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 confirms five-year extension for key Telco declarations
On 16 July 2009 the ACCC announced its decision to extend the six declarations—the unconditioned local loop service (ULLS); line sharing service (LSS); local carriage service (LCS); wholesale line rental (WLR); and public switched telephone network (PSTN) originating access (OA) and terminating access (TA)—that enable Telstra’s competitors to provide fixed voice and broadband services over Telstra’s copper network for a further five years. The ACCC chose not to vary the declared ULLS to include sub-loop unbundling. This decision by the ACCC will ensure consumers continue to reap the benefits of price and service competition in the sector.
The ACCC considers the government’s National Broadband Network, announced in April 2009, will have a major effect on the future telecommunications regulatory environment, particularly on the regulation of the fixed services subject to this declaration review. A lack of certainty regarding ongoing access in a period of transition could have a significant negative impact on competition and investment by both access providers and access seekers, to the detriment of end users.
The 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).
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.
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
In July 2009 five new access disputes were notified to the ACCC:
Telstra Corporation Limited (a/p) and Vodafone Network Pty Limited (a/s) on the price payable to Telstra by Vodafone for the supply of the MTAS from 1 July 2009 to 31 December 2009
Chime Communications Pty Ltd (a/s) and Telstra Corporation Ltd (a/p) on the price payable to Telstra by Chime for supply of WLR
Adam Internet Pty Ltd (a/s) and Telstra Corporation Ltd (a/p) on the price and non-price terms for Telstra’s supply of the LSS to apply from 1 August 2009
Network Technology (Aus) Pty Ltd (a/s) and Telstra Corporation Ltd (a/p) on the price and non-price terms for Telstra’s supply of LSS to apply from 31 July 2009
Vodafone Network Pty Ltd (a/p) and Telstra Corporation ltd (a/s) on the price of supply of the MTAS.
In July 2009 the ACCC made one interim determination and extended the operation of three interim determinations. The determinations concern access disputes over the supply of WLR, ULLS and LSS.
Draft determination—initial Victorian Advanced Metering Infrastructure budgets and charges On 31 July the AER released its draft determination and consultant’s report on the Victorian Advanced Metering Infrastructure (AMI) budgets for 2009–11 and charges for 2010–11, as well as a report from its consultant.
Under Victorian regulatory arrangements, CitiPower, Jemena, Powercor, SP AusNet and United Energy Distribution (the Victorian electricity distribution network service providers) are required to install AMI for all customers consuming less than 160 MWh of electricity per annum by December 2013. The distributors are to recover costs for the roll-out via a pass-through mechanism, established through a Victorian Parliament Order-in-Council.
AMI is expected to deliver the following benefits:
the introduction of cost-reflective time of use tariffs, resulting in more efficient network utilisation
distributor operational cost savings resulting from remote meter reading and connection and disconnection of customers’ supply
more efficient outage detection
improved accuracy of customer billing.
As part of this process the AER must approve or reject the Victorian distributors’ initial AMI budget applications covering forecast capital expenditure and operating expenditure for the period from 2009 to 2011. The AER must also approve or reject initial applications for metering charges to apply for 2010 and 2011. These charges recover distributors’ expenditures resulting from metering costs over the 2006–08 period and any pre–start date AMI actual capital expenditure before 2009. The distributors’ budget and charges applications are available on the AER website.
For the average customer, the draft determination would result in metering charges for 2010 that are $53 above the 2009 charges approved by the Essential Services Commission of Victoria (ESCV), with a further $25 increase in 2011. The increases mainly reflect the impact of large expenditures in new metering technology and supporting infrastructure.
The AER will host a public forum on its draft determination in Melbourne on 21 August 2009. The AER is required to publish a final determination on its website by 30 October 2009.
Regulatory proposals for Queensland and South Australian electricity distribution network service providers The AER is required to make a distribution determination for the Queensland (Energex and Ergon Energy) and the South Australian (ETSA Utilities) electricity distribution network service providers, establishing a revenue requirement for each distributor for the 2010–15 regulatory control period.
On 18 July 2009 the AER published regulatory proposals received from Energex, Ergon Energy and ETSA Utilities. The AER’s preliminary examination of the regulatory proposals found that each proposal sufficiently complied with the requirements of the relevant provisions of chapter 6 of the National Electricity Rules (NER). The proposed negotiated distribution service criteria for each distributor were also published.
Interested parties are invited to make written submissions on each distributor's regulatory proposal and the AER's proposed negotiated distribution service criteria. Submissions close on Friday, 28 August 2009. The AER also hosted public forums on the regulatory proposals in Brisbane and Adelaide in early August.
Further information regarding the regulatory proposals is available on the AER website.
A draft decision is expected to be published at the end of November 2009. The final decision will be made in April 2010.
Final decision—Citipower’s capital contribution charge policy On 17 July 2009 the AER released a decision on CitiPower's capital contribution charge policy for recovering future upstream network augmentation costs. This decision follows a draft decision on CitiPower's capital contribution charge for marginal cost of network reinforcement, published by the ESCV in December 2008.
The AER has now assumed responsibility for the economic regulation of electricity distribution services in Victoria from the ESCV, including making decisions on whether Victorian distributor charges for connecting new customers are fair and reasonable under the ESCV regulatory instruments and guidelines.
The ESCV undertook a formal review of the fairness and reasonableness of CitiPower’s charges for recovering the cost of augmenting shared assets upstream of the point of connection (deep connection), and published a draft decision for consultation that rejected CitiPower’s approach. The AER progressed the ESCV review and similarly concluded that CitiPower's current charge rates do not comply with ESCV guidelines.
Gas network regulation matters
Access arrangement revision review processes for gas distribution pipelines
ActewAGL On 30 June 2009 ActewAGL submitted its access arrangement proposal for the Australian Capital Territory, Queanbeyan and Palerang gas distribution network. The revisions to the access arrangement are to apply for the 2010–15 period.
The AER published ActewAGL’s proposal and access arrangement information on 22 July 2009, and hosted a public forum on 27 July 2009 in Canberra at which ActewAGL outlined the key aspects of its access arrangement proposal.
Interested parties are invited to make written submissions on the proposal by 11 September 2009.The submission is available on the AER website.
Country Energy On 1 July 2009 Country Energy submitted its access arrangement proposal for the Wagga Wagga gas distribution network. The revisions to the access arrangement are to apply for the 2010–15 period.
The AER published Country Energy’s proposal and access arrangement information on 22 July, and hosted a public forum in Wagga Wagga on 28 July at which Country Energy outlined the key aspects of its access arrangement proposal.
Interested parties are invited to make written submissions on the proposal by 11 September 2009. The submission is available on the AER website.
Energy markets
AER institutes proceedings against Queensland generator Stanwell
On 20 July 2009 the AER announced that it had instituted proceedings in the Federal Court, Brisbane against Stanwell Corporation Limited (a Queensland Government-owned electricity generator) for alleged contraventions of the NER.
The AER has alleged that Stanwell did not make several of its offers to generate electricity on 22 and 23 February 2008 in good faith. The proceedings arose from the AER report into the sustained high electricity prices in Queensland on 22 and 23 February 2008.
A directions hearing will be held on 4 September 2009.
$5000/MWh reports
The AER published two Spot prices above $5000/MWh reports in July, both on high-price events in June in Tasmania.
On 1 June 2009 the spot price in Tasmania reached $9159/MWh for the 10.00 am trading interval, primarily as a result of Hydro Tasmania rebidding capacity from prices below $300/MWh to prices above $9000/MWh.
On 12 occasions between 10 and 19 June, the spot price in Tasmania exceeded $5000/MWh. Eleven of the events occurred when sudden and repeated reductions in the output from non-scheduled generation owned by Hydro Tasmania resulted in the dispatch of other high-priced Hydro Tasmania generation.
The remaining high price event, which occurred at 5.00 pm on 16 June, was the result of a significant amount of capacity being priced above $5000/MWh by Hydro Tasmania for the trading interval.
ACCC invites comment on Australian Rail Track Corporation Hunter Valley rail network access undertaking
On 23 April 2009 the Australian Rail Track Corporation (ARTC) lodged an access undertaking application for the Hunter Valley rail network with the ACCC for assessment under Part IIIA of the Trade Practices Act.
On 29 May 2009 the ACCC released an issues paper and commenced public consultation on the proposed undertaking by inviting submissions from interested parties.
The ACCC received a number of submissions in response to its public consultation, mainly from Hunter Valley coal producers and the above rail operators. Some issues to emerge from the submissions include contractual alignment between the proposed terms of the undertaking and port terminal access arrangements, use of the loss capitalisation model and rail capacity management.
The ACCC will now assess the submissions in the light of the proposed undertaking and prepare a draft decision.
Final advice provided to the minister on water planning and management charge rules
On 10 July 2009 the ACCC submitted its final advice on water planning and management charge rules to the Minister for Climate Change and Water, Senator Penny Wong.
The proposed rules require state and territory government departments and agencies to publish details of water planning and management charges. The ACCC is also proposing to establish a voluntary reporting framework to report more broadly on water planning and water management activities, costs and charges.
The ACCC conducted extensive stakeholder consultation in forming its advice, including the release of an issues paper, position paper and draft advice, including draft rules.
The minister may adopt the ACCC's draft rules, with or without variation.
