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.
Declaration review—digital data access service and integrated services digital network
On 14 March 2008 the ACCC issued its draft report proposing an extension of the declarations of the digital data access service and integrated services digital network services until 30 June 2009 or a further 12 months from the expiry date of the current declaration to provide a transition period for migration to alternative services. The ACCC expects to issue its final decision in June 2008.
Exemptions from access obligations
The Trade Practices Act enables carriers to apply for exemptions from the standard access obligations that apply to a declared service. The ACCC can only grant the exemption if it is the long term interests of end users.
Telstra’s exemption applications
Four submissions have been received from interested parties on the ACCC’s transmission exemption application discussion paper. In the meantime, the ACCC sought further information from Telstra on 28 March 2008. The ACCC will release its draft decision in April/May 2008.
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.
Revised ULLS monthly charge access undertaking
The ACCC published Telstra’s revised unconditioned local loop service (ULLS) monthly charge access undertaking on 6 March 2008. Telstra proposes a monthly charge of $30 for each ULLS in Band 2 exchange service areas applying for the period to 31 December 2010. The ACCC will issue a discussion paper for seeking submissions from interested parties.
View the list of undertakings currently before the ACCC here.
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.
New access disputes
No new access disputes were reported by the ACCC in March.
In March 2008 quarter the ACCC made one final determination concerning Telstra’s supply of the ULLS to Macquarie Telecom and eight other interim decisions, six in relation to Telstra’s supply of line sharing services (LSS) and two in relation to mobile terminating access service (MTAS).
ACCC accepts resolution from Optus over Fusion advertising
SingTel Optus Pty Ltd (Optus) has agreed to clarify a representation regarding their Optus Fusion bundled home phone and broadband cap advertising campaign following interventions by the ACCC. View further details.
ACCC receives formal notification from G9 consortium
The ACCC has received formal notification from the G9 consortium of telecommunications companies that it would withdraw the special access undertaking as lodged by it with the ACCC on 30 May 2007.
High Court unanimously supports validity of the telecommunications access regime
The ACCC welcomed a unanimous decision by the justices of the High Court of Australia to confirm the constitutional validity of Part XIV of the Trade Practices Actand specially its application to the ULLS and line sharing service (LSS). The High Court has confirmed that Telstra’s ownership of the public telephone network has always been subject to the rights of its competitors to gain access to and use its network for the ultimate benefit of customers.
Release of decisions on cost allocation methods for the Australian Capital Territory and New South Wales 2009 electricity distribution businesses
On 31 March 2008 the AER published its decision to approve the cost allocation methods proposed by the Australian Capital Territory and New South Wales electricity distribution businesses. The cost allocation methods approved for ActewAGL, Country Energy, EnergyAustralia and Integral Energy are to be used in their regulatory proposals for 2009–14.
The approval of the cost allocation methods is the first decision made by the AER as part of its first distribution determination in New South Wales and the Australian Capital Territory. Approval of the cost allocation methods is a new requirement of the National Electricity Rules (NER) which took effect from January 2008.
The AER's decision documents and public versions of the DNSP's cost allocation methods are available on the AER website.
TransGrid notice of proposed pass-through for network support
On 13 March 2008 TransGrid, the New South Wales electricity transmission network service provider, submitted a notice of proposed pass-through for network support of $21.9 million over the 2008–09 financial year for 350 MW of support during summer 2008–09.
The AER is assessing the notice according to the pass-through rules outlined in the New South Wales and Australian Capital Territory Transmission Network Revenue Cap—TransGrid 2004–05 to 2008–09 decision. The AER invited comment from interested parties.
The AER is required to notify TransGrid by 13 May 2008 of its opinion on the notice or decide to extend the assessment period for a further two months.
A public version of TransGrid's notice and supporting materials are available on the AER website.
Network service provider exemption for Moranbah North joint venture partners
On 17 March 2008 the AER issued its decision to grant an exemption under s. 13(1) of the National Electricity Law, clause 2.5.1(d) and 2.9.3 of the NER to the Moranbah North joint venture partners (as the owners of the Moranbah North Coal Network) from the requirement to register as a network service provider (NSP) and the operation of chapter 5 of the NER.
NS Resources Australia Pty Ltd (ABN 88 082 160 432)
Nippon Steel Australia Pty Ltd (ABN 64 001 445 049).
Moranbah North Management (the operator of the Moranbah North Coal Network) was nominated by the Moranbah North joint venture as the intermediary to act on its behalf and has accordingly registered with the National Electricity Market Management Company (NEMMCO) as the distribution network service provider.
The network service provider exemption and associated documents are available on the AER website.
Approval of 2008–09 distribution loss factors
On 20 March 2008 the AER approved distribution loss factors for 16 distribution network service providers across all six National Electricity Market jurisdictions under clause 3.6.3 of the NER. Distribution loss factors (DLFs) were approved for:
CitiPower & Powercor
Alinta AE & United Energy
SP AusNet, Aurora Energy
ETSA Utilities
Integral Energy
Energy Australia
Country Energy
OneSteel
Ergon Energy
Energex
Oaky Creek Network Service Provider
Capcoal Network Service Provider
ActewAGL.
On 28 March 2008 the AER approved Aurora Energy’s revised DLFs for 2008–09. This revision is a result of the findings of a review of loss factors in the west coast region. The AER also approved the distribution loss factor for the Moranbah North Coal Network for 2008–09. These approvals were under clause 3.6.3 of the NER.
The approval of 2008–09 DLFs and associated documents are available on the AER website.
Recent high priced events in the SA electricity market
Since 1 January 2008 electricity half-hourly spot market prices have increased to $5000/MWh or more in South Australia on 51 occasions. These price events saw the highest average prices in South Australia since the market started in 1998. Over January, February and March prices averaged $243/MWh, compared to an average price of $69/MWh over the same period in 2007. The previous highest average price for the quarter was $110/MWh in 2001.
Under the NER, the AER is required to report on spot prices that exceed $5000/MWh. The AER has completed reports into high priced events on 4 and 10 January and 18 and 19 February 2008, with further reports due to be released shortly. The AER investigations into these events have found that the high prices were caused by a combination of high demand, generator bidding and transmission constraints. In fact, during March 2008, the temperature in Adelaide exceeded 35 degrees for a record 15 days in succession.
While high temperatures increased air conditioning use and electricity demand, bids from AGL contributed to high prices. AGL owns the largest generator in South Australia, Torrens Island. AGL priced more than 75 per cent of its capacity at or close to the price cap of $10 000/MWh during the high price events. This represents around one-third of South Australia's demand at those times.
While bidding high prices is not a breach of the NER, AGL revised its bids a number of times. The NER require generators to rebid in 'good faith'. The AER is investigating AGL's compliance with the good faith provision.
A significant proportion of South Australia's electricity requirements is sourced from generators in Victoria using the Heywood and Murraylink transmission interconnectors. In December the South Australian transmission network service provider (Electranet) reduced the maximum allowable flow on Heywood, the larger of the two interconnectors, by around 100 MW, or 25 per cent. Accordingly, the AER is also investigating the reduced flow capacity between South Australia and Victoria.
The report relating to recent high prices is available on the AER website.
Notification and consultation about gas flow reversal on South West Queensland Pipeline
Following a reversal of gas flow of the South West Queensland Pipeline (SWQP), the AER has commenced a consultation and notification process for two Queensland pipelines affected—that is, the SWQP and the Carpentaria Gas Pipeline (CGP). The purpose of the consultation is to publicly notify interested parties that the flow reversal has occurred and determine the implications of this event for each pipeline.
The SWQP access arrangement contains a 'review trigger mechanism' (clause 13(c)), which provides for a review of the access arrangement before the scheduled review date if a specified event occurs. The service provider, Epic Energy Queensland Pty Ltd (Epic Energy), confirmed that the flow of gas on the SWQP had been reversed and therefore a specified event had occurred. However, Epic Energy has indicated in a letter dated 9 November 2007 that the review of the access arrangement should be deferred. At this stage the ACCC proposes to begin the formal review process on 1 July 2008. Submissions are currently being sought on the matter.
The CGP access arrangement contains a 'review trigger mechanism' (clause 8.4), which provides for a review of the access arrangement before the scheduled review date if a specified event occurs. In 2007 the ACCC commenced inquiries into whether a specified event under clause 8.4 had occurred. The ACCC has continued to monitor the situation in light of the reversal of the flow of gas on the SWQP and any possible implications for the CGP access arrangement.
In correspondence to the ACCC dated 15 November 2007, the APA Group, the owner of the CGP, stated that in its view the reversal of flow of gas on the SWQP has no implications for the CGP access arrangement. Accordingly, the APA Group submitted that no specified event under clause 8.4 of the access arrangement occurred that would trigger a review of the access arrangement. The due date for submissions is 18 April 2008.
The notification and documents associated with this event are available on the AER website.
North West Shelf joint venturers—application for revocation of authorisation
On 14 December 2007 the North West Shelf joint venture partners requested a revocation of authorisation A18492. The joint venturers have reviewed their activities and consider there is no need to maintain the authorisation. The joint venturers will continue their gas joint marketing practices without it.
Interested parties were consulted on the revocation application over December 2007 and January 2008, and all submissions received by the ACCC supported the application for revocation of the authorisation. The ACCC revoked the North West Shelf joint marketing authorisation on 6 March 2008.
Documents associated with this decision are available on the ACCC website.
Rule change proposal
On 17 March 2008 the AER submitted two rule change proposals to the Australian Energy Market Commission (AEMC) relating respectively to the reclassification of contingency events and price setting by NEMMCO. These proposals resulted from the AER investigation into the events of 16 January 2007 in Victoria, when bushfires caused transmission lines between Victoria and New South Wales to fail and around a quarter of the demand in Victoria to be interrupted.
The AER’s first rule change proposal requests that clause 4.2.3 of the NER be changed to set out a clearer process for NEMMCO to re-classify contingency events during abnormal conditions, such as those that existed on 16 January. The proposed changes would ensure greater consistency, transparency and rigour to the process of re-classifying contingency events.
The second rule change proposal seeks to remove the obligation imposed on NEMMCO under clause 3.9.2 to set the dispatch price to the price cap following the shedding of interruptible load as a result of a contingency event. The AER investigation found that requiring NEMMCO to assess whether prices should be set to the price cap in circumstances such as those that existed on 16 January could compromise system security. The AER’s proposed rule change would allow NEMMCO to focus solely on returning the power system to a secure operating state in such cases.
The AEMC has begun the consultation process on the AER’s rule change proposals.
The rule change proposal and associated documents are available on the AEMC website.
The report shows that prices for aeronautical services continued to increase in 2006–07, although less significantly than experienced in previous years. An exception was Adelaide airport, which reported an average price increase of 55 per cent after the first full-year application of the passenger facilitation charges following commencement of operations at the new terminal 1 during the previous financial year. This significantly influenced the increase in aeronautical revenue at Adelaide airport.
The report found that in terms of overall rating of quality of service, over the past five years Brisbane has been the top-ranked airport, achieving an overall rating of good. This year for the first time Brisbane was joined by Adelaide as the top-ranked airport, representing a significant change for Adelaide airport, which was generally rated at the satisfactory level in the past. Melbourne and Sydney airports rated at the mid-point between satisfactory and good. Perth airport has been rated between satisfactory and good. Both Canberra and Darwin have generally rated at the overall satisfactory level, although Canberra fell slightly below the overall satisfactory level in 2006–07.
There was a large increase in passenger numbers in 2006–07. Passenger numbers increased at all airports for the fourth consecutive year, most notably at Darwin and Perth. Airports generally charge on a per passenger basis, resulting in an increase in revenues. Costs have increased to a lesser extent, as they are largely fixed and are less influenced by passenger volumes, resulting in increased margins.
Most airports reported increased average prices for ‘aeronautical-related’ services (predominantly car-parking and check-in counters), with the more significant increases being at Adelaide and Darwin. However, the margins earned on these aeronautical-related services varied across airports with Canberra and Darwin posting the most significant increases.
The report analyses the 2006–07 regulatory accounts of Australia Post to establish whether its competitive activities (or non-reserved services) are being cross-subsidised with revenue from its monopoly activities (or reserved services).
The ACCC was given this role in response to complaints that Australia Post was cross-subsidising its competitive services with revenues from its reserved services. The Australian Postal Corporation Act 1989 was amended in June 2004, with s. 50H(2) now providing that the ACCC must require Australia Post to keep records about its reserved services. The purpose of this requirement is to allow the ACCC to monitor for the presence of cross-subsidy.
The key findings of the report show there is no evidence that Australia Post is subsidising its non-reserved services with revenue from its reserved services.
One non-reserved service did receive a subsidy in 2006–07. Revenue from logistics services was $3.3 million less than the direct cost of providing the service. However, the source of the subsidy to logistics appears to be the other non-reserved services and not the reserved services.
