The Final Harper Competition Policy Review Report (Harper Review) was released on 31 March 2015. We set out below the key potential implications for networks businesses.
The Harper Review recommends creating a new Access and Pricing Regulator (APR) to regulate national access and pricing across various industries.
This recommendation would see the Australian Energy Regulator (AER), currently a constituent component of the Australian Competition and Consumer Commission (ACCC), incorporated into the APR. The APR would regulate a broader range of industries than the AER, including telecommunications, electricity, gas and bulk water. The separation of the AER from the ACCC has been the subject of much debate over a lengthy period. The Harper Review recommendation accords with various submissions, including from the States, advocating separation. If implemented, the creation of the APR would give rise to further transitional and continuity issues. Electricity and gas networks would have their third regulator in four price resets.
In respect of telecommunications, the Harper Review recommendation accords with the finding of the Vertigan Panel that the telecommunications industry does not require an industry specific regulator.
In respect of access, the Harper Review proposal would see the National Competition Council (NCC) dissolved, with the APR taking over the NCC's declaration functions (e.g. gas pipelines).
The proposed regulatory structure would further encourage the existing trend toward convergence of approach to network regulation across different industries, evident for example in the shift in telecommunications regulation from a Total Service Long Run Incremental Cost (TSLRIC) methodology to a building block methodology in recent years.
Integration of the National Electricity Market (NEM) with Western Australia and Northern Territory
The Harper Review supports moves to include Western Australia and the Northern Territory in the NEM (albeit without physical connection). Western Australia's electricity market review is presently considering the adoption of the NEM regime for regulation of the Western Power Network area. The Northern Territory has already committed to adopting the NEM regime in respect of network regulation.
The Harper Review recommended that a specific prohibition on price discrimination should not be re-introduced into the Competition and Consumer Act 2010 (CCA).