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. Details of determinations made can be accessed on the public register. View further information here.
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.
View the list of undertakings currently before the ACCC here.
Declared services
Part XIC of the Trade Practices Act enables the ACCC to ‘declare’ telecommunications services. Upon declaration, standard access obligations apply. The access provider is obliged to supply the service to an access seeker upon request. The ACCC has the ability to vary or revoke declarations, but with the exception of minor changes, must hold a public inquiry ahead of such changes.
ACCC’s final decision on Telstra’s ULLS monthly charge undertakings
The ACCC issued its final decision on Telstra’s unconditioned local loop service (ULLS) undertaking on 28 August 2006. The final decision to reject the undertaking confirms the draft decision issued on 15 June 2006.
In relation to the finding on the reasonableness of the terms and conditions, the ACCC has concluded on an overall basis that the proposed price and non-price terms and conditions contained in the undertakings:
are unlikely to promote the long-term interests of end-users (LTIE), as they will not promote competition and will not encourage the economically efficient use of, and investment in, infrastructure
result in Telstra recovering more than is necessary to promote Telstra’s legitimate business interests
would harm the interest of access seekers and the persons who have rights to use the service
exceed the direct costs of providing access
do not have a material effect on the operational and technical requirements necessary for the safe and reliable operation of telecommunications services
are not likely to facilitate the economically efficient operation of the ULLS.
Accordingly, the ACCC’s view is that it is not satisfied that the terms and conditions specified in the undertaking are reasonable.
The ACCC’s final decision is therefore to reject Telstra’s undertakings.
An access dispute has been notified to the ACCC under Part XIC of the Trade Practices Act.
Macquarie Telecom Pty Limited has notified the ACCC of an access dispute with Telstra Corporation Limited.
This access dispute relates to the price paid by Macquarie for the ULLS supplied by Telstra.
Telstra’s decision on fibre-to-the-node investment
Telstra decided to discontinue talks with the ACCC over Telstra's proposed fibre-to-the-node (FTTN) network upgrade.
Since day one of discussions the ACCC has recognised the benefit of any proposal to extend the reach of existing high-speed broadband to more Australians. But the ACCC must also consider proposals such as Telstra’s in accordance with the requirements of the Trade Practices Act. The central objective of that law is to promote the long-term interests of 20 million Australian end-users.
The ACCC last received documentation from Telstra on a FTTN access service and its pricing for this new service in late June, and was awaiting details on a transition plan for access seekers from current unconditioned local loop arrangements. Telstra had previously said that the discussions between it and the ACCC were '98 per cent' complete.
ACCC and ACMA to work together on industry data collection
The Australian Communications and Media Authority (ACMA) and the ACCC have agreed to work together to streamline and coordinate industry data collection practices.
The two agencies will identify overlaps in industry data requests, develop proposals for sharing data and explore opportunities for joint reporting.
Both ACMA and the ACCC will initiate discussions with industry on ways to streamline industry information requests.
As part of this new collaborative process, ACMA and the ACCC are proposing to produce an inaugural joint report on communications infrastructure that will focus on the location of infrastructure and the state of the market for telecommunications services.
The joint report is designed to leverage off the expertise of both agencies and is intended to assist the assessment of regional service adequacy by the Regional Telecommunications Independent Review Committee, to be convened in 2008. The review committee forms part of the government's future-proofing arrangements for regional telecommunications services.
The ACCC has published an information paper on the pricing of Telstra's key wholesale services and dependent retail services.
The paper comprises a 'retail pricing protocol' and is published as part of the government's operational separation regime.
It outlines the ACCC's views on assessing potentially anti-competitive behaviour in telecommunications markets and on the concept of 'price equivalence', which is an important element of the operational separation of Telstra.
The retail pricing protocol seeks to promote equivalent pricing across Telstra's wholesale and retail businesses. It provides details on the nature and timing of the calculations that Telstra should make in the course of its pricing decisions, and the information concerning those calculations that it should make public. However, the protocol is not binding on Telstra.
On 31 August 2006 the ACCC released its draft decision on APT Petroleum Pipelines Limited’s (APTPPL) revised access arrangement for the Roma to Brisbane Pipeline (RBP). In making its decision the ACCC consulted the AER. The draft decision proposes not to approve the revised access arrangement in its current form and sets out the amendments required for approval.
This decision is the first assessment of the RBP reference tariff by the ACCC under the National Third Party Access Code for Natural Gas Pipeline Systems (the code). Previously the tariff was set by the Queensland Government according to its transitional arrangements.
The initial capital base determined by the ACCC is $250.63 million compared to the proposed ICB of $346.2 million. The net present value of costs depreciated optimised replacement cost (DORC) methodology proposed by APTPPL for calculating the ICB was not accepted by the ACCC. Instead it adopted the straight line approach to calculate the DORC. In addition, it deducted the value of past expansions of the pipeline that have been funded by users of the RBP.
The ACCC also proposed changes to the weighted average cost of capital (WACC), the allowance for non-capital costs and the reference tariff, with the post-tax nominal return on equity set at 11.92 per cent and the nominal vanilla WACC at 9.02 per cent. The ACCC accepted APTPPL’s proposal that the only reference service to be offered for the access arrangement period would be for firm forward haul and that it would only apply to the services provided using the existing capacity of the RBP.
Access to additional services such as back haul, interruptible and park and loan will be through negotiation, backed by the availability of the code’s dispute resolution provisions. APTPPL is expected to have a strong incentive to develop and market these services as any revenue it receives from them is in addition to its benchmark revenue.
APTPPL has agreed to investigate developing an electronic bulletin board to assist users to identify opportunities for trading, risk mitigation and investment.
The ACCC invited interested parties to make submissions on its draft decision by 25 September 2006. It will take these into consideration in making its final decision.
National Electricity Market monitoring and enforcement
$20 000 penalty imposed on AGL
The AER imposed a civil penalty of $20 000 on AGL Hydro Partnership over its use of the inflexibility and rebidding provisions of the National Electricity Rules with respect to its MCKAY1 generating unit on 22 March 2006.
The AER issued an infringement notice alleging that AGL Hydro breached clause 3.8.22(c)(2)(i) of the rules by failing to provide a verifiable and specific reason for declaring the MCKAY1 generating unit as inflexible.
Physical operating conditions can prevent generators from increasing or decreasing output and the rules allow generators to notify the system operator, NEMMCO, of such circumstances using the inflexibility provisions. A generator that declares itself inflexible is treated outside the normal market arrangements and must be dispatched by NEMMCO at the volume notified regardless of the price the generator offers that capacity. Bidding inflexible may afford a commercial advantage to a generator over its competitors.
For these reasons, the AER carefully monitors and rigorously enforces the inflexibility provisions of the rules to ensure that bidding inflexible is used only exceptionally and in response to genuine technical operating requirements. The AER's enforcement tools range from the infringement notice used in this case, to legal action seeking penalties of up to $100 000.
In this instance, AGL Hydro used a rebid to declare its generator inflexible when abnormal operating conditions did not exist. This was reflected in the reason given by AGL Hydro for this rebid. In this case the AER has opted to issue an infringement notice rather than seek higher penalties from the Federal Court. This decision was made having regard to the nature of the breach (including the fact that this was an isolated event rather than a pattern of behaviour) and the fact that AGL Hydro has co-operated fully with the AER investigation. AGL Hydro has since retrained all relevant personnel to avoid any repetition of the event.
As AGL Hydro has paid the infringement penalty, the AER's investigation of this matter is now closed.
NEM monitoring
The AER continues to publish weekly market analyses setting out the spot price for each 30-minute trading interval in each region of the National Electricity Market. These 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 website (www.aer.gov.au).
The AER published the results of its compliance monitoring and enforcement activities conducted during the June quarter on 17 August.
The Productivity Commission is currently holding a public inquiry into the price regulation of airports. The purpose of the inquiry is to examine the effectiveness of the current 'light-handed' regulatory regime which was put in place in 2002 and is administered by the ACCC.
The ACCC made a submission to the inquiry in August 2006. The ACCC's submission attempts to contribute to the public debate about the effectiveness of ‘light-handed’ monitoring for the regulation of monopoly infrastructure. It draws on the ACCC’s experience in administering the airports’ light-handed system of monitoring, as well as its previous experience in regulating airports and its experience in regulating other monopoly industries.
On 22 June 2006 the Senate moved that the Senate Economics Legislation Committee inquire into the price of petrol in Australia, with particular reference to:
the relationship between the landed price of crude oil, refining costs, the wholesale price and the retail price of petrol
regional differences in the retail price of petrol
variations in the retail price of petrol at particular times
the industry’s integrated structure
and any other related matters.
The committee is to report by 9 October 2006.
In late July the ACCC provided the Senate committee with its submission to the inquiry. In the submission the ACCC notes that the overall level of petrol prices in Australia has been high over the past year and that record high prices have been recorded in many places. Furthermore, there has been significant volatility in daily petrol prices in the major metropolitan cities. These reflect the existence of regular price cycles.
The submission found that petrol prices in Australia are determined by a combination of factors, which can broadly be categorised into underlying factors and locally specific factors:
Underlying factors are those that are the key determinants of the overall level of petrol prices and are common across all locations. These include the price of Singapore refined petrol, the Australian/US dollar exchange rate, Australian Government fuel standards, excise and the goods and services tax.
Locally specific factors are those that vary in influence depending on the precise location. These include state government subsidies, state government policies, price cycles and the level of competition in local markets (which is determined by a range of considerations).
Analysis in the submission indicates that the international price for refined petrol is the key determinant of the overall level of petrol prices in Australia.
This price is determined by supply and demand factors, which are outside the control of Australian regulators and governments.
The submission aims to provide information on several issues in the petroleum industry to explain the recent movements in petrol prices, both at the overall level and as a result of price cycles in the major metropolitan cities. It also provides information on price increases before public holidays and the city–country price differential.
