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.
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.
In November three new disputes were notified to the ACCC under Part XIC of the Trade Practices Act:
Agile Pty Ltd (also known as Internode) notified the ACCC of an access dispute with Telstra over access to Telstra’s unconditioned local loop service (ULLS).
Soul Pattinson notified the ACCC of a dispute with Telstra over access to Telstra’s ULLS service.
Telstra notified the ACCC of a dispute with Hutchinson over access to Hutchinson’s Mobile Terminating Access Service (MTAS).
Interim determinations
The ACCC published interim determinations in four telecommunications access disputes regarding the supply of the public switched telephone network originating and terminating access services (PSTN OTA) from Telstra to Optus Networks and Optus Mobile.
The interim determinations provide that the charges payable by Optus to Telstra for the period up to 31 December 2007 are as set out in the pricing principles and indicative prices for the PSTN OTA.
The interim determinations and the accompanying statement of reasons were made on 28 August 2007.
Final decision to reject Optus' undertakings for MTAS
On 28 November 2007 the ACCC announced its final decision to reject access undertakings submitted by Optus for its MTAS. The Optus 2007 undertaking sought a price of 12 cents per minute for the supply of its MTAS. The ACCC could not be satisfied that the price terms and conditions of the undertaking were reasonable.
On 23 November 2007 the ACCC released its final pricing principles for access to the ULLS. The ACCC’s general pricing principles for the ULLS will include:
maintaining a TSLRIC+ methodology
having a specific cost component included in the ULLS monthly price—calculated by combining ‘ULLS-specific costs’ with ‘LSS-specific costs’ and Telstra’s internal equivalent costs, and allocating these costs across the number of active ULLS, line sharing service (LSS) and asymmetric digital subscriber line (ADSL) lines
having connection charges set with reference to the amounts charged by third party contractors to Telstra for jumpering work in exchanges, indirect costs and back-of-house costs.
On 28 November the ACCC issued the MTAS pricing principles determination relevant for 1 July 2007 to 31 December 2008. The previous MTAS pricing principles determination expired on 30 June 2007. The Trade Practices Act requires the ACCC to have regard to a pricing principles determination if the ACCC is required to arbitrate a MTAS access dispute.
The MTAS pricing principles determination proposes an indicative price for the MTAS of 9 cents per minute from 1 July 2007 to 31 December 2008. The indicative prices have been informed by the WIK model, international cost benchmarks and other cost models. Any future pricing determinations will consider a range of factors as set out in the supporting documentation and will continue to consider efficiently incurred costs of MNOs with reference to actual costs consistent with the Australian Competition Tribunal's position.
The MTAS pricing principles determination and other supporting material are available here.
Declaration reviews for digital data access service and the integrated services digital network
The purpose of the public inquiry is to determine whether the declaration of the ISDN and DDAS services should be re-made, extended, revoked, varied or allowed to expire. In June 2005, the ACCC continued declarations for the DDAS and ISDN services. The declarations only relate to regional areas until 30 June 2008 as the declarations in CBD and metropolitan areas expired on 30 June 2006.
A discussion paper was issued on 16 November 2007 which identifies issues relevant to the review and seeks comments on particular aspects of DDAS, ISDN and related markets and the impact of regulation on these markets. Submissions on the discussion paper are due by 21 December 2007.
On 30 November 2007 the AER issued its draft decision on VENCorp’s electricity transmission determination for the regulatory period 1 July 2008 to 30 June 2014.
The draft decision provides for over $200 million of new investment in network growth over the next six years, and allows revenues for VENCorp that increase from $373 million in 2008–09 to $517 million in 2013–14.
The AER has scheduled a pre-determination conference on this draft decision in Melbourne on Wednesday, 12 December 2007. The purpose of pre-determination conference is to explain the draft decision and receiving oral submissions from interested parties. Information about the pre-determination conference is available on the AER website.
The AER also invites written submissions from interested parties. Submissions close on 19 February 2008. Issues raised at the pre-determination conference and in submissions will be taken into consideration by the AER in making its final decision.
Documents associated with the transmission determination including the, the draft decision consultants’ reports and VENCorp’s proposal are available on the AER website.
Development of electricity distribution guidelines
On 30 November 2007 the AER released two issues papers related to its new functions in electricity distribution regulation as part of a preliminary consultation process for the development of guidelines under the National Electricity Rules (NER).
The NER does not mandate this initial process. The AER is undertaking preliminary consultation in the lead-up to commencing its new role in the national regulation of electricity distribution in 2008. The intention is to provide stakeholders with an early opportunity to provide input and comments prior to the AER commencing the formal consultation process required under the NER.
The first issues paper outlines the development of:
a post-tax revenue model
a roll forward model
cost allocation guidelines
an efficiency benefit sharing scheme.
The second issues paper deals specifically with the development of a service target performance incentive scheme. The two issues papers are available on the AER website.
ElectraNet transmission determination
On 28 November 2007 the AER released its draft decision on the ElectraNet transmission determination for the period 1 July 2008 to 30 June 2013. The draft decision approves maximum allowed revenues for ElectraNet that increase from $209 million in 2008–09 to $271 million in 2012–13. The revenue allowance is based on an opening asset value of around $1.2 billion and a weighted average cost of capital of 9.66 per cent.
The draft decision provides for an investment of $606 million in ElectraNet's electricity transmission network over the next five years. A total operating and maintenance allowance of over $291 million is provided for the regulatory control period. The transmission determination also provides for a service target performance incentive scheme to apply to ElectraNet, as well as approving ElectraNet’s negotiating framework and negotiated transmission service criteria.
The AER has scheduled a pre-determination conference on the draft decision in Adelaide on Tuesday 11 December 2007. The purpose of the pre-determination conference is to explain the draft decision and receive oral submissions from interested parties. Information about the pre-determination conference is available on the AER website.
The AER also invites written submissions from interested parties. Submissions close on Monday, 18 February 2008. Issues raised at the pre-determination conference and in submissions will be taken into consideration by the AER in making its final decision.
Documents associated with the transmission determination, including the draft decision, consultants’ reports and ElectraNet’s proposal are available on the AER website.
Market impact of transmission congestion—release of incentive scheme and 2006–07 report
The AER released its draft transmission service target performance incentive scheme and associated explanatory statement on 20 November 2007. This version of the scheme incorporates a parameter based on the market impact of transmission congestion and amendments to the parameters that currently apply to EnergyAustralia, Transend and TransGrid.
The AER invites submissions on the draft service target performance incentive scheme. Submissions close on 4 January 2008.
A copy of the draft service target performance incentive scheme and associated explanatory statement is available from the AER website.
The AER has also released its 2006–07 report on the indicators of the market impact of transmission congestion. This report is also available from the AER website.
Consultation papers on guidelines for ACT and NSW electricity distribution determinations for 2009–14
The AER will be required to make distribution determinations in May 2009 for the period 2009–2014 in respect of electricity distribution network service providers in the Australian Capital Territory and New South Wales. The NER will provide for the AER to release a number of transitional guidelines in early 2008 that relate to these distribution determinations.
In preparation for the release of these guidelines on 22 November 2007, the AER released two papers for consultation :
a paper outlining preliminary positions with respect to the application of:
a post tax revenue model
roll forward models
an efficiency benefit sharing scheme
a service target performance incentive scheme
a guideline on control mechanisms for direct control services
a paper discussing issues associated with the application of:
a demand management incentive scheme
control mechanisms for alternative control services
a guideline on materiality for pass through events.
Powerlink application for pass-through of network support costs
On 26 November 2007 the AER formally advised Powerlink that it approved its pass-through application for $2.4 million in costs associated with the provision of network support during the 2006–07 financial year. The pass-through amount will be added to the Powerlink 2007–08 maximum allowed revenue.
The AER has assessed the application in accordance with s. 5.6.2 of the ACCC’s 2001 Powerlink revenue cap.
Documents associated with Powerlink’s pass-through application are available on the AER website.
AER issues regulatory test for electricity networks
On 2 November 2007 the AER issued a revised regulatory test for electricity network businesses along with explanatory and dispute resolution guidelines.
The regulatory test is used by transmission and distribution businesses in the National Electricity Market to assess the efficiency of network investment proposals. The AER's revisions simplify and clarify aspects of the regulatory test and align the regulatory test to the NER issued by the Australian Energy Market Commission at the end of 2006.
In conjunction with the revised regulatory test, the AER has developed its first regulatory test application guidelines which are designed to provide greater guidance to businesses applying the regulatory test, and enhance transparency and consistency in investment decision making.
The AER also issued regulatory test dispute resolution guidelines to assist parties in understanding the regulatory test dispute resolution rules and process.
The regulatory test documents are available on the AER website.
Gas Code decisions
GasNet draft access arrangement
On 15 November 2007, the ACCC issued its draft decision on GasNet's revised 2008–12 access arrangement. The decision sets out 32 amendments GasNet must make to the access arrangement for approval by the ACCC.
The draft decision provides for $75 million of refurbishment and replacement investment over the next five years, which is 28 per cent above the amount approved for the current access arrangement period. The draft decision is based on a weighted average cost of capital of 9.38 per cent.
The ACCC's proposed amendments to the access arrangement will result in an initial real average tariff increase of 16 per cent to $0.34/GJ for 2008, as compared to a 36 per cent increase to $0.40/GJ proposed by GasNet.
However, most of this real average tariff increase between access periods is because of users paying a lower than the forecast average tariff at the end of the current access period. As a result, users have paid lower tariffs that are not indicative of the long term sustainable tariff level. While the initial average tariff is rising by 16 per cent, the ACCC's draft decision means that the average level of tariffs will be broadly similar over the two access periods.
The draft decision did not approve GasNet's proposed cost allocation methodology on the basis that it will result in reference tariffs that are not cost reflective in either the short or the long run.
GasNet and interested parties have until 14 December 2007 to respond to the ACCC's draft decision. After considering submissions, the ACCC will issue its final decision, scheduled for February 2008.
Documents associated with GasNet’s proposed access arrangement, including the draft decision and consultants’ reports, are available on the AER website.
Markets
Report into prices above $5000/MWh in New South Wales on 22 October 2007
On 27 November 2007 the AER released a price report detailing the events of 22 October 2007, when the 30-minute spot price exceeded $5000/MWh in New South Wales.
This and previous $5000/MWh price reports are available from the AER website.
National electricity market quarterly compliance report
The AER released the quarterly compliance report for June to September 2007 detailing its monitoring and enforcement activities during that period on 16 November 2007. The report also provides an overview of the results of investigations conducted by the AER that have been published separately, and the results of the AER’s targeted compliance program.
This and previous quarterly compliance reports are available from the AER website.
