International and Australian regulatory
developments and decisions
Issue 54
REGULATORY
OBSERVER
International and Australian regulatory
developments and decisions
13 December 2013
02
UK Government
announces
cross-sectoral study in
National Infrastructure
Plan
03
International
Regulatory Round-up
04
Australian Regulatory
Round-up
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REGULATORY OBSERVER
UK Government announces cross-sectoral
study in National Infrastructure Plan
On 5 December 2013, the UK Treasury and Infrastructure UK issued the updated National Infrastructure Plan
2013. The first of these plans was issued in 2010. The latest iteration sets out the challenges facing UK
infrastructure and the government’s strategy for meeting the infrastructure needs of the economy.
The plan includes a forward-looking infrastructure pipeline, including detail on the status of planned and potential
infrastructure investments in the UK. The infrastructure pipeline is a bottom up assessment of potential
infrastructure investment to 2020 and beyond, which includes large infrastructure projects with a capital value of
£50 million and over. The pipeline also includes large capital programmes of investment of £50 million or over,
which may consist of a number of smaller projects which are grouped together and are often rolling investments.
The overall value of the pipeline has increased from over £309 billion to over £375 billion of investment since the
previous update. Most of the value of the pipeline is in the energy and transport sectors, totalling over £340
billion of combined investment.
As part of the plan, the Treasury and Department of Business, Innovation and Skills (BIS) have initiated a joint
cross-sectoral study. The study, which will be conducted with expert input from UK regulators, will focus on the
way regulators work together and with government on issues related to cross-sector infrastructure delivery. More
specifically, the study will consider:



how economic regulators can better address cross-sector issues and achieve efficiencies in their own
decision-making processes;
the role regulators should have in supporting economic growth, and how their duties contribute to this;
and
options to improve the impact of the regulatory environment on consumer outcomes.
The study will make recommendations in the UK Spring 2014.
In response to the study’s announcement, the Civil Aviation Authority (CAA), the Office of Communications
(Ofcom), the Office of Gas and Electricity Markets (Ofgem), the Office of Rail Regulation (ORR) and the Office
of Water Services (Ofwat) issued a joint statement.
The regulators noted they have already taken steps to work more closely on issues of cross-sectoral significance
and in learning lessons across industries. The regulators will undertake further work to assess the overall
affordability of infrastructure on customer bills; lessons from each sector on empowering consumers to get the
best deals and how, working together, they can help to improve the environment for efficient investment in UK
infrastructure.
A wider group of UK economic regulators is also developing a collaborative programme of work on
cross-sectoral issues, which will be announced in the UK Spring. This group includes the CAA, the Ofcom, the
Ofgem, the Financial Conduct Authority, Monitor, the ORR, the Utility Regulator for Northern Ireland, the Ofwat
and the Water Industry Commission for Scotland.
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REGULATORY OBSERVER
International
Regulatory
Round-up
COMMUNICATIONS
Americas
US: FCC clarifies foreign
ownership policy for
broadcast industry
The Federal Communications
Commission (FCC) has clarified its
policies and procedures for
reviewing transactions in the
broadcasting industry that would
result in foreign ownership stakes
exceeding a 25 per cent
benchmark set by statute. The
ruling clarifies the FCC’s intent to
review applications and petitions
for declaratory rulings proposing
such ownership on a case-by-case
basis.
US: FCC releases data on
local telephone competition
The FCC has released data on
local telephone competition in the
United States as at 31 December
2012. The data demonstrate
continued growth in subscribership
to Voice over Internet Protocol
(VoIP) and mobile telephony
services, and continued decline in
subscribership to traditional wired
telephone services.
US: FCC’s Connect America
Fund to expand rural
broadband
The FCC’s Connect America Fund
has authorised over $US255
million of funding to provide new
broadband access to over 400,000
homes and businesses in rural
areas of 41 states. The Connect
America Fund is part of the FCC’s
initiative to bring broadband
access to rural communities. Five
carriers will use the funds in rural
portions of their service areas
where, absent support from the
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REGULATORY OBSERVER
Connect America Fund,
broadband expansion is unlikely.
Europe
UK: Ofcom report reveals
increased broadband
take-up
The Ofcom’s annual Infrastructure
Report has revealed that, in June
2013, 73 per cent of UK premises
could receive superfast
broadband, up from 65 per cent in
2012. Some 22 per cent of
broadband connections are
superfast, up from 10 per cent last
year. The Ofcom and the
European Union (EU) define
superfast broadband services as
those delivering download speeds
of 30 megabits per second or
more.
UK: Ofcom consulting on
blueprint for meeting future
mobile demand
The Ofcom has begun consulting
on its Mobile Data Strategy, which
is aimed at meeting the growing
demands that will be placed on the
UK’s wireless communications
infrastructure over the next two
decades.The Ofcom has identified
a number of new spectrum bands
as potential candidates for future
mobile broadband use. When
combined with developments in
mobile technology, such as 5G,
and the introduction of more
advanced mobile networks, the
Ofcom estimates that this new
spectrum could boost mobile data
capacity by more than 25 times
between now and 2030.
Oceania
NZ: Commerce Commission
releases final decision on
Unbundled Bitstream Access
On 5 November 2013, the New
Zealand Commerce Commission
(CCNZ) released its final decision
on the additional costs of Chorus’s
unbundled bitstream access
(UBA) service. These are the
costs of providing the UBA service
over and above the unbundled
copper local loop (UCLL) price
component. The additional UBA
cost component will be $NZ10.92
per line per month, applying from
1 December 2014.
NZ: Commerce Commission
consults on Unconditioned
Copper Local Loop
The CCNZ has released a
consultation paper for the Final
Pricing Principle (FPP) of Chorus’s
UCLL Service. This paper seeks
views on the process that the
CCNZ should take, as well as
some of the key issues to address
in setting the final price for the
UCLL Service using the Total
Service Long Run Incremental
Cost (TSLRIC) methodology. The
CCNZ is seeking submissions on
the consultation paper by 31
January 2014.
ENERGY
Europe
UK: Ofgem holds conference
on re-engaging consumers
On 5 November 2013, the Ofgem
held a conference for industry
leaders, suppliers and consumer
groups to discuss how they can
work together to better engage
consumers in the energy market.
The conference was chaired by
Ofgem Chairman, David Gray and
featured presentations from a
range of industry stakeholders.
Oceania
NZ: Commerce Commission
adjusts Transpower’s
maximum allowable
revenues
The CCNZ has reduced electricity
transmission provider
Transpower’s maximum allowable
revenue for the coming pricing
year from 1 April 2014 to 31 March
2015 by $NZ25.1 million, from
$NZ959.7 million to $NZ934.6
million. The reduction in the 201415 maximum allowable revenue
has been made to account for the
fact that Transpower overrecovered from customers in the
2012-13 year. This over-recovery
was caused by Transpower’s
regulatory asset base being
smaller than forecast and the laterthan-expected commissioning, on
average, of new assets.
NZ: Commerce Commission
determines Orion’s
customised price-quality path
The CCNZ has determined
electricity distributor Orion’s
customised price-quality path for
2014-2019, which takes into
account Orion’s circumstances
following the Canterbury
earthquakes in 2010 and 2011. In
its final decision, the CCNZ has
allowed Orion to increase prices
by up to 8.4 per cent from
1 April 2014, which will result in an
average increase of approximately
$NZ4.80 per month to a typical
household customer. Further
annual increases at the consumer
price index (CPI) plus 1 per cent
will be allowed until 2019. The
quality standards require the
reliability of supply to gradually
improve over the period to 2019,
towards pre-earthquake levels.
NZ: Commerce Commission
settles with Wellington
Electricity on price breach
The CCNZ has signed an
out-of-court settlement agreement
with Wellington Electricity after it
breached its price path for the
1 April 2011 to 31 March 2012
assessment period. Wellington
Electricity exceeded the price path
by $NZ116,757 because the costs
it was able to pass through to
consumers came in lower than it
had forecast. Wellington Electricity
will reduce the amount it can earn
in the 2014-2015 year by
$NZ148,214 to compensate for the
amount it over charged in the
2011-2012 year. This amount
reflects the gain to Wellington
Electricity as a result of the breach
and has been adjusted for the time
value of money.
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REGULATORY OBSERVER
WATER
Europe
UK: Ofwat receives business
plans
The Ofwat has confirmed that
regulated water companies have
submitted their business plans for
the period 2015-2020. Companies
that deliver plans that the Ofwat
judges outstanding across the
board will benefit from a fast-track
approval process; plans requiring
some intervention will go through a
standard process while any
company whose plan has
significant shortcomings will be
asked to resubmit. Final decisions
on prices will be made by January
2015, with new bills coming into
effect in April 2015.
UK: Ofwat rejects Thames
Water price rise
The Ofwat has rejected Thames
Water's application for an
additional price increase for
2014-15. Within the three-month
timescale for assessing the
application, the Ofwat found that
the evidence the company
submitted did not justify its
proposed £29, or 8 per cent,
additional increase in customers'
bills. The Ofwat’s decision means
the maximum that Thames Water
can add to customers’ bills for
2014-15 is still 1.4 per cent above
inflation, as set in the 2009 price
review.
POST
Europe
UK: Ofcom issues annual
monitoring update on postal
sector
The Ofcom has issued its annual
monitoring update on the UK
postal sector. The update shows
that the universal postal service
delivered by Royal Mail is moving
closer to long-term financial
sustainability, following
improvements in performance.
However, the Ofcom has told
Royal Mail it must improve
important aspects of the service it
provides to postal users after
missing some key performance
targets.
Australian
Regulatory
Round-up
COMMUNICATIONS
ACCC accepts NBN Co
Special Access undertaking
On 13 December 2013, the
Australian Competition and
Consumer Commission (ACCC)
accepted the varied Special
Access Undertaking (SAU) lodged
by NBN Co on 19 November 2013.
The varied SAU incorporates all of
the changes in the ACCC’s notice
to vary and replaces the
undertaking submitted by NBN Co
in December 2012.The SAU will
form a key part of the framework
for governing prices and other
terms upon which NBN Co will
supply services to
telecommunications companies
over the National Broadband
Network (NBN) until 2040.
ACCC to not oppose
NBN Co’s proposed
acquisition of TransACT’s
fibre network
On 14 November 2013, the ACCC
announced that it would not
oppose the proposed acquisition of
TransACT’s fibre to the premises
(FTTP) network by NBN Co. The
ACCC considered that it was
highly unlikely that NBN Co would
overbuild the TransACT FTTP
network in the absence of the
proposed acquisition. The ACCC
therefore concluded that the
proposed acquisition represents a
bare transfer of assets and
wholesale market share from
TransACT to NBN Co.
ENERGY
AER releases final
expenditure incentives,
expenditure assessment and
shared asset guidelines
On 29 November 2013, the
Australian Energy Regulator
(AER) released three guidelines
as part of its Better Regulation
reform program relating to:



expenditure forecast
assessment;
expenditure incentives; and
shared assets.
The expenditure forecast
assessment guideline describes
the process, techniques and
associated data requirements for
the AER approach to setting
efficient expenditure allowances
for network businesses. The AER
approach to assessing efficient
expenditure is closely linked to its
expenditure incentive measures.
The expenditure incentives
measures include the AER’s
capital expenditure incentives
guideline and efficiency benefit
sharing scheme. These give
electricity network businesses
incentives to spend efficiently and
share the benefits of efficiencies
with consumers. The incentive
schemes are integrated with the
AER’s approach to forecasting to
promote efficient spending.
The shared asset guideline
outlines how consumers will
benefit from the other services
electricity network businesses may
provide using the assets
consumers pay for.
AER releases first annual
performance report on retail
energy market
On 26 November 2013, the AER
released its first annual
performance report on the retail
energy market under the National
Energy Retail Law, which started
in South Australia, the Australian
Capital Territory (ACT) and
Tasmania (for electricity only)
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REGULATORY OBSERVER
during 2012-13. The AER monitors
retail market and retailer
performance in key areas including
number of active retailers,
customer switching rates, the
number of customers in debt,
average debt levels, the numbers
disconnected for non-payment and
the assistance provided to
customers experiencing payment
difficulties. The report also focuses
on customer service levels
provided by retailers, including the
performance of their call centres
and the rates of complaints across
retailers.
AER approves Victorian gas
network tariffs for 2014
On 22 November 2013, the AER
approved gas distribution and
ancillary reference services tariffs
for the period 1 January to
31 December 2014 in accordance
with the 2013-17 Victorian access
arrangements for Multinet,
Envestra Albury, Envestra Victoria
and SP AusNet. Relevant
documentation is available on the
AER website.
AER releases confidentiality
guideline
On 19 November 2013, the AER
released the final confidentiality
guideline as part of the Better
Regulation reform program. The
guideline sets out how energy
network businesses must make
confidentiality claims over
information they submit to the
AER.
Victorian electricity
distributors submit pricing
proposals
On 31 October 2013, the Victorian
distribution network service
providers proposed annual
network tariffs for the twelve
months commencing on
1 January 2014. The AER will
assess these for compliance
against the distribution
determination price controls and
whether all energy consumption
estimates are reasonable, as
required by the National Electricity
Rules.
AEMC releases issues paper
on Review of Electricity
Customer Switching
The Australian Energy Market
Commission (AEMC) has
published an Issues Paper to
commence its Review of Electricity
Customer Switching arrangements
in the National Electricity Market.
The review is focused on
supporting customer choice and
facilitating efficient switches
between retailers. Stakeholders
are invited to provide submissions
by 24 December 2013.
TRANSPORT
ACCC releases petrol report
The ACCC has released its
Monitoring of the Australian
petroleum industry report for 2013.
The report analyses the prices,
costs and profits of unleaded
petrol in Australia. The report
shows that international prices and
domestic fuel taxes are the key
drivers of petrol prices. Domestic
petrol prices remained high in
2012-13 on the back of
persistently high international
prices
ACCC accepts fuel discounts
undertakings from Coles and
Woolworths
On 6 December 2013, the ACCC
accepted undertakings from Coles
and Woolworths that they will each
voluntarily cease making fuel
saving offers which are wholly or
partially funded by any part of their
business other than their fuel
retailing business, and will in
addition limit fuel discounts which
are linked to supermarket
purchases to a maximum of 4
cents per litre. By removing the
funding by supermarkets and
limiting the supermarket offers to a
maximum of 4 cents per litre the
ACCC considers that other fuel
retailers will be able to compete on
a more level playing field.
ACCC releases stevedoring
report
On 7 November 2013, the ACCC
released its fifteenth Container
stevedoring monitoring report. The
report highlights that further
economic reforms are required if
future benefits of continuing
industry reforms and increasing
competition in the container
stevedoring industry are to be
realised. The report notes the
following reforms need to be
considered:
1. Reform to heavy vehicle road
provision so that the right
investments in the right roads
can occur;
2. Develop better signals for
exporters and importers to
enable them to make better,
informed decisions about
‘modal choice’ i.e. whether to
use road or rail services to
move containers;
3. Use pricing mechanisms to
incentivise truck operators to
better use landside facilities,
such as through peak-period
pricing, which can encourage
off-peak access to terminals.
ACCC seeking views on
Graincorp’s port terminal
access arrangements at
Newcastle
The ACCC has released an Issues
Paper seeking views on whether
the scope of regulation of
GrainCorp’s bulk grain port
terminal in Newcastle should be
reduced due to the presence of
other bulk export grain facilities at
the Port of Newcastle. The ACCC
is inviting submissions on
GrainCorp’s application to vary its
Access Undertaking for its
Carrington grain terminal. The
ACCC is seeking public
submissions from interested
parties by 31 January 2014.
ACCC issues draft decision
on Viterra's wheat port
undertaking
On 21 November 2013, the ACCC
issued a draft decision proposing
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REGULATORY OBSERVER
to consent to Viterra’s application
to extend and vary its 2011 Port
Terminal Services Access
Undertaking. In addition to the
application to extend the
undertaking, Viterra also proposes
to make a number of variations to
its 2011 undertaking. Proposed
variations include changes to the
first–in-first-served booking
process, the suspension of portloading protocols during periods of
force majeure, and the movement
of bookings between Inner
Harbour and Outer Harbour
facilities in Adelaide.
Regulatory Observer is a regular
publication of the Australian
Competition and Consumer
Commission. For editorial
enquiries and mailing list enquiries
please contact Simon Haslock
(simon.haslock@accc.gov.au).