Part XIC of the Trade Practices Act 1974 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 begins public consultation on fixed-line service declarations
On 25 November 2008 the ACCC announced that it will hold a public inquiry to review six fixed-line telecommunications service declarations, in accordance with its obligations under the Trade Practices Act. The declarations are due to expire on 31 July 2009.
The six fixed-line services to be considered in the combined inquiry are:
unconditioned local loop service (ULLS)
line sharing service
public switched telephone network originating and terminating access services
local carriage service
wholesale line rental service.
The public inquiry is to determine whether the declarations should be remade, extended, revoked, varied or allowed to expire. Submissions on the discussion paper from interested parties are due by 13 March 2009.
On 25 November 2008 the ACCC announced that it will hold a public inquiry to review the domestic transmission capacity service declaration in accordance with its obligations under the Trade Practices Act. The purpose of the public inquiry is to determine whether the declaration of the DTCS should be remade, extended, revoked, varied or allowed to expire. The current declaration is due to expire on 31 March 2009.
A discussion paper that identifies issues relevant to the review has been issued, and submissions are due by 23 December 2008.
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 exemptions where they promote the long term interests of end-users.
ACCC grants Telstra DTCS exemptions
On 25 November 2008 the ACCC issued a final decision granting Telstra exemptions from its obligations to supply the declared DTCS for:
capital-regional transmission on nine capital-regional routes
inter-exchange transmission in 16 central business district (CBD) exchange service areas
inter-exchange transmission in 72 metropolitan exchange service areas.
The ACCC did not grant an exemption for the supply of DTCS for tail-end transmission in metropolitan and CBD areas.
On 11 November 2008 the ACCC issued a final decision to reject Telstra’s application for exemption from its obligations to supply regulated fixed line services to Optus within Optus’ HFC cable network footprint.
The ACCC was not satisfied that granting the ‘Optus HFC exemption’ would promote the long-term interests of end users. The ACCC’s final decision highlights two major concerns with the application:
that singling out a particular competitor would represent a discriminatory access policy that would be likely to discourage investment and undermine the potential for efficient facilities-based competition in the telecommunications industry
that Telstra’s strong position in the pay-TV market and control over content, through its interest in Foxtel, would be likely to limit any possible competitive benefits from granting the exemption.
ACCC proposes to reject Telstra’s ULLS undertaking
On 13 November 2008 the ACCC issued a draft decision proposing to reject Telstra’s access undertaking for a $30 ULLS monthly change for metropolitan areas. The ULLS monthly charge relates to the rent that Telstra charges competitors to access the copper wire from the telephone exchange to a house or office. Access seekers use the ULLS to supply voice and broadband services to end users.
The ACCC invites interested parties to respond to issues raised in the draft decision by 12 December 2008.
ACCC issues draft MTAS pricing principles determination and indicative prices for 2009 to 2011
On 14 November 2008 the ACCC issued draft pricing principles and indicative prices for the mobile terminating access service for 2009 to 2011. The draft pricing principles adopt a cost-based pricing approach informed by the total service long run incremental cost framework, but also cover international cost benchmarking, developments in other markets and data captured under the regulatory accounting framework.
The draft indicative price for the MTAS during this period is 9 cents per minute. The draft indicative price reflects the uncertainties surrounding the actual cost of supplying the MTAS, the significant investments in infrastructure made by mobile operators and concerns about the absence of substantial reductions in fixed-to-mobile retail prices.
The ACCC invites submissions from interested parties by 12 December 2008.
View draft pricing principles and indicative prices for 2009–11 here.
The ACCC is able 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 notified to the ACCC during November 2008. The ACCC continues to arbitrate 28 access disputes; an additional 18 disputes are under judicial review.
On 27 November 2008 Commissioner Ed Willett delivered a speech at the European Competitive Telecommunications Association's annual regulatory conference.
View all speeches here. This particular speech will be available shortly.
On 28 November 2008 the AER released its draft decision on the ActewAGL distribution determination for the period from 1 July 2009 to 30 June 2014. The draft decision provides for a $278 million investment in ActewAGL's electricity distribution and sub-transmission network over the next five years. A total operating and maintenance allowance of over $296 million is also provided for.
The draft decision approves annual revenue requirements for ActewAGL that will increase from $144 million in 2009–10 to $183 million in 2013–14. The revenue allowance is based on an opening asset value of around $588 million and a weighted average cost of capital of 9.82 per cent.
The AER has scheduled a pre-determination conference on the draft decision, which will be held in Canberra on Monday, 8 December 2008. The pre-determination conference will enable the AER to explain the draft decision and to 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, 16 February 2009. Issues raised at the pre-determination conference and in submissions will be considered by the AER when making its final distribution determination.
Documents associated with the draft distribution determination, including the draft decision, consultants’ reports and ActewAGL’s regulatory proposal, are also available on the AER website.
New South Wales distribution determinations
On 28 November 2008 the AER released its draft decisions on the Country Energy, EnergyAustralia and Integral Energy distribution determinations for the period from 1 July 2009 to 30 June 2014. The draft decision approves total revenue requirements for the New South Wales distribution network service providers (DNSPs) that increase from:
$939 million in 2009–10 to $1.4 billion in 2013–14 for Country Energy
$1.3 billion in 2009–10 to $2.1 billion in 2013–14 for EnergyAustralia’s distribution assets
$137 million in 2009–10 to $273 million in 2013–14 for EnergyAustralia’s transmission assets
$793 million in 2009–10 to $1.1 billion in 2013–14 for Integral Energy.
The draft decision provides for investment over the next five years of:
$4.0 billion ($2008–09) for Country Energy
$7.2 billion ($2008–09) for EnergyAustralia’s distribution assets
$1.3 billion ($2008–09) for EnergyAustralia’s transmission assets
$2.9 billion ($2008–09) for Integral Energy.
Provision over the regulatory control period is also given for total operating and maintenance allowances of:
$2.0 billion ($2008–09) for Country Energy
$2.5 billion ($2008–09) for EnergyAustralia’s distribution assets
$160 million ($2008–09) for EnergyAustralia’s transmission assets
$1.5 billion ($2008–09) for Integral Energy.
The draft decision determined an indicative weighted average cost of capital of 9.72 per cent for DNSPs.
The AER has scheduled a pre-determination conference on the Country Energy draft decisions in Canberra on Monday, 8 December 2008. A conference for the EnergyAustralia and Integral Energy draft decisions will be held in Sydney on Tuesday, 9 December 2008. The pre-determination conferences will enable the AER to explain the draft decisions and receive oral submissions from interested parties. Information about the pre-determination conferences is available on the AER website.
The AER also invites written submissions from interested parties. Submissions close on Monday, 16 February 2009. Issues raised at the pre-determination conference and in submissions will be considered by the AER in making its final distribution determination.
Documents associated with the draft distribution determination, including the draft decision, consultants’ reports and EnergyAustralia’s regulatory proposal are also available on the AER website.
TransGrid transmission determination
On 28 November 2008 the AER released its draft decision on the TransGrid transmission determination for the regulatory control period from 1 July 2009 to 30 June 2014. As a result of this draft decision, TransGrid will significantly increase investment in its transmission network. The draft decision also approves maximum allowed revenues for TransGrid that increase from $678 million in 2009–10 to $904 million in 2013–14, or around 4.0 per cent per annum.
The draft decision provides a $2.55 billion investment in TransGrid’s electricity transmission network over the next five years. A total operating and maintenance allowance of $765 million is provided for the regulatory control period. The transmission determination also provides for a service target performance incentive scheme to apply to TransGrid, as well as approving TransGrid’s negotiating framework and negotiated transmission service criteria.
The AER has scheduled a pre-determination conference on the draft decision in Sydney on Tuesday, 9 December 2008. 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, 16 February 2009. 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 TransGrid’s proposal are also available on the AER website.
AER draft decision on Transend’s electricity transmission revenue proposal
On 27 November 2008 the AER published its draft decision on Transend’s revenue proposal for the regulatory control period from 1 July 2009 to 30 June 2014. Under the National Electricity Rules (NER), the AER is required to make a transmission determination for Transend that will establish network charges for the 2009–14 period.
The AER has scheduled a pre-determination conference on the draft decision in Hobart on Wednesday, 10 December 2008. The conference will provide an opportunity for the AER to outline its draft decision and for stakeholders to provide oral submissions.
Documents associated with the Transend regulatory determination process, including the AER’s draft decision, can be found on the AER website.
The AER has invited interested parties to send written submissions in response to the draft decision. Submissions will close on Wednesday, 18 February 2009.
Framework and approach paper for Energex and Ergon Energy
On 27 November 2008 the AER published its final framework and approach paper on the application of schemes to apply to Energex and Ergon Energy in the 2010–15 regulatory control period.
The AER’s final framework and approach paper sets out its likely approach to the application of a service target performance incentive scheme, efficiency benefit sharing scheme and demand management incentive scheme to Energex and Ergon Energy in the next regulatory control period. The paper also includes the AER’s consideration of other matters raised by the DNSPs.
This paper and the earlier preliminary positions paper and submissions from interested parties are available on the AER website.
Framework and approach paper—ETSA Utilities Electricity distribution determination 2010–15
On 26 November 2008 the AER published the framework and approach paper for its 2010–15 distribution determination for ETSA Utilities.
The framework and approach paper states the form of control that will apply to ETSA Utilities’ distribution services in the forthcoming regulatory control period, and sets out the likely approach to the classification of services and application of a service target performance incentive scheme, efficiency benefits sharing scheme and demand management incentive scheme.
This paper, the AER’s earlier preliminary positions paper and submissions from interested parties during the consultation process are available on the AER website.
AER decision on Transend network support pass-through proposal
On 26 November 2008 the AER decided to allow a pass-through amount of $506 732 for network support payments for Transend for 2007–08 and an adjustment amount (including interest) to be applied to network support customers in the 2009–10 financial year.
Documents associated with Transend’s network support pass-through can be found on the AER website.
Moomba to Sydney pipeline light regulation coverage determination application
The National Competition Council released its final decision and statement of reasons on 19 November 2008, approving EAPL’s application. The NCC determined that the services provided by the covered portion of the Moomba to Sydney pipeline (MSP) are to be light regulation services.
As the MSP is now subject to light regulation, the current access arrangement ceases to apply. While the MSP will not be required to have its tariff and non-tariff terms and conditions of access approved by the AER, in an access dispute the AER may make an access determination for the tariff and non-tariff conditions of access.
Under the annual compliance process, EAPL will be required to report annually certain information to the AER. EAPL is also required to publish its terms and conditions of its light regulation services, including tariffs, on its website.
National Gas Law guidelines and processes
Annual compliance process
On 7 November 2008 the AER made a final decision to make an annual compliance order, following a review of submissions on its draft decision and modified order. The annual compliance process has been established under the National Gas Law, to obtain information and documentation from service providers of covered transmission or distribution pipelines to ascertain compliance with their general and specific duties primarily under Chapter 4 of the NGL.
The final decision, a summary of submissions and responses, final annual compliance order and final annual compliance guideline were subsequently published on the AER website. The AER also provided service providers of covered pipelines with the final decision and annual compliance order, and provided the final decision to parties that participated in the consultation process.
Access dispute guideline
On 26 November 2008 the AER released the Access dispute guideline, which outlines how the AER will conduct an access dispute hearing under the NGL.
Consultation on the draft Access dispute guideline closed on 24 October 2008. Two submissions were received.
Recent high priced events in the national electricity market
The AER is required under the NER to investigate and report on any instances in the National Electricity Market (NEM) where the spot price exceeds $5000/MWh.
On 20 November 2008 the spot price reached $5061/MWh in Queensland for the 2.30 pm trading interval. The network capability in south-west Queensland had been restricted at times since the previous evening because of lightning storms in the vicinity. This reduction in network capability and outages of a number of Queensland generators resulted in tighter than normal supplies. In accordance with clause 3.13.7 of the NER, the AER will issue a separate report into the circumstances that led to the spot price exceeding $5000/MWh.
On 5 November 2008 the ACCC issued its 2007–08 container stevedoring monitoring report covering prices, costs and profitability of container terminal operators at the ports of Adelaide, Brisbane, Burnie, Fremantle, Melbourne and Sydney.
The report shows that unit costs and revenues remained steady in 2007–08. Profits, however, increased because of increases in volumes and improved productivity. Profitability as measured by an average rate of return on assets remains at levels significantly above the average of the top 200 companies listed on the Australian Stock Exchange as well as comparable overseas container port operators tracked during the ACCC’s monitoring program. Information provided by the stevedores indicates that the industry has continued to invest in new assets and additional future terminal capacity.
The report also shows that, over the past 10 years, Australian stevedores have benefited from waterfront reform by becoming increasingly efficient and profitable. The number of containers processed through Australian terminals has risen significantly. At the same time, users of stevedoring services have benefited as the cost of using stevedoring services has fallen in real terms.
The report highlights that demand for stevedoring services is expected to grow over the next decade, which presents opportunities for more intense competition in Australian stevedoring. Some ports, such as the Port of Brisbane and Port Botany, are planning to expand terminal capacity using three rather than two terminals, with the additional terminal due to commence operation within the next five years. Other ports, such as the Port of Melbourne and the Port of Fremantle, are relying on expansion of existing terminals with new facilities not expected to come on line until around 2015 to 2017. Decisions regarding the role of competition in meeting Australia’s future stevedoring needs will need to be made.
The ACCC noted that during 2007–08 a number of state governments increased their scrutiny of the degree of efficiency by which containers are moved through the terminals onto trucks and trains. Where solutions that involve cooperation or coordination among industry players are proposed, parties should seek their own legal advice to determine whether trade practices issues arise. In some cases, industry-based solutions can be authorised under the Trade Practices Act. Industry participants should consult with the ACCC early and before implementation to ensure potential trade practices concerns are addressed.
On 14 November 2008 the ACCC issued three new publications to assist irrigators, water brokers and water exchanges to understand their rights and responsibilities under the Trade Practices Act.
Water trading—a guide to your fair trading rights when using brokers and exchanges is a comprehensive guide that will help irrigators to understand their fair trading rights when dealing with brokers and exchanges. The guide includes:
tips when looking for a broker or exchange
examples of conduct that is likely to contravene the Trade Practices Act
information about remedies and penalties for breaches of the Trade Practices Act
steps to resolve a dispute with a broker or exchange.
Water Trading—an overview of your fair trading rights when using brokers or exchanges provides a short overview of irrigators’ fair trading rights when using brokers and exchanges.
Water Brokers and Exchanges—your fair trading obligations will help brokers and exchanges understand their fair trading obligations under the Trade Practices Act when dealing with irrigators.
These new publications are available on the ACCC website.
Consistent with Part 4 of the Water Act 2007, the Minister for Climate Change and Water, Senator the Hon. Penny Wong, has written to the ACCC requesting advice on the water market and water charge rules.
The Act requires that in making or amending the rules, the ACCC and or the minister should provide for consultations with Basin states, infrastructure operators and the public.
During November the ACCC held public forums in Dubbo, Shepparton, Deniliquin and Griffith to facilitate consultation on both the draft water market rules and the draft water charge (termination fees) rules, which were released for public consultation in October.
The water market rules were created to free up the trade of water access rights within the Murray-Darling Basin. The rules will ensure that policies or administrative requirements of irrigation infrastructure operators holding a group water access entitlement on behalf of their member irrigators do not prevent or unreasonably delay trade.
The purpose of the water charge rules is to encourage full cost recovery for water delivery services that will contribute to achieving an economically efficient and sustainable use of water resources and water infrastructure assets. If water charge rules are applied consistently across the Basin, the efficient functioning of water markets will be facilitated, distortions to trade will be removed and water users will be sent signals about efficient investment in water infrastructure assets.
A commissioner and relevant staff attended each forum to consult on the draft advice and respond to stakeholder concerns. Irrigator groups and irrigation infrastructure operators were invited to present their views at these forums. Over 200 irrigators, operators and other stakeholders attended these public forums.
Data from the latest ACCC grocery price survey is now available on the GROCERYchoice website (www.grocerychoice.gov.au).
Each month GROCERYchoice publishes the prices of typical 'grocery baskets' from supermarket chains across Australia. Price information is obtained from an independent monthly survey of approximately 500 products from 600 supermarket outlets. Survey results are made available on the GROCERYchoice website on the first business day of the following month.
The survey results released in November found that Coles and Woolworths were the cheapest on a total grocery basket in 30 regions each, with independents being cheapest on total grocery basket in eastern central Queensland. ALDI was the cheapest retailer for a basket of basic staple grocery products.
