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Legislative Assembly for the ACT: 2004 Week 10 Hansard (Thursday, 26 August 2004) . . Page.. 4355 ..

The regulatory approach of national competition policy is that the preferred board policy direction is for reliance on competitive markets to produce efficient outcomes, subject to the condition that there may be circumstances in which competition may not produce the optimum outcome for the community as a whole. The ICRC endorses this view, as does my department. My department’s analysis broadly agreed with the ICRC view that there is no clearly discernible significant net public benefit in opening the greenfield electricity infrastructure market in the ACT to full competition. Indeed, the department identified additional technical regulatory costs associated with opening the market to competition. In the final analysis, I am not persuaded that there is an overwhelming argument for the benefits outweighing the costs for opening this market to competition.

Aside from the matter of the costs or benefits of the decision to make the market contestable, I recognise that ActewAGL is not in the same class of businesses in which the government has ownership interests to which the competitive neutrality obligations incontrovertibly apply. As such, ActewAGL’s responsibility for competitive neutrality and a national competition policy or government outsourcing practice is not the same as for those other government business enterprises.

This government and previous governments of the ACT have met the national competition policy obligations by corporatising ACTEW and establishing independent regulatory arrangements in the territory under the Independent Competition and Regulatory Commission Act 1997 and the Utilities Act 2000. Consequently, there is no basis requiring that ActewAGL makes its work in greenfields infrastructure development contestable. I also note that ActewAGL currently contracts out a substantial amount of its greenfield work and this provides opportunities for the market to benchmark the charges that ActewAGL applies to its infrastructure works.

While I will not add any more governance costs to the community for private rather than public benefit, I am equally concerned to ensure that pressure is maintained for efficiency in ActewAGL’s operation and the contribution it makes to the development of Canberra’s service infrastructure. In this regard, the ICRC assures me that it has used and will appropriately use the necessary regulatory power to maintain effective oversight of the pricing of ActewAGL’s infrastructure program. I am assured that the ICRC’s regulatory approach is that ActewAGL’s participation in this area receives appropriate oversight in the community interests. In this regard, I note the ICRC’s oversight of both capital and operating expenditure under the price path set every five years. One of the most important risks to manage in any ACT government is to ensure that ActewAGL, as the incumbent electricity network service provider, has a base capacity to meet emergencies as they arise.

As I have noted when tabling the ICRC report, we recognise the magnificent effort that ActewAGL employees and management made in getting Canberra back to normal after the devastating January 2003 fires. Equally, I appreciate ActewAGL’s responsiveness to other emergencies in relation to the security of their network and the certainty of supply of essential services such as the impact severe storms have on Canberra’s electricity supply.

I would be concerned that if ActewAGL were forced to compete for its own work as the incumbent distribution network operator, it could be exposed to predatory competition

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