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Legislative Assembly for the ACT: 2000 Week 3 Hansard (7 March) . . Page.. 616 ..

MR HUMPHRIES (continuing):

The Territory Owned Corporations Act is somewhat unclear about what constitutes a main undertaking and more so about what amounts to a disposal. It is the Government's view that the spirit of the Act should be acknowledged by having placed before this place a clear issue which allows the Territory's Assembly, the democratically elected members of this Assembly, to consider and vote upon the issue of whether ACTEW should be in a position to proceed to form a joint venture with AGL - that is, whether assets of ACTEW, other than water and sewerage assets, should be put to the service of the new partnership between those two major Australian utilities, namely, ACTEW and Australian Gas Light.

It is evident that the ACTEW/AGL partnership proposal can deliver significant flow-on economic benefits to this Territory. The partnership will ensure that ACTEW is strategically positioned to compete effectively in the national electricity market. The partnership can provide benefits - the flow-on to ACTEW stakeholders, including consumers and taxpayers, through improved customer services and lower prices. I put before the Assembly that this partnership will transfer risks associated with the ownership of ACTEW away from taxpayers to third parties.

Energy trading will be managed under this arrangement as part of AGL's substantially larger energy trading portfolio. The energy trading risk will be substantially reduced through contractual arrangements with AGL whilst the partnership will be able to benefit from AGL's greater buying power and larger customer base. As part of the partnership proposal, AGL will provide the ACT with substantial economic development opportunities through a gas-fired electricity generation plant, AGL's national call centre and the national headquarters of one of AGL's energy infrastructure service businesses. The fifty-fifty partnership will ensure that both the ACT Government and AGL do not lose control of their existing businesses.

Only AGL has significant energy assets in the ACT which can be pooled with ACTEW's energy assets. In addition, the ACT will retain full ownership and control of the water and sewerage assets. Under the terms of the partnership, services will continue to be provided by existing ACTEW and AGL staff. The primary objective of the partnership is to enable the ACT Government to maintain effective control of the core services of ACTEW whilst addressing the issue of market risk in the retail electricity and trading areas and the ACT's lack of economies of scale as one of the smallest utilities in the country.

Mr Speaker, the partnership will strive to drive down prices and improve customer services, particularly in energy products that will stimulate economic growth and investment in the ACT. The improved economies of scale and scope from the combined operation of ACTEW and AGL will provide an environment in the ACT in which businesses can operate as effectively as possible, thereby assisting in the economic development and attractiveness of the region. On the revenue side, multi-energy sales and marketing to a consolidated customer base will enable increased customer retention and margins as contestability continues to develop in this country.

ACTEW and AGL are now in a position where they are confident the partnership can be successfully implemented. However, ACTEW and AGL are reluctant to proceed with the due diligence, which will require substantial time and resources, only to find Assembly

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