Directions Hearing – Communiqué 25 July 2014

Industry Panel Directions Hearing – Communiqué 25 July 2014

The Industry Panel held a directions hearing on 25 July 2014 in Canberra with a focus on its proposed approach to the review. Subsequent public hearings will deal with the more substantive issues of the pricing direction.

President Ms Mary Anne Hartley QC, and Members Ms Claire Thomas PSM and Ms Sally Farrier presided.  This was an open hearing.  A transcript as well as list of attendees will be published to the Panel's website.

The Panel President opened the hearing by outlining the Panel's scope and process in the context of its legislative framework. Ms Hartley emphasised the Panel's commitment to make the entire review process open and transparent.

• As a first step, the Panel had written to ACTEW and other parties to the review, inviting them to make submissions ahead of this directions hearing. Five submissions were received, all of which are available online.
• The Panel will also invite public submissions in response to issues that are raised in ACTEW's Statement of Facts and Contentions (refer below), or any other relevant matters that should be considered as part of the review.
• Broader feedback from the ACT community will be sought through two public hearings and consideration of written submissions once the Panel has released its draft report for comment.

The Panel determined that ACTEW's application for a review is not frivolous or vexatious on the basis that the ICRC decision potentially has material implications for ACTEW, and having received no submissions to the contrary. This determination means that a review will proceed.

The following points were also made:

• The review is likely to involve consideration of multiple issues, which will require the Panel to make careful judgements about trade-offs in reaching its final decision.
• The Panel sees its over-riding objective as reaching the correct or preferable decision about the price direction, noting that this is a merits review.
• In reaching an evidence-based and balanced decision, the panel will be informed by consultation as well as accepted, well-tested regulatory techniques.
• The Panel is cognisant of the key drivers of price – namely demand, the return on capital, operating expenditure and capital expenditure – and the need for appropriate information and data on all these respective inputs.
• The Panel also notes the implications of the inter-relationships between the different elements of the pricing direction – for example, a change in the length of the regulatory period will require a recalibration of certain parameters (which, in turn, will require the relevant information to undertake any recalibration).

The Panel then summarised and responded to the key issues raised in submissions received to date.

• ACTEW was directed to supply a Statement of Facts and Contentions documenting its reasons for requesting the review, which is to be submitted to the Panel by 31 July 2014. Details of what is to be included in this statement are available on the panel's website through the following link to the Industry Panel Directions Hearing Slides. (PDF 228KB) (Word 37KB)
• There will be opportunity for the public to provide input – in response to ACTEW's Statement of Facts and Contentions, at public hearings, and through submissions.
• Submissions and correspondence from any interested party will be published on the Panel's website (unless these are provided on an in-confidence basis and the Panel assesses that the claims for confidentiality are reasonable).
• The Panel accepted that sufficient time is required between the close of written submissions and the public hearing of review issues. Accordingly, it changed its timetable to allow at least two weeks between these milestones.
• Given the need to resolve ACTEW's prices for water and sewerage services expeditiously, the scope of the issues that the review can consider must necessarily be limited to those that have the most material impact on stakeholders.
• While there may be merit in examining alternative pricing structures in future price determinations, the Panel does not consider the present review is likely to be the appropriate vehicle for embarking on wider pricing reforms.

The Panel also outlined those documents that it intends to consider during the review process.  These include the terms of reference of the original pricing investigation and all relevant laws, ACTEW's application for review and forthcoming Statement, ICRC's public reports and pricing models, public submissions related to the pricing decision, and relevant decisions made by other utility regulators.

No additional matters were raised by attendees.

Next steps

31 July - ACTEW's Statement of Facts and Contentions is due to be submitted to the Panel and will be published to the Panel's website.

15 August – Closing date for all other submissions regarding the issues that the Panel needs to consider as part of the review. These may respond to issues raised in ACTEW's Statement of Facts and Contentions, and/or raise any other relevant matters that should be considered. Further details are available through the following link to the Industry Panel Directions Hearing Slides. (PDF 228KB) (Word 37KB)

1 September – A public hearing on the review issues will be held at 11:30am on 1 September 2014 at the CIRSO Discovery Centre, North-Science Road, Acton, ACT 2601.

At the Industry Panel Directions Hearing – 25 July 2014, the Industry Panel indicated that the following documents be published on the Panel's website.

Industry Panel Directions Hearing Transcript (PDF 335KB) (Word 596KB)

Industry Panel Directions Hearing Attendance List (PDF 491KB) (Word 46KB)

Industry Panel Directions Hearing Slides. (PDF 228KB) (Word 37KB)