The Australian Competition and Consumer Commission has issued a draft determination on NBN Co’s revenue controls for 2014-15. It has also set out its view that NBN Co’s prices did not exceed maximum regulated prices during the 2014-15 financial year.
The ACCC is required to make annual determinations on NBN Co’s revenue controls in accordance with the Long Term Revenue Constraint Methodology (the LTRCM), which is set out in NBN Co’s special access undertaking (the SAU). The SAU establishes part of the regulatory framework for the National Broadband Network (NBN) and includes important provisions to encourage NBN Co to incur expenditure efficiently.
“The revenue control provisions in the SAU set out the method for determining the amount of revenue NBN Co is allowed to earn each financial year to recover its costs of providing services,” ACCC Commissioner Cristina Cifuentes said.
“Having assessed NBN Co’s proposal against the methodology in the SAU, the ACCC has made the draft decision to accept the values proposed by NBN Co for determining allowable revenues for 2014-15.”
Where NBN Co is unable to recover the allowed revenue in a particular year, any shortfall is put into NBN Co’s cost recovery account. NBN Co will have the opportunity to recover its accumulated losses over time as the take-up of NBN services increases.
In making the draft determination on NBN Co’s revenue controls, the ACCC is proposing to accept NBN Co’s actual capital and operating expenditure for the year. The ACCC has also decided to accept the proposed values for regulated assets and accumulated losses.
In addition to the revenue control provisions, the SAU includes a cap on the prices that NBN Co is allowed to charge for its services.
“The ACCC is satisfied that NBN Co’s prices did not exceed the applicable maximum regulated prices in 2014-15,” Ms Cifuentes said.
In its proposal, NBN Co has also requested a minor amendment to the ACCC’s 2013-14 determination to correct for an error in its submission. The ACCC will consider NBN Co’s proposed amendment in the same process as the draft determination.
The ACCC invites stakeholder views on its draft determination for 2014-15, including reasons for those views. Submissions are due by 5pm on Friday 15 April 2016.
The ACCC’s draft determination, its reasons for making this draft determination, and NBN Co’s 2014-15 LTRCM proposal and supporting documents, are available at: NBN Co - Special Access Undertaking.
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