International and Australian regulatory
developments and decisions
Issue 58
REGULATORY
OBSERVER
International and Australian regulatory
developments and decisions
20 June 2014
02
Ofgem takes action to
assist UK energy
consumers
03
International
Regulatory Round-up
04
Australian Regulatory
Round-up
1
REGULATORY OBSERVER
Ofgem takes action to assist UK energy
consumers
In June 2014, the UK’s Office of Gas and Electricity Markets (Ofgem) undertook two actions aimed at
assisting energy consumers. Firstly, Ofgem wrote to the UK’s ‘Big Six’ energy retailers, calling on
them to explain to customers what impact falling wholesale costs will have on their energy prices.
Secondly, Ofgem approved a proposal by energy retailers to commit the sector to cut the time it takes
consumers to switch to just three days by the end of 2014.
On 10 June 2014, the Chief Executive Officer of Ofgem, Mr Dermot Nolan, wrote to the ‘Big Six’
energy suppliers ‘in relation to the significant falls in wholesale gas and electricity prices…seen over
the past year or so.’ In early June, UK gas prices for next-day delivery reached their lowest level since
September 2010 and were around 38 per cent below the same time last year. The trend has been
similar in electricity, with prices reaching their lowest level since April 2010 at the beginning of June,
around 23 per cent lower than the same time last year. Ofgem’s concerns arose as energy retailers
are yet to reduce their prices for existing customers to reflect the wholesale cost changes.
Mr Nolan stated in the letter that, in a competitive market, Ofgem ‘would expect the threat of losing
market share to encourage suppliers to pass on sustained reductions in wholesale costs as savings to
consumers as soon as possible. If that is not happening, it could be seen as further evidence that
competition is not working for consumers as well as it should be.’ Ofgem has noted that its current
concerns regarding retail energy prices support its proposal to refer the retail market to the
Competition and Markets Authority (CMA). This proposal emerged after Ofgem’s March 2014 report
assessing competition in the energy market, produced in conjunction with the CMA, confirmed that
competition is not working as well as it could.
On 16 June 2014, Ofgem approved the energy retailers’ proposal to cut switching time to three days,
after the statutory two-week cooling off period, by the end of 2014. This means customers will be able
to switch electricity and gas retailers in two and a half weeks. Ofgem’s CEO, Mr Nolan, noted that
current timeframes for switching energy retailers did not compare well with other sectors of the
economy, with consumers being able to change their bank in seven days and their mobile phone in
just a couple of days. Ofgem simultaneously published new proposals to make the switching process
more reliable and put next-day switching in place by the end of 2018 at the latest.
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REGULATORY OBSERVER
International
Regulatory
Round-up
spectrum from television
broadcasters who voluntarily
choose to give up some or all of
their spectrum usage rights in
exchange for incentive payments,
in order to auction new spectrum
licences to wireless providers.
are receiving more data, SMS and
calling minutes.
COMMUNICATIONS
Oceania
Europe
NZ: Telecom granted
clearance to acquire unsold
radio spectrum block
NZ: Commerce Commission
releases draft decision on
Transpower’s expenditure
allowances for 2015-2020
UK: Ofcom proposes
reduction in mobile
termination rates
On 4 June 2014, the Office of
Communications (Ofcom) began
its Mobile call termination review
2015-2018. Current industry rates
are around 0.8 pence per minute
(ppm). Ofcom is proposing a new
charge control, applying to all
operators, which would mean
termination rates would fall to less
than 0.5 ppm by April 2017 in real
terms.
Americas
US: FCC consults on how
best to protect and promote
an open internet
On 15 May 2014, the Federal
Communications Commission
(FCC) sought public comment on
how best to protect and promote
an open internet. The Notice of
Proposed Rulemaking poses a
broad range of questions. The
FCC has previously concluded that
broadband providers have the
incentive and ability to act in ways
that threaten internet openness.
However, there are no rules that
stop broadband providers from
trying to limit internet openness.
US: FCC adopts rules for
first spectrum incentive
auction
On 15 May 2014, the FCC
adopted rules to implement the
Broadcast Television Incentive
Auction. The two-sided auction will
use market forces to recover
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REGULATORY OBSERVER
On 30 May 2014, the Commerce
Commission of New Zealand
(CCNZ) granted a clearance to
Telecom New Zealand Limited
(Telecom) that will enable it to
acquire the management rights for
the final block of 5MHz radio
spectrum in the 700MHz range
from the Crown. There are 45MHz
available in the 700MHz range,
which the Crown has sold
management rights to by auction.
NZ: Commerce Commission
extends copper pricing
consultation
On 22 May 2014, the CCNZ
announced an extension to its
timetable for determining
wholesale prices under the final
pricing principle (FPP) for both the
unbundled bitstream access
(UBA) and unbundled copper local
loop (UCLL). The CCNZ is now
aiming for a draft decision on both
prices by 1 December 2014, and a
final decision by 1 April 2015.
NZ: Commerce Commission
releases telecommunications
monitoring report
On 21 May 2014, the CCNZ
released its annual
telecommunications monitoring
report analysing the state of New
Zealand’s telecommunications
markets. A trend noted in the
report is that telecommunications
services are delivering more to
consumers for less cost. Spending
on telecommunications services is
about the same in real terms as it
was ten years ago, but consumers
ENERGY
Oceania
On 16 May 2014, the CCNZ
released its draft decision on the
allowances for operating and base
capital expenditure that will be
used to set Transpower’s price
path for the period from 1 April
2015 to 31 March 2020. The
CCNZ has reduced Transpower’s
proposed operating expenditure
allowance by 6.5 per cent and the
proposed capital expenditure
allowance by 12.3 per cent. The
CCNZ is seeking feedback on its
draft decision and Transpower’s
proposal by 27 June 2014.
NZ: Commerce Commission
releases decision on
Transpower upgrade
On 12 May 2014, the CCNZ
released its decision to approve
Transpower’s proposed NZ$161m
replacement and upgrade of the
lines between the Bunnythorpe
substation near Palmerston North
and the Haywards substation in
the Hutt Valley. Construction is
expected to be completed by
2020. Transpower estimates that
the investment will add 0.041
cents per kWh to consumers' bills.
WATER
Europe
UK: Ofwat issues draft
determinations for two water
companies
On 30 May 2014, the Office for
Water (Ofwat) published draft
determinations for Northumbrian
Water and Dŵr Cymru as part of
the 2014 price review. Under the
current plans submitted, Dŵr
Cymru will decrease customer bills
by 5 per cent in real terms over the
next price-control period
2015-2020, while investing more
than £2.5 billion. Northumbrian
Water will reduce customer bills by
2 per cent over the five-year price
control, with investment of £2.7
billion. The Ofwat considers this
investment will maintain and
improve services for customers
and the environment.
Australian
Regulatory
Round-up
COMMUNICATIONS
ACCC to continue mobile
termination regulation
On 17 June 2014, the ACCC
concluded its inquiry into the
regulation of mobile terminating
access services (MTAS). The
ACCC has decided to continue to
regulate mobile voice termination
services for a further five years
until 30 June 2019, and to regulate
short message services (SMS)
termination services for the first
time.
ACCC reports on breaches
of Telstra SSU
On 26 May 2014, the ACCC’s
annual report on Telstra’s
compliance with its Structural
Separation Undertaking (SSU)
was tabled in Parliament. The
report outlines a number of
occasions during the 2012-13
financial year where the ACCC
considers Telstra did not meet
certain commitments that it gave in
its SSU.
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REGULATORY OBSERVER
ACCC begins consultation
on regulated access to
wholesale
telecommunications services
On 23 May 2014, the ACCC
released a consultation paper
seeking views on non-price terms
of access for the regulated fixed
line services supplied using
Telstra’s copper network, and the
regulated transmission and mobile
termination services. The ACCC
has decided to consult separately
on setting non-price terms for the
regulated services, given the
number of complex pricing issues
covered by the ACCC’s current
telecommunications access
inquiries.
ACCC approves Telstra
measures to help migrate
customers to the NBN
On 22 May 2014, the ACCC
approved Telstra’s proposed
measures to support the migration
of customers on to the National
Broadband Network (NBN). These
measures relate to a specific
process that may be used by
NBN Co in limited circumstances
to connect premises to the NBN in
fibre-to-the-premises deployment
regions.
AER releases draft
amendments to the AER
Compliance procedures and
guidelines
On 13 June 2014, the Australian
Energy Regulator (AER) released
a Notice of draft instrument and
proposed draft amendments to the
AER Compliance procedures and
guidelines. The guidelines
establish an exception reporting
framework that applies to all
retailers and distributors in
jurisdictions that have adopted the
Retail Law. The proposed
amendments seek to refine the
reporting framework and to
improve the quality of reports
submitted by regulated entities.
Gotta Getta Group pays
infringement notices for
alleged misleading solar
offer
Disbury Holdings Pty Ltd, trading
as Gotta Getta Group, has paid
penalties totalling $20,400
following the issue of two
infringement notices by the ACCC
in relation to advertisements for
Gotta Getta Group’s solar
systems.
ENERGY
ACCC reauthorises energy
code of practice
IPART releases final report
on solar feed-in tariffs
On 6 June 2014, the ACCC
reauthorised an industry code of
practice for face-to-face energy
sales conducted by electricity and
gas retailers. Energy Assured
Limited was formed by energy
retailers to develop and manage
the code. It applies when energy
products are sold through house
visits and in other face-to-face
settings such as at kiosks at
shopping centres.
On 16 June 2014, the Independent
Pricing and Regulatory Tribunal
(IPART) released its final report on
solar feed-in tariffs for 2014-15.
IPART’s final decision is that the
benchmark range for voluntary
solar feed-in tariffs in 2014-15 is
4.9 to 9.3 cents per kilowatt hour.
The benchmark range is a guide to
retailers and customers on the
likely value of electricity exported
to the grid by customers from their
solar PV units. Electricity retailers
in NSW have the flexibility to set
their own feed-in tariffs.
AER publishes electricity
distribution network service
provider information for
2012-13
On 28 May 2014, the AER
published 2012-13 network
performance information on
regulated electricity distribution
businesses in NSW, ACT, QLD,
SA and Tasmania. The information
has been provided in response to
Annual Reporting Regulatory
Information Notices issued to the
businesses.
AER publishes retail energy
market update for Quarter 3,
2013-14
On 21 May 2014, the AER
published retail energy market
performance data for the third
quarter of 2013-14. Where
available, historical disconnections
data published by jurisdictional
regulators has been added for
comparative purposes.
AER releases March 2014
Quarterly compliance report:
National Electricity and Gas
Laws
On 9 May 2014 the AER published
its latest Quarterly compliance
report. The report summarises the
AER's compliance monitoring and
enforcement activities in the
wholesale electricity and gas
markets during the January-March
2014 period. It provides an
overview of the results of
investigations, compliance audits
and projects undertaken during the
quarter.
ACCC takes action against
Origin for alleged false and
misleading representations
On 8 May 2014, the ACCC
instituted proceedings in the
Federal Court of Australia against
Origin Energy Limited (Origin)
alleging that Origin made false or
misleading representations and
engaged in misleading or
deceptive conduct. The allegations
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REGULATORY OBSERVER
relate to representations made by
Origin to residential consumers of
electricity and/or natural gas in
South Australia about the level of
discounts off energy usage
charges that could be obtained
under Origin’s DailySaver energy
plans.
AEMC issues final report on
Annual Market Performance
Review
On 7 May 2014, the Australian
Energy Market Commission’s
Reliability Panel issued its final
report on the Annual Market
Performance Review 2013. The
Reliability Panel undertakes an
annual review which examines the
performance of the National
Electricity Market in terms of
reliability, security and safety of
the power system.
WATER
ACCC issues Water
Monitoring Report
On 8 May 2014, the ACCC
released its fourth annual Water
Monitoring Report for the
Murray-Darling Basin (MDB) under
the Water Act 2007. The report
details the impact of water-market
and water-charge reforms on
irrigation infrastructure operators
and their customers throughout the
MDB. These reforms reduced
barriers to water trade and
improved irrigators’ access to
water markets outside their
irrigation area, particularly in NSW
and South Australia.
TRANSPORT
ACCC report finds no
cross-subsidy in Australia
Post
On 6 June 2014, the ACCC issued
its ninth report assessing
cross-subsidy between the
services provided by Australia
Post. The ACCC uses information
provided by Australia Post in
accordance with ACCC
record-keeping rules to undertake
this work. Australia’s Post’s
regulatory accounts do not show
that it is cross-subsidising its
contestable services with revenue
from its monopoly services.
Instead, in 2012-13, the ACCC
found that Australia Post’s
contestable services as a whole
were a possible source of subsidy
for the monopoly service.
Regulatory Observer is a regular
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