The ACCC is vested with powers to arbitrate telecommunications access disputes and make a final binding determination to resolve a dispute. Arbitration hearings are private and the ACCC generally does not make any public comment on disputes except to announce when a dispute has been notified. No new access disputes were notified to the ACCC in April
Division 5 of Part XIC of the Trade Practices Act enables access providers to voluntarily lodge written access undertakings with the ACCC specifying the terms and conditions upon which they agree to supply a specified service. The ACCC can accept or reject the undertaking. The list of undertakings currently before the commission is on the ACCC website.
ACCC rejects Vodafone undertaking for mobile terminating access service (MTAS)
On 31 March 2006 the ACCC released its final decision to reject the access undertaking submitted by Vodafone for the supply of the MTAS on its second generation GSM network.
The ACCC rejected the undertaking because the terms and conditions contained within it are not reasonable. Vodafone's price terms proposed that the access price of the MTAS on its 2G network should trend toward a 'target' price of 16.15 cents per minute over the period 2005–07. The price terms are based on cost modelling undertaken by consultants on Vodafone's behalf.
The ACCC had concerns with Vodafone's methodology which have led it to the conclusion that Vodafone's proposed prices for its MTAS are likely to significantly overstate the efficient costs of providing the service in Australia.
ACCC draft decision to reject Hutchison's undertakings for mobile terminating access service
On 21 April the ACCC announced its draft decision to reject the access undertakings submitted by Hutchison Telecommunications (Australia) Limited and Hutchison 3G Australia Pty Ltd for the supply of the MTAS on its second generation and third generation GSM network.
Hutchison put forward three undertakings, two on the supply of MTAS for mobile to mobile calls and one on the supply of MTAS for fixed to mobile calls.
The ACCC has rejected the series of undertakings because some of the terms and conditions are not reasonable. The undertakings proposed different rates for the supply of the MTAS across each of the undertakings. The different pricing structure reflected factors such as if Hutchison could secure reciprocal pricing arrangements with other mobile operators and the network on which the call originated.
The ACCC seeks submissions from interested parties on its draft view by no later than 12 May 2006.
ACCC rejects Telstra undertaking for LSS connection and disconnection charges
On 4 April the ACCC issued its final decision on Telstra's Line Sharing Service (LSS) connection and disconnection charges undertaking.
The LSS provides access to part of the basic copper wire of Telstra's customer access copper network, allowing competing carriers to provide their own broadband services to end-users while Telstra continues to provide voice services.
It is an important element in the development of infrastructure-based competition in Australian telecommunications.
The ACCC has concluded that Telstra's proposed LSS connection and disconnection charges are well above the appropriate costs for this service. The ACCC is also of the view that it is not appropriate for a separate disconnection charge to be levied in all cases as proposed by Telstra.
The ACCC also remains concerned that the undertaking does not provide sufficient certainty to access seekers that charges for larger scale 'managed network migrations' would not be covered by the undertaking. While Telstra has provided assurances that it would not seek to apply the undertaking charges indiscriminately to all connections, the ACCC is still of the view that it would be preferable if this was made clear in the terms of the undertaking itself.
ACCC issues Part A competition notice over wholesale line rental
On 12 April 2006 the ACCC issued a Part A competition notice in relation to Telstra's wholesale line rental price increase.
In December 2005 Telstra raised the price of its Home Access product, which is an input used by Telstra's wholesale customers to provide line rental and local call services to consumers. The price increase resulted in Telstra's retail prices for the line rental component for the majority of its fixed voice products being below Telstra's wholesale price for line rental.
The ACCC considers the effect or likely effect of Telstra's pricing conduct includes:
hindering Telstra's retail competitors from competing for certain types of customers
reducing the incentives for Telstra's retail competitors to compete for new or existing customers
reducing the ability of Telstra's retail competitors to expand product offerings and invest in infrastructure.
The competition notice allows third parties to take action to seek to recover loss or damage for certain anti-competitive conduct that occurs while the notice is in force. It also provides various options for the resolution of the ACCC's competition concerns. Further action by the ACCC will depend on several factors, including the outcome of the continuing investigation as well as any action taken by Telstra in response to the notice.
Accounting separation reports
ACCC issues Telstra accounting separation report for December quarter 2005
The accounting separation regime was introduced to address competition concerns arising from the level of vertical integration between Telstra's wholesale and retail services. It also aims to improve the provision of price and cost information to the ACCC, competing telecommunications providers and the public.
Fibre to the node developments
ACCC reassures industry on fibre to the node discussions with Telstra
The ACCC issued a media release on 12 April reassuring the telecommunications industry and the public that decisions about access to any fibre to the node network would only be made after public scrutiny and due process.
On 15 March 2006, the AER released a scoping paper, initiating public consultation on the development of regulatory guidelines for gas and electricity distribution businesses. This consultation aims to address issues that are unlikely to be affected by the changing legislative structure or where a clear direction has been identified in the current reviews. The scoping paper is available on the AER’s website.
The paper envisages the release, in three stages, of consultation papers with indicative timeframes as illustrated below.
Discussion paper
Draft decision
Final decision
Stage 1
Scoping paper
March 2006
No draft
June 2006
Stage 2
PTRM and roll forward model
Incentive mechanism for opex
Cost allocation methodology
Information requirements
July 2006
Late 2006
Early 2007
Stage 3
Connection and capital contribution
Service standards
Tariff setting
Ring fencing
Late 2006
Early 2007
Mid 2007
Submissions on the scoping paper were due on 5 May 2006.
The AER was to meet with all electricity distribution businesses after the Easter break to discuss the scoping paper and obtain informal feedback on the paper. Calls on NSW and ACT electricity distributors will also discuss the upcoming distribution reviews.
The AER is also planning the first meeting of a working group between the AER and the Energy Networks Association (ENA) to advise on detailed elements of the AER’s approach to distribution regulation. ENA have nominated representatives from AGL, SP AusNet, Ergon, Energex and Integral Energy to participate in the working group.
The AER has sent letters to the heads of all relevant jurisdictional regulators inviting them to participate in a working group with the AER to conduct ongoing informal consultation on distribution regulation issues. The AER has received several positive responses from regulators and expected the first meeting of the working group to be held in May 2006.
Under the National Electricity Rules the AER is responsible for regulating the revenues associated with the non-contestable elements of the transmission services provided by Powerlink Queensland (Powerlink). The current revenue cap decision for Powerlink ends on 30 June 2006. Therefore, the AER is required to set Powerlink’s revenue cap for a five-year period from 1 July 2007 to 30 June 2012.
On 3 April 2006 Powerlink submitted its revenue cap application to the AER. Powerlink’s application is available on the AER’s website.
On 20 April 2006 the AER hosted a public forum in Brisbane for interested parties on Powerlink’s application. Powerlink and the Energy Users Association of Australia (EUAA) presented at the forum. Interested parties were provided with the opportunity to ask questions of Powerlink and the AER. A copy of the minutes of the meeting and presentation slides are available from the AER’s website.
The AER is currently reviewing Powerlink’s application and, once satisfied that it meets its information requirement guidelines, the AER will begin formal consultation on it.
Electricity regulatory report for 2004–05
The Australian Energy Regulator (AER) has released the 2004–05 electricity regulatory report covering transmission network service providers in the National Electricity Market.
The ACCC issued reports in 2004 and 2005 that provided revenue, profit, expenditure and service standards information on transmission businesses. The businesses covered in this report are ElectraNet, EnergyAustralia, Murraylink, Powerlink, SPI PowerNet, Transend, TransGrid and VENCorp.
The AER continues to publish weekly market analyses that set out the spot price for each 30-minute trading interval in each region of the National Electricity Market. These weekly reports highlight wholesale market prices more than three times the weekly average. They compare the demand and price forecasts published by NEMMCO four and twelve hours ahead of despatch with actual outcomes and publish the most probable reasons for significant variations between actual and forecast prices. Those reports are available on the AER’s website.
The current compliance program targets 24 specific Rules provisions each year. The aim is to ensure compliance by focussing participants on their obligations under the Rules.
For each targeted provision, staff investigate the extent of compliance with the provision either for all, or for a sample of, market participants.
Service standards compliance review for 2005
On 28 April 2006 the AER completed its service standards compliance review for the 2005 calendar year. Six transmission network service providers were reviewed in relation to service standards by the AER and the AER’s expert consultant, Sinclair Knight Merz (SKM). These TNSPs were SP AusNet, TransGrid, EnergyAustralia, Murraylink, Transend and ElectraNet.
The AER’s submission covers these issues in detail and also provides an analysis of other elements of the AEMC’s package, including the new definition of prescribed services.
ACCC energy
GasNet’s application
On 23 December 2005 GasNet lodged an application under s. 8.21 of the Gas Code seeking the ACCC’s agreement that forecast capital expenditure (new facilities investment) in constructing the Corio Loop will meet the requirements of s. 8.16(a) of the Gas Code for roll-in to GasNet’s capital base. The effect of such an agreement would be to bind the ACCC’s decision when it considers revisions to GasNet’s access arrangement in 2007. This is the first application of this nature made to the ACCC.
GasNet is the owner-operator of the Principal Transmission System (PTS) which delivers gas throughout Victoria. VENCorp, the independent system operator of the PTS, identified in its annual planning review a major system capacity constraint facing the PTS in winter 2008, and recommended that GasNet undertake a major system augmentation to ensure that the PTS has sufficient useable system linepack (volume of gas) to cover supply–demand imbalances at this time.
VENCorp identified several ways to achieve the required augmentation and, after a cost–benefit analysis, has recommended the extension of the southwest pipeline from Lara to Brooklyn (Corio Loop). The proposed project involves construction of a 57 km, 500 mm diameter pipeline, running from the Brooklyn compressor station for 12 km using an existing easement, and then along a greenfields route to meet the southwest pipeline in Lara.
On 5 April 2006 the ACCC released a draft decision after considering GasNet’s application and submissions from interested parties. The ACCC’s draft decision has assessed that the Corio Loop provides system-wide benefits that justify a tariff increase to all users and has assessed the prudent costs of the Corio Loop to be $62.5 million.
Interested parties were invited to make submissions on the draft decision by Friday 28 April 2006. The ACCC is considering submissions received on the draft decision, and expects to release a final decision no later than June 2006.
