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Legislative Assembly for the ACT: 2002 Week 13 Hansard (19 November) . . Page.. 3742 ..

MR QUINLAN (continuing):

Moving to FRC extends the choice of retail to all ACT consumers. It enables ACT consumers to purchase electricity from their choice of 13 retailers licensed to operate in the ACT-again, to add a qualification, if all of those 13 retailers make a genuine effort to create a market. That is still not definite. I can make no guarantees, I'm sorry.

Consumers will be free to exercise choice or to remain with ActewAGL retail on a regulated electricity tariff or to move to another retailer offering a contract that better meets their specific needs and requirements, and certainly the breadth of products will develop in relation to this.

To be enticed away from the regulated system, electricity users will need to be attracted by an offer that they assess as better meeting their needs. Consumer choice for small business and domestic consumers in the electricity market is a key part of the reform. It is important that the ACT market is responsive to user needs, in the same way as the New South Wales market allows electricity consumers in Queanbeyan to exercise their choice of preferred electricity retailer-and this freedom has seen many electricity consumers in New South Wales select ActewAGL as their preferred supplier. So, in fact, our utility is already in this market on the selling side. It is just not exposed to competition for its captive customers at this stage at the low end of consumption.

Deregulation of the electricity market in the ACT already undertaken has provided to consumers of more than 100 megawatt hours per annum the opportunity to seek out the best value for their requirements. At the same time, the smaller end of the market, including domestic consumers and small businesses, has not enjoyed this freedom to shop around. This has placed some consumers, predominantly small business and higher-end domestic users, at a disadvantage relative to their interstate contemporaries.

The ACT has benefited in the past from contracts struck at extremely favourable rates, but a large part of these is due to expire soon. The expiration of those new contracts will have an effect on the prevailing market prices, regardless of whether we go to free retail contestability or not; there are other influences that are going to affect the electricity prices. The ACT is facing significantly higher costs with the expiry of those contracts. Just to give you a figure, the ACT's long-term contracted wholesale prices are up to-I stress "up to"-20 per cent below the current market price. The government is conscious of the need to protect smaller users who are not in a position to evaluate various offers that may be made from new suppliers, or in fact may receive few offers from new suppliers because they just do not represent an attractive proposition.

For this reason, government has decided to have a transitional period, initially of three years. During this period, those customers that do not wish to exercise their choice of electricity retailer will be able to continue to be supplied by ActewAGL at a regulated price. There will be continued access to the regulated tariff through the transitional period in accordance with the conditions of the May 1999 electricity prices direction by the ICRC. The ICRC will be issued with a reference to undertake price determination for the regulated tariff from the expiry of the current price direction in July 2004 to March 2006 to cover the full transitional period.

The ICRC will be required to identify and make explicit the various components of the price determination to identify costs directly associated with the implementation of free retail contestability and those that result from the prevailing conditions in the market.

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