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Legislative Assembly for the ACT: 2000 Week 2 Hansard (2 March) . . Page.. 518 ..

MR HUMPHRIES (continuing):

Mr Speaker, the fact is that it is the chance to be able to work with another energy company which has an existing large customer base. It is that very opportunity which is one of the most compelling reasons for going with the deal proposed for AGL.

I think it is now widely accepted in this industry that in this kind of business you need a customer base of between 2,000,000 and 5,000,000 customers to be really viable in a competitive market. I will explain why in a moment. Let us be clear: ACTEW has 100,000 customers at the present time - 100,000 compared with a minimum on that estimate of 2,000,000 to 5,000,000 customers in the event of competition. Mr Speaker, that is why ACTEW benefits from being part of a larger customer base. Access to those customers is going to be of value to ACTEW. Why? The reason principally is that when competing entities in the energy market decide to wage trade wars against each other they decide to do so by undercutting their opponents.

We know the sort of situation we are talking about here. Company A makes a fabulous offer to new customers, saying, "Come over to us and you will get 50 per cent off your energy bills for the first three months", or something like that. You see them all the time on television. It is a perfectly obvious and very successful kind of approach - I assume that it is because of the number of times it happens - that companies take. They make very good offers to the customers of other businesses in order to get them to come to their company. If someone wants to do that with ACTEW's tiny - 100,000 - customer base, if someone says, "We will give you half-price energy bills for six months if you change over to us", they can do so on the basis that they have a huge customer base, as is the case with most other energy suppliers in this country, and the larger customer base - - -

Mr Quinlan: You do not know, do you?

MR HUMPHRIES: Yes, I do, Mr Quinlan. Sit back and listen and you will enjoy it. Having the larger customer base presents them with the financial capacity to do that. They can compete. They can carry the loss of supplying half-price electricity to the 100,000 customers in the ACT for six months or whatever it might take because they have 2,000,000, 3,000,000 or 4,000,000 customers elsewhere in the country who are capable of paying them enough to get them by in the meantime. If ACTEW is part of a large corporation such as AGL, is associated with AGL, and as a result of that joint partnership there is a capacity to weather those sorts of competitive storms because it has a large enough customer base to survive those sorts of raids, if you like, by other companies - - -

Mr Quinlan: Are we merging with AGL national?

MR HUMPHRIES: No, but with the provision of the larger customer base we will have the opportunity to be able to survive those sorts of problems. How long would ACTEW survive if its customers were offered the sort of deal that I have just referred to? How long would ACTEW survive? I ask people in this chamber today: If someone came along to you tomorrow and said, "If you change over to my electricity company I will take 50 per cent off your energy bills for the next six months", who can honestly put up their hands and say that they would not accept that sort of offer when it was not being matched by ACTEW? Nobody would do it; obviously not. Mr Speaker, nobody would knock back an offer of that kind.

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