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Legislative Assembly for the ACT: 1998 Week 2 Hansard (21 May) . . Page.. 515 ..

MS TUCKER (continuing):

The new electricity market throws up many challenges, and I acknowledge that. Despite being only a small part of ACTEW's overall profits, electricity retailing is where all the risks are held. That is why the company needs to look to growth not from selling electricity, but from selling energy services. As members are aware, I was threatened with defamation action last year for criticising ACTEW's hedging contract with Yallourn. I noted with some interest the comment from the pricing commissioner that he is not convinced that ACTEW has purchased wisely in the competitive market.

The flawed implementation of a green choice scheme is another case in point. ACTEW has also been very slow to join the greenhouse challenge. While other retailers around the country are seizing the opportunities in the new environment, ACTEW is letting business slip through its fingers. For example, the University of Canberra entered into an energy management program not with ACTEW, but with Energy Australia. We are not even capturing areas where we should have a comparative advantage.

Obviously, ACTEW's management structure is also relevant to ACTEW capturing new market opportunities. The Fay Richwhite report does make the comment that, while ACTEW's small home market is disadvantaged in terms of achieving scale economies, its multi-utility nature means that it should be able to capture economies of scope. It is, therefore, surprising that ACTEW has recently restructured its management structure to separate water and electricity, as this may jeopardise the capacity of the company to achieve these economies of scope. In conclusion, I look forward to a lot more debate about how ACTEW can be redirected to focus on the opportunities of the next century - clean energy, energy efficiency, and other new energy services - as well as to maximise the potential of the world-class water technology that it has already developed.

MR QUINLAN (4.54): Mr Speaker, as Mr Corbell mentioned earlier, we recognise that Fay Richwhite has experience to bring to bear on this question. However, that experience does include direct involvement and participation in privatised electricity supply, and that is a bit of a worry in terms of just how objectively it might have come to the question. The report does paint a negative picture of ACTEW's prospects of survival in the big, bad commercial world. I might add, as Mr Corbell has said, that the comments on ACTEW by the independent regulator are also disturbing and indicate that ACTEW might not be measuring up, or might not be able to measure up, in that market.

I am concerned that the report writes off altogether ACTEW's ability to compete. If Fay Richwhite is right, then that is a commentary on the overall competition policy. That seems to imply that at least the electricity supply industry is heading towards oligopoly, much as the oil industry is today, and that consumers will end up to some extent being at the whim of a few suppliers that will work in concert - those that have deep pockets and are killing off the competition now. I would recommend to the Government that, through our participation in COAG, we bring this to the table; that we actually challenge the breakneck speed at which we are heading towards a market economy, when, in fact, most of us believe that we are going to live, and do live, in a mixed economy. There is a hell of a difference when it comes to essential services.

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