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Legislative Assembly for the ACT: 1998 Week 1 Hansard (29 April) . . Page.. 156 ..

MS CARNELL (continuing):

I quote:

For a business in a growth environment not making decisions foregoes potential increments to value. Alternatively, in a high risk trading environment, not making decisions may lead to rapid increases in financial exposures.

The Fay Richwhite report also states:

The structure of the ACT economy and its likely development path indicate that ACTEW is unlikely to experience substantial growth from its domestic market. As the incumbent monopoly retailer in the electricity business it can be expected to lose market share as competitors enter. This will reduce the commercial value of the energy retail business.

At present much of the financial risk is associated with ACTEW's retail market. In this context the Fay Richwhite report states:

... however, that electricity market risk is concentrated in this part of the business. It follows that shareholder and Board tolerance for risk will be a major factor in determining the future growth path for the retail electricity business. It is also the case that a number of the growth options available to ACTEW are conditional on a viable retail business.

Mr Speaker, the Fay Richwhite report also states:

ACTEW's growth opportunities lie with new services within its existing area and/or traditional/new services outside the ACT, ie., continued growth in ACTEW's business value requires an expanded business scope. The growth opportunities within the ACT are limited. The majority of growth opportunities are outside the ACT. There is business risk associated with pursuing these growth opportunities and there is a material opportunity cost (value foregone) in not pursuing them.

The changing business environment and the associated risks to ACTEW and its value as a taxpayer-owned asset are not minor issues of academic interest only. If the Government gets it wrong, not only is its value as a taxpayer-owned asset under threat, but the future employment of its staff is also at risk. The Government must determine what is in the best interests of the ACT, to ensure that it is not abrogating its responsibilities.

The report also states:

Doing nothing and retaining the status quo is also an option. However, this does not effectively manage business risk and is likely to lead to erosion of business value and lost growth opportunities.

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