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.
View the declared services register here.
ACCC issues MTAS declaration review discussion paper
On 18 December 2008 the ACCC issued a discussion paper commencing a public inquiry to review the domestic mobile terminating access service declaration. The MTAS is a wholesale input, used by providers of calls from fixed-line and mobile networks, in order to complete (terminate) calls to mobile subscribers connected to other networks.
The inquiry will determine the current declaration, which is due to expire on 30 June 2009, should be re-made, extended, revoked, varied or allowed to expire. Submissions are due by 30 January 2009.
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 (LTIE).
On 18 December 2008 the ACCC issued a draft decision not to accept access undertakings submitted by eight digital radio multiplex transmission licensees. The eight identical undertakings proposed the terms and conditions on which the multiplex licensees will provide access to the digital radio multiplex transmission to broadcasters. The draft decision reflects various concerns with the proposed access undertakings such as the flexibility that the undertaking provided the multiplex licensees which could be addressed by the licensees. Following a period of public consultation, the ACCC will decide whether to accept the undertakings. The submissions are due by 23 January 2009.
ACCC issues telecommunications fixed services cost model for consultation
On 19 December 2008 the ACCC began public consultation on a model commissioned by the ACCC for regulated fixed network services by issuing a discussion paper and model documentation.
Cost models make an important contribution to the information regulators rely upon when making decisions. The date for submissions has been extended to 30 March 2009.
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
During the reporting period, the ACCC was notified of six new access disputes, five relating to MTASs and one to an unconditioned local loop service (ULLS). These access disputes are between:
Telstra (access seeker) and Optus Networks (MTAS)
Telstra (access seeker) and Optus Mobile (MTAS)
Telstra (access seeker) and Hutchison (MTAS)
Optus Mobile (access seeker) and Telstra (MTAS)
Optus Networks (access seeker) and Telstra (MTAS)
Amcom Pty Ltd (access seeker) and Telstra (ULLS).
With these notifications, the ACCC continues to arbitrate 37 access disputes. In addition, 15 are under judicial review.
In December 2008 and January 2009, the ACCC issued interim determinations in the arbitration of two access disputes: the first for a dispute over access to WLR/LCS between Digiplus and Telstra, and the second for a dispute over access to the ULLS between Amcom and Telstra.
The ACCC also extended the operation of an interim determination made in arbitration of a dispute over access to the LSS between Chime and Telstra for another 12 months until 31 December 2009. The ACCC did not make any final determinations in arbitration of disputes during December 2008.
View the register of final and interim determinations here.
Published determinations
During December 2008 and January 2009, the ACCC did not publish any determinations made in arbitrations concerning access disputes.
Wholesale access to Telstra network still required
The Australian Competition Tribunal has confirmed that there was an ongoing need for access to Telstra’s network and that, in effect, the ACCC had proposed scaling back that regulation too soon. The Tribunal rejected Telstra’s applications for exemption from obligations to supply the wholesale line rental service (WLR) and local carriage service (LCS) in parts of metropolitan Australia. The Tribunal reviewed the decision made by the ACCC in August 2008, which was to grant more limited exemptions than those sought by Telstra.
ACMA and ACCC release joint report on communications infrastructure and services
On 12 December 2008 the Australian Communications and Media Authority and the ACCC released Communications infrastructure availability in Australia 2008, their second annual joint report. The report discusses the availability of broadband, fixed voice, mobile voice and mobile data in the community. The key findings included in the report include:
the number of broadband subscribers increased by 1.1 million in the 12 months to June 2008 mainly because of growth in wireless broadband (47 per cent) and DSL provided on unbundled services (33 per cent)
broadband connection speeds are rising with a 25 per cent increase in subscribers using a 1.5 Mbps service, predominantly as a result of evolution from ADSL1 to ADSL2+ services.
mobile services are evolving from second generation (2G) to third generation (3G) with 8.55 million 3G services in operation by June 2008 (an increase of 88 per cent)
fixed voice remains a large part of consumers’ spend on communications services and the number of fixed lines remained stable in the year to June 2008 at 11 million fixed line services in operation.
In conjunction with this report, the ACCC also published information about the number and distribution of services supplied over Telstra’s customer access network.
ACCC issues two reports under the Telstra accounting separation regime
On 22 December 2008 the ACCC issued two reports under the enhanced accounting separation regime for Telstra:
an imputation and non-price terms and conditions report for the September quarter 2008
a current cost accounting report for 2007–08.
Among other things, the reports noted that in the September 2008 quarter imputed margins reported for local services and the bundle of fixed line voice services decreased, while margins for ADSL services increased; and that wholesale service levels generally improved, with all service levels close to or better than those reported for retail services.
In December the ACCC delivered two communications related speeches as follows:
On 3 December 2008 Commissioner Ed Willett delivered a speech on ‘Australia’s broadband future’ as part of the extended launch of the Committee for Economic Development of Australia's research report.
On 8 December 2008 Commissioner John Martin delivered a speech at the fourth annual Racing and Sports Betting Forum, in which he discussed the implications of an evolving media sector.
ACT and NSW distribution network service provider draft decisions and distribution determinations
In January 2009 the AER received revised regulatory proposals from distribution network service providers, as permitted under clause 6.10.3 of the transitional chapter 6 rules. This was following the AER's release of draft decisions and distribution determinations in November 2008 to apply to ActewAGL, Country Energy, EnergyAustralia and Integral Energy (the DNSPs) for the regulatory control period from 1 July 2009 to 30 June 2014. The draft decisions establish the basis for determining the DNSPs' distribution network charges for the 2009–14 regulatory control period.
The AER draft decisions and the DNSPs’ revised regulatory proposals are available on the AER website.
The AER final decisions and distribution determinations for each DNSP will be released by the end of April 2009.
TransGrid draft decision and transmission determination
On 14 January 2009 the AER received a revised revenue proposal from TransGrid, as permitted under clause 6A. 12.3 of Chapter 6A of the National Electricity Rules (NER). This was following the AER’s release of a draft decision on TransGrid’s transmission determination for the regulatory control period 1 July 2009 to 30 June 2014. The draft decision established the basis for determining TransGrid's transmission network charges for the 2009–14 regulatory control period.
The AER draft decision and TransGrid’s revised revenue proposal are available on the AER website.
The AER final decision and transmission determination for TransGrid will be released by the end of April 2009.
AER draft decision on Transend’s electricity transmission revenue proposal
On 10 December 2008 the AER held a pre-determination conference in Hobart for the Transend draft decision. The conference provided an opportunity for the AER to outline its draft decision and for stakeholders to provide oral submissions.
This followed the publication of the AER draft decision on 27 November 2008 on Transend’s revenue proposal for the regulatory control period from 1 July 2009 to 30 June 2014. Under the NER, the AER is required to make a transmission determination for Transend that will establish network charges for the period from 2009 to 2014.
The AER also invited interested parties to send written submissions in response to the draft decision. Submissions will close on 18 February 2009.
Transfer of functions from Essential Services Commission of Victoria to AER
On 1 January 2009 the AER assumed responsibility for the economic regulation of Victorian electricity DNSPs.
This function was previously the responsibility of the Essential Services Commission of Victoria. The new responsibilities are conferred upon the AER by the operation of the National Electricity (Victoria) Act 2005 in accordance with the Trade Practices Actand the Australian Energy Market Agreement. The NEVA specifically confers economic regulatory functions, powers and duties on the AER. The AER will also assume responsibility for some related non-economic functions. These non-economic functions are to be specified in a Victorian Order-in-Council under s. 21 of the NEVA and were previously also the responsibility of the ESCV.
Preliminary positions—framework and approach paper—Victorian electricity distribution determination
On 19 December 2008 the AER published its framework and approach paper for the Victorian DNSPs for the 2011–15 distribution determination.
The framework and approach paper will apply to the Victorian DNSPs Citipower, Powercor, Jemena, SP AusNet and United Energy for the forthcoming regulatory control period.
The preliminary positions paper outlines the AER’s likely approach in the application of a service target performance incentive scheme, an efficiency benefit sharing scheme and a demand management incentive scheme to the Victorian DNSPs. The paper also sets out the AER’s proposed form of control and service classification for regulated services.
Draft demand management incentive scheme—Victorian electricity distribution determination
On 19 December 2008 the AER published its proposed demand management incentive scheme (DMIS) for the Victorian DNSPs for the regulatory control period commencing in 2011.
The role of the scheme is to provide incentives for DNSPs to implement efficient non-network alternatives or to manage the expected demand for standard control services in some other way. The scheme is designed to complement the existing incentives within the regulatory framework for DNSPs to implement non-network alternatives and manage demand.
The proposed DMIS is applied in three stages: through the AER’s framework and approach outlining the AER’s likely approach, the regulatory proposal submitted by the DNSPs setting out the businesses approach to the DMIS and through the AER’s distribution determination final decision.
Statements—revised WACC parameters (transmission) and regulatory intent on the revised WACC parameters (distribution)
On 11 December 2008 the AER published the proposed statement of the revised WACC parameters (transmission) and statement of regulatory intent on the revised WACC parameters. The proposed statements and accompanying explanatory statement are available on the AER website.
The NER provide that the AER may review the WACC parameters to be adopted in determinations by electricity transmission and distribution network service providers. Reviews are to be conducted every five years, with the first review concluded by 31 March 2009, at which time the AER will release its final decision for both transmission and distribution. The outcomes of this review will only apply to electricity transmission and distribution determinations when the proposal is submitted after 31 March 2009 and before the completion of the AER’s second review in 2014.
Submissions on the AER's proposed statements were due by 28 January 2009.
On 18 December 2008 GasNet Australia submitted a variation proposal to its access arrangement concerning the application of the transmission refill and the cross system withdrawal tariffs applying to the Western Underground Gas Storage facility (WUGS) and SEAGas connection point.
GasNet proposes to change the transmission refill tariff applicable to injections into the WUGS facility and remove the cross system withdrawal tariff applicable to injections into the SEAGas pipeline. The result is that gas injected into the WUGS and then withdrawn into the SEAGas pipeline will attract the same tariff as if it were withdrawn directly from the GasNet System into the SEAGas pipeline.
The AER has determined that this is a material access arrangement variation proposal under the National Gas Rules (NGR) and that it should be treated as a full access arrangement proposal.Interested parties have been invited to make submissions to the AER on issues relevant to the proposed variation by 19 February 2009.
GasNet’s variation proposal is available on the AER website.
On 1 December 2008 GasNet Australia’s amended access arrangement for the principal transmission system came into effect. The amendment relates to the payment deed principles.
The AER approved the variations on 26 November 2008, having regarded the likely impacts on stakeholders arising from the variation proposal and concluding that there would be no material effects. The variation proposal does not affect the scope of services provided to shippers, the transmission tariffs or the method for varying the tariffs. It affects only the payment requirements for the provision of tariffed transmission services. Further, the payment deed principles do not appear to directly affect other market participants.
Information about the variation to GasNet Australia’s access arrangement is available on the AER website.
National Gas Law guidelines and processes
Draft Access arrangement guideline
On 12 December 2008 the AER closed consultation on the draft Access arrangement guideline. The purpose of the draft guideline is to provide service providers and other interested parties with an outline of how the AER will undertake an access arrangement review process under the National Gas Law. In addition it will provide participants in any review process with guidance on relevant policy considerations as well as some administrative details on how to frame proposals and make submissions.
High-price events in the national electricity market
$5000 report
The electricity spot market price exceeded $5000/MWh in Queensland on 20 November 2008. As required under the NER, a price report into the event was published in December 2008.The report is available on the AER website.
High prices in January
In South Australia the spot price exceeded $5000/MWh for eight trading intervals on Tuesday, 13 January 2009 and for five trading intervals on Monday, 19 January 2009. In New South Wales the spot price reached $5020/MWh on Thursday, 15 January 2009.
A heatwave across Victoria and South Australia during the last week in January led to record demands and spot prices above $5000/MWh in both regions on 28 and 29 January 2009.
The AER will issue reports about these events.
As the cumulative price in South Australia and Victoria exceeded the cumulative price threshold of $150 000, administered price capping (where the spot price is capped at $300/MWh) was invoked on 29 January 2009 and remained in place for rest of the month.
Investigation into the de-rating of the Heywood interconnector in November–December 2007
On 23 December 2008 the AER issued an investigation report into the de-rating of the Heywood interconnector. The investigation resulted from high spot prices in South Australia over the March quarter 2008.
The focus of this investigation has been to determine whether ElectraNet, the transmission network service provider that owns and operates the transmission network in South Australia, has complied with relevant obligations under the NER. In particular, the investigation focuses on ElectraNet’s compliance with its network planning and reporting obligations.
While the investigation has not revealed any specific breaches of the NER by ElectraNet, it has identified a number of information quality issues. Poor quality information can have significant ramifications for other market participants, who rely on operational and planning publications by network operators for the purposes of their operational and investment decisions.
The AER has requested that ElectraNet commit to improving its processes by:
better integrating changes to the network capability identified through the planning process into its ongoing analysis of, and reporting on, the expected future operation of its networks
disseminating reliable, prompt and full information relating to major network factors (such as those contributing to the Heywood de-rating) as soon as its analysis and studies reveal issues likely to have significant impacts within the National Electricity Market.
This report completes the AER’s investigation into these events and follows on from the AER imposing infringement penalties totalling $60 000 on BPP in November 2008. The penalties related to the alleged failure of BPP’s power station to ensure its offers to supply generation capacity into the National Electricity Market accurately reflected its capability and its alleged failure to follow dispatch instructions issued by the market operator.
The report sets out the results of the AER’s investigation, including why the AER alleged BPP failed to follow dispatch instructions during the morning of 4 November 2007. The report also examines whether the conduct of other relevant generators affected by those events was in accordance with the NER.The report is available on the AER website.
Monitoring of the Australian petroleum industry, report of the ACCC into the prices, costs and profits of unleaded petrol in Australia
On 17 December 2007 the Assistant Treasurer and Minister for Competition and Consumer Affairs, the Hon. Chris Bowen MP, directed the ACCC to formally monitor the prices, costs and profits of unleaded petrol products for a period of three years. The first of three reports was submitted to the minister on 17 December 2008.
For the 2008 monitoring report, information was gathered from a range of industry stakeholders representing the parts of the industry where the 2007 inquiry report on the price of unleaded petrol indicated that competition was less than effective and which could provide maximum coverage of the industry. Information was subsequently requested from:
Refiner–marketers—Shell, Caltex, BP, Mobil
Supermarket chains—Coles Express, Woolworths
Large independent chains—Gull, United, 7-Eleven, Neuman, Liberty
Independent wholesalers—Liberty, United, Gull, Neumann
In consultation with industry stakeholders, the ACCC then developed a series of data templates that were used to collect information from all levels of industry to assist the ACCC in its analysis.
Conclusions of the ACCC’s 2008 formal monitoring report
The ACCC’s report showed that movements in petrol prices in Australia are overwhelmingly influenced by international petrol prices.The analysis concluded that Australian petrol prices have closely followed pricing trends in the international price of petrol which is determined by the international price of crude oil. The major contributor to any increases in Australian petrol prices was the higher Singapore Mogas 95 benchmark price.
Chart 1: Seven-day rolling average retail unleaded petrol prices across the five largest metropolitan cities compared to Singapore benchmark (Australian cents per litre) 2007–08
The price of petrol did deviate from the international benchmark price for a short period in December 2007 and October 2008. The ACCC found that the deviations were a result of supply issues in NSW, Victoria and Queensland, an increase in international freight costs, and changes in the price of Singapore Mogas 95 and the Australian dollar exchange rate.
In 2007–08 average prices in the three smaller capital cities and country towns were approximately 6 to 7 cents per litre higher than the five largest metropolitan cities. The differential is due to a combination of factors including higher transport costs, lower volumes and less competition in small country centres.
Chart 2: Average monthly unleaded petrol prices in the five largest metropolitan cities, the three smaller capital cities and country towns—July 2002 to November 2008
The analysis showed that the petrol industry is still concentrated at the refining and wholesale levels. However at the retail level the petrol industry price competition is active. Australian petrol prices are relatively low compared with other OECD countries.
The analysis showed that the overall profitability of the petrol industry has been somewhat volatile over the past three years. However, profitability has not increased in the past year even though the retail price of petrol has increased considerably.
Australian Rail Track Corporation Ltd interstate rail access undertaking—application for variation withdrawn
The Australian Rail Track Corporation Ltd (ARTC) was established in 1998 to manage the infrastructure and access to the standard gauge rail network connecting the mainland capital cities (i.e. the interstate rail network).
On 18 December 2008 the ACCC released its draft decision not to allow the ARTC to vary its interstate access undertaking.
In summary, the ACCC view is that the proposed variation is not justified as currently drafted because the proposed indemnity clause would prevent a rail operator (or ARTC) from being indemnified for loss arising out of a contract between a rail operator and a third party (or ARTC and a third party) in circumstances where ARTC (or the operator) has breached the indicative access agreement and caused an incident that has resulted in loss to that third party.
In addition, the ACCC formed the preliminary view that ARTC had not consulted with rail operators before applying to the ACCC seeking the variation as is required by the terms of the 2008 undertaking.
The ACCC received a written notice from ARTC on 15 January 2009 withdrawing its application of 9 October 2008 to vary the undertaking. ARTC indicated in its withdrawal letter that it will undertake further consultation with rail operators about the wording of the variation.
In light of the withdrawal of the application, the ACCC did not issue a final decision on the variation application.
Submission to Productivity Commission to review parallel importation of books
On 22 January 2009 the ACCC made a submission to the Productivity Commission’s commissioned study reviewing the importation provisions of the Copyright Act 1968 restricting importation and commercial distribution of copyright-protected books from overseas.
In principle the ACCC considers that the parallel import provisions restrict competition and need a public interest justification to be maintained. Without such justification, the market should be opened up to realise potential consumer benefits in the form of lower prices, increased availability and improved service.
The ACCC draws on its past experience in conducting empirical analysis of price differentials arising from parallel import restrictions to provide the Productivity Commission with guidance on any empirical work it may conduct in its study. The ACCC also outlines the analytical framework that should be used to assess whether the current restrictions should remain in place.
The Productivity Commission is expected to release a draft report in March 2009, with a final report to government on 13 May 2009.
Details of the study and submissions received can be found on the Productivity Commission website.
ACCC advice on water market rules and water charge (termination fee) rules
On 23 December 2008 the ACCC submitted advice on water market rules and water charge (termination fee) rules to the Minister for Climate Change and Water, Senator the Hon. Penny Wong.
As required under ss. 93(1) and 98(1) of the Water Act 2007, the minister had written to the ACCC requesting advice by December 2008 on the water charge (termination fee) rules and water market rules. The resulting ACCC advice also includes recommended water market rules and water charge (termination fee) rules.
Considered in this advice are stakeholder submissions in response to issues papers, position papers and, more recently, draft advice to the minister through the extensive consultation by the ACCC. The ACCC also conducted six public forums in regional centres on the draft advice for water market rules and water charge (termination fee) rules. In total the ACCC received 195 written submissions—130 on the water market rules and 65 on the water charge (termination fees) rules. These submissions are available on the ACCC website.
The minister may adopt the ACCC's draft rules with or without variation. If the minister intends to proceed with the ACCC's advice and recommended rules, she must publish a notice on the Department of Climate Change website that includes a copy of the proposed rules and a copy of the advice provided by the ACCC at least four weeks before the proposed rules are made.
Release of position paper on water charge rules for water planning and management
On 23 January 2008 the ACCC released its position paper on water charge (water planning and management) rules for comment.
Establishing a set of water charge rules that apply to all Murray–Darling Basin jurisdictions’ water planning and management charges will improve the transparency and availability of information regarding such charges.
The approach proposed by the ACCC recommends the development of enforceable rules and model rules. It focuses on improving transparency of water planning and management charges and increasing the information available about the associated activities and costs, and the proportion of costs recovered from water users.
Submissions to the position paper must be provided to the ACCC by COB Friday, 27 February 2009.
