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Legislative Assembly for the ACT: 2002 Week 5 Hansard (9 May) . . Page.. 1485 ..

Water and sewerage assets-management

(Question No 139)

Ms Tucker asked the Treasurer, upon notice, on 10 April 2002:

In relation to the management of the ACTEW's water and sewerage assets and services by ActewAGL:

(1) Does the contract between ACTEW and ActewAGL include a two phase arrangement whereby there is a transitional period between the commencement of ActewAGL joint venture and the next scheduled regulatory review of water and sewerage services by the Independent Pricing and Regulatory Commission (IPARC).

(2) What are the operational and contractual differences between these two phases.

(3) When is the next review by IPARC scheduled to be completed.

(4) Is there scope within the contract for the contract to be terminated at (a) the end of the first phase, and (b) during the second phase, and if so, under what circumstances can the contract be terminated.

Mr Quinlan: The answer to the members' question is as follows:

(1) The contract between ActewAGL and ACTEW Corporation contemplates two phases, the first in the nature of an 'alliance' arrangement, the second to be negotiated by 30 September 2004 and to reflect more 'arms length' commercial contracting arrangements. There is no direct link in the contract between the phases and any regulatory review by the Independent Competition and Regulatory Commission (ICRC), other than a general co-incidence of timing. The ICRC replaced IPARC in March 2000.

(2) During the first phase, ActewAGL provides services to ACTEW Corporation in an alliance framework. The intent of this phase is that ACTEW and ActewAGL work together to develop a clear understanding and definition of the costs and risks involved in management of the water and sewerage business, and that the parties work together to resolve any issues which may arise, rather than reverting to a strict contractual resolution.

The second phase of the contractual relationship has been broadly defined, but will be ultimately negotiated taking into account the outcomes of the first phase. Broadly, the second phase contract will be more 'arms length', in nature, with ActewAGL taking more responsibility and financial risk for delivery of services and outcomes than in the initial alliance phase.

(3) The current water pricing path has been set by the ICRC and is due to be reviewed and replaced with effect from mid 2004.

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