ‘with Transgrid’ and to dictate the result of the ‘PACR’.
According to the applicant, there are two legal problems with the course the Minister adopted in making the May Order as it applies to Transgrid:
(a)The Minister has purported to require AEMO to procure Transgrid’s assent to the so‑called ‘PACR’. However, just as the Minister could not compel Transgrid, she could not achieve the same result indirectly by dictating AEMO procure Transgrid’s assent.
(b)It begged the question to find, as the judge did, that Transgrid could lawfully have declined to publish the so‑called ‘PACR’. The Minister could not lawfully oblige AEMO to procure Transgrid’s assent to the PACR.
As to s 49(3) of the Law, the applicant submitted that the Minister could not and did not disapply s 49(3) of the Law. The functions referred to in s 49(3) included any functions that Victoria, as an adoptive jurisdiction, conferred on AEMO under the NEVA. As s 49(3) of the Law is part of the law of Victoria, it follows that, with respect to any function that the Minister confers on AEMO under s 16Y, AEMO must, in carrying out that function, have regard to the National Electricity Objective. Expressly, cls 4.1 and 4.4 of the May Order confer a ‘function’ on AEMO, but in such a way that precludes compliance with s 49(3). While the applicant accepted that the ‘function’ conferred on AEMO is not ‘evaluative’, it contended that it is that very deprivation, caused by the Minister’s dictation, that makes the May Order repugnant to s 49(3) and therefore to the NEVA. In short, the scheme is that AEMO cannot be given a ‘function’ that makes it a mere instrument of the Minister. The effect of the May Order is to disapply the rule that requires an evaluative assessment that must be conducted in accordance with s 49(3), which is to strip out a function that requires AEMO to have regard to the National Electricity Objective and replace it with a function that does not allow it to do so.

Consideration – The direction to act ‘with Transgrid’

By conferring on AEMO the function of preparing and publishing a PACR ‘with Transgrid’, the Minister did not purport to decree that the PACR, as defined in cl 2 of the May Order, is a ‘PACR’ for the purposes of the Rules. By cl 5.2(b) of the May Order, the Minister expressly disapplied r 5.16A of the Rules, with the consequence that AEMO was not required to conduct a PACR for the VNI West augmentation in accordance with r 5.16A. The PACR required by the May Order was defined in cl 2 to mean ‘a project assessment conclusions report setting out an assessment of the options for VNI West required to be published under clause 4.4 of this Order’. The requirement for this ‘PACR’ to identify Option 5A as the preferred option was then prescribed by cl 4.5 ‘for the purposes of the PACR for VNI West to be published under clause 4.4’. The words ‘with Transgrid’ in cl 4.4 do not change the nature of the PACR that AEMO was required to publish by the May Order.
Furthermore, ss 16Y(1)(b)–(e) empowered the Minister to disapply or modify the requirements of the NEVA concerning AEMO’s declared network functions and all of the Rules. The effect of the order disapplying r 5.16A.4 was that there is no prescribed procedure for identifying the preferred option for the declared transmission system. In light of the Minister’s power of disapplication, the further power in s 16Y(1)(i) to ‘regulate’ the specified augmentation must be construed as including the power for the Minister to identify the preferred option directly. Textually, the term ‘regulate’ is sufficiently broad to encompass such a course.
The May Order did not direct Transgrid to prepare a PACR ‘with AEMO’. Nor did it direct Transgrid as to the preferred option. Clause 4.5 of the May Order, made pursuant to legislation of the Victorian Parliament, was only directed to AEMO as the proponent of the augmentation of the declared transmission system, which was wholly within Victoria.
The applicant contended that the May Order would ‘oblige AEMO to procure Transgrid’s assent … with AEMO at pain of penalty for non-compliance’. It submitted that the combined effect of s 16ZD(vi) of the NEVA and pt 6 of the Law is that civil penalties may flow to a person who has ‘breached a provision of’ a s 16Y Order.[61] It submitted that AEMO would have breached the May Order if Transgrid had declined to prepare the PACR as contemplated in cls 4.1, 4.4 and 4.5 of the May Order.
[61]See also Law, ss 61(1)–(2).
We do not accept that submission. As the respondent submitted, those clauses are to be construed according to ‘the general principles relating to the interpretation of Acts of Parliament’.[62] These include the principle that provisions will not be interpreted as requiring that which appears irrational or unjust, or would be impossible or impracticable.[63]
[62]Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389, 398 (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ); [1996] HCA 36; Disorganized Developments Pty Ltd v South Australia (2023) 97 ALJR 575, 580–1 [14] (Kiefel CJ, Gageler, Gleeson and Jagot JJ); [2023] HCA 22.
[63]Uelese v Minister for Immigration and Border Protection (2015) 256 CLR 203, 217 [45] (French CJ, Keifel, Bell and Keane JJ), 232 [100] (Nettle J); [2015] HCA 15.
Furthermore, what cl 4.1 mandates is not that AEMO achieve some result, but that it carry out the functions in cls 4.4 and 4.5 in the sense of exercising its powers and discharging its duties under cls 4.4 and 4.5 to their intended end.
In all of those circumstances, a practical failure to procure Transgrid’s assent to the steps contemplated in cls 4.1, 4.4 and 4.5 would not constitute a breach of the clauses capable of incurring civil penalties.
It follows that the fact that the May Order referred to a function being undertaken ‘with Transgrid’ was not beyond power.

Consideration – Section 49(3)

Section 49(3) of the Law requires AEMO, in carrying out functions referred to in s 49, to have regard to the National Electricity Objective, which is set out in s 7 of the Law.
The functions conferred on AEMO by s 49 are its statutory functions — including in relation to the management of the wholesale exchange[64] and functions conferred by jurisdictional electricity legislation or an application Act[65] — and its functions in its role as National Transmission Planner under s 49(2). The NEVA (including s 16Y) is an ‘application Act’ as defined.[66] AEMO’s functions also include ‘any other functions conferred under this Law or the Rules’.[67] In Victoria, AEMO has conferred upon it declared network functions under the declared network functions subdivision.
[64]Law, ss 49(1)(a), (b).
[65]Law, s 49(1)(h).
[66]See Law, s 2 definition of ‘application act’:
application Act means an Act of a participating jurisdiction that applies, as a law of that jurisdiction, this Law or any part of this Law;
[67]Law, s 49(1)(i).
However, the May Order disapplied some of those declared network functions in respect of the specified augmentation. In particular, the May Order disapplied ss 50F(2) and 50F(3) of the Law, which set out what AEMO must do (as part of its declared network functions) in deciding whether a proposed augmentation should proceed. Instead, AEMO was required to provide a PACR supporting the same conclusion as the draft PACR that it had previously forwarded to the Minister.
Section 49(3) requires no more than that regard be had to the National Electricity Objective when AEMO is carrying out its functions under s 49 of the Law. There is nothing to suggest that in order to have regard to the National Electricity Objective it is necessary to carry out the RIT-T process for a specified augmentation. Correlatively, it cannot be said that in not carrying out the RIT-T process for the specified augmentation, AEMO failed to have regard to the National Electricity Objective.
Indeed, there is nothing in the evidence to suggest that AEMO, in preparing the PACR pursuant to the May Order, did not ‘have regard to’ the National Electricity Objective as relevant to the considerations which should be addressed in the PACR. Rather, as we read the PACR, AEMO sought to identify both the extent to which its conclusions gave effect to the National Electricity Objective and the extent to which its conclusions gave effect to other factors. Thus, the PACR set out how the RIT-T analysis for VNI West had been updated since the July 2022 PADR. It further undertook a net market benefit analysis with regard to two credible options. Ultimately, it concluded that on a scenario weighted net market benefit basis Options 5 and 5A effectively ranked equally. Option 5 (crossing the Murray near Echuca) was expected to deliver net benefit of approximately $1,374 million net present value while Option 5A (crossing the Murray north of Kerang) was found to have a net benefit of approximately $1,371 million net present value (0.2 per cent less than Option 5). This assessment is plainly directed to the substance of the National Electricity Objective.

Finally, the contention that the May Order is inconsistent with s 49(3) of the Law ignores the effect of ss 16ZC(1) and 16ZC(3)(a)(i), which remove the possibility of any such conflict.

Conclusion

Proposed grounds 1 and 2 are not reasonably arguable and have no real prospect of success. Leave to appeal will be refused.
---

Annexure 1

Victoria Government Gazette, 20 February 2023, Order

Annexure 2

Victoria Government Gazette, 27 May 2023 Order

[2024] VSCA 201

13 September 2024