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Legislative Assembly for the ACT: 1998 Week 8 Hansard (29 October) . . Page.. 2469 ..

MR HUMPHRIES (continuing):

Mr Speaker, a survey by Ernst & Young and Sinclair Knight Merz that was published in Business Review Weekly this week showed a very interesting result when it comes to customer loyalty in that area. It found that electricity customers feel very little loyalty to their local networks when it comes to buying services. Bear in mind that within 24 months ACT residential customers will also be floating customers, like phone purchasers before and other people, able to purchase electricity from people other than ACTEW. That survey found that the price was an overriding impetus prompting customers to switch power contracts and already 50 per cent of customers surveyed across Australia had signed contracts with alternative suppliers. Of the 200 customers surveyed, 38 per cent were reporting savings of at least 30 per cent on their power bills. Mr Speaker, I ask members of this place to ask themselves this question: If it is possible to obtain savings of that kind from other suppliers in the retail market when ACTEW is open to residential competition, do people seriously imagine that the people who are busily signing off these petitions on ACTEW will not move over to the new suppliers when they get that competitive price edge? Of course they will. Thirty-eight per cent of customers on top of that first 38 per cent were saving between 15 and 30 per cent. The BRW article quotes Mark Green as saying:

Generators are being squeezed by low prices in the wholesale electricity market and retailers are getting zero or negative margins.

What that means, Mr Speaker, is that ACTEW, as a retailer of electricity, can expect to get a zero or a negative margin as it competes to retain current business or bid for new businesses.

Mr Smyth: Can you run a business with a zero margin?

MR HUMPHRIES: It is not very easy, Mr Smyth, not very easy at all. For one thing, it means that your dividend as a shareholder goes down. It goes down really fast, Mr Speaker, and the benefits of retention by a shareholder are pretty marginal, if they exist at all. Mr Speaker, ACTEW's market is being eroded already and, as I say, we have not yet hit the big hurdle, which is the residential market hurdle. When the residential market is open to competition, the asset that those people opposite seem to think is so valuable is suddenly going to be subject to such fierce competition that it is going to be very hard indeed - in fact, it is almost inconceivable - for ACTEW to be able to retain all the customers it now has.

Where is it going to obtain the money to provide the dividends it now does, without all those customers? Mr Speaker, perhaps the ALP would prefer to retain ACTEW as a monopoly with a status which it enjoyed in the past, not to allow other people - - -

Mr Quinlan: You can.

MR HUMPHRIES: Mr Quinlan says that it can. It could have, except for the deal reached in 1994 by the Follett Government to open up the market to competition. When that deal was reached, the capacity of ACTEW to remain insulated from competition ended, as of that date. So, Mr Speaker - - -

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