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Legislative Assembly for the ACT: 2000 Week 3 Hansard (7 March) . . Page.. 629 ..

MR STEFANIAK (continuing):

January of next year, in line with the dates announced for New South Wales. Further retail competition will mean further challenges for ACTEW's retailing business, but in some ways they will be a continuation of the challenges that ACTEW now faces day to day.

Some people have queried how many customers one can expect to shift from ACTEW if all customers were able to choose their own retailer. That is a question that, quite frankly, nobody in Australia is in a position to answer right now. Overseas experience of full retail contestability is important, but it is not very helpful in coming to a firm landing about the expected number of customers who will shift. It is not sensible to make direct comparisons between the effect of changes in Australia and the changes that have taken place in the United Kingdom, parts of the US, Scandinavia, New Zealand and elsewhere.

There are two main reasons for that. The first is that systems to allow small customers to choose their retailers are in their infancy everywhere in the world. Even in the UK and in California we have only around two years' experience. Secondly, no two countries have the same market arrangements or regulatory arrangements. In the UK, for example, any attempt to reduce prices for customers was bedevilled for quite a while by a perceived lack of competition between generators, a problem that is now being overcome. Compare that with Australia, where many competing generators are battling it out in the national electricity market and have driven down wholesale prices to levels lower than expected.

Having said that, initial trends were that far more customers changed electricity retailers in England and Wales than anywhere else where competition has been instituted. The UK regulator reported that 11 per cent of electricity users and a quarter of gas users had changed their suppliers since contestability was introduced. Despite the caveats that must be placed on such figures - the electricity figures were based on only a year's experience, for example - one must conclude that it is not a given that customers will be slow to transfer. Another report from the UK has been on the interest of consumers in joint electricity/gas deals for their homes. That, of course, is a major argument for the ACTEW/AGL partnership.

The detail of regulatory arrangements for retail competition varies greatly from country to country. For example, in America, you cannot talk about a national electricity market. There are many market arrangements, some of them very new, some small and some large, in different parts of the country. California, for example, has instituted full retail competition, but under Californian laws many utilities - those owned by cities - do not have to participate in the market and, if they choose to do so, are allowed to impose special charges on customers who change their retailer. That particular regulatory decision worked against customers changing retailer. Early reports were that only one per cent of customers shifted, and of those most were customers who wanted to buy green power from new retailers at charges far higher than the usual rate. In Australia, of course, green power is already available to small customers and competing retailers offer competing green power products.

Another constraint round the world has been the availability of cost-effective systems that allow for the transfer of customers from one retailer to another by recording the energy consumed by each customer and charging it to the customer's preferred retailer.

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