The Australian Competition and Consumer Commission (ACCC) today approved an agreement between NBNCo and SingTel Optus for the migration of Optus’ hybrid fibre coaxial (HFC) customers to the forthcoming national broadband network and the partial decommissioning of Optus’ HFC network. NBNCo will pay A$800 million to Optus as part of the deal.
The ACCC decided that the resulting lessening of competition from the agreement was outweighed by benefits to the public good. Justification for this rested on a range of issues, including the fact that Optus did not intend to improve or expand its HFC service in the future so that its network would only provide a close substitute to the NBN for lower end broadband services. Further, and partly as a result of this lack of investment, growing customer demand for higher speed services means consumers would naturally migrate to the NBN (and away from the HFC network) over time if the agreement did not proceed. The HFC network would then be uneconomic to operate once a critical mass of customers were lost. This decision confirms a draft decision made by the ACCC in May 2012.
Frontier (Australia) advised Optus and NBN Co in regard to their submissions to the ACCC.
For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
The Mining Task Force of the Asia-Pacific Economic Cooperation (APEC) has published a report on the impact for ten APEC economies of changes to European Union (EU) classifications regarding carcinogenicity that are applicable to nickel and nickel-based products. The report was sponsored in APEC by the Russian Federation and prepared by the Nickel Institute, based on analysis by an international consortium of consultants led by Frontier (Australia).
The analysis was based on an assessment of the nickel value chain and development of scenarios projecting changes to health and environmental regulation. Such scenarios could result from the implementation of EU classifications, including their possible implementation in APEC economies. Frontier used a computable general equilibrium model, augmented by a model of the nickel value chain, to estimate the impact of the regulatory scenarios. The modelling showed potentially substantial impacts on the nickel value chain in the ten economies. However, the overall economic impact was limited, because of the small share of the nickel value chain in these economies, and the likelihood that employment and investment would shift to other sectors should the nickel value chain in these economies shrink. With current environmental and occupational exposure to the classified substances being very low, the negative impacts can be reduced by ensuring that regulation of nickel chemicals remains predictable, and proportionate to the risks they pose.
For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
The long debate surrounding carbon pricing in Australia entered a new phase on Sunday, 1 July with the commencement of Australia’s carbon pricing scheme at a $23/tonne CO2-e starting price. Based on the first day of volume-weighted average pool prices across New South Wales, Queensland and Victoria, the introduction of a carbon price has lead to a roughly $23/MWh increase in pool prices. This reflects a rate of carbon price pass-through into wholesale pool prices of approximately 100%, and an average pool price increase due to carbon of 66%.DOWNLOAD FULL PUBLICATION
The long debate surrounding carbon pricing in Australia entered a new phase on Sunday, 1 July 2012 with the commencement of Australia’s carbon pricing scheme at a $23/tonne CO2-e starting price. Both economic theory and electricity futures markets have pointed towards a relatively large share of the carbon price being passed through into wholesale electricity prices at the commencement of the scheme. Based on NEM market prices on the first day of carbon pricing, this expectation has held true.
Danny Price, Managing Director of Frontier Economics (Australia) commented
“We estimate that the $23/tonne carbon price was passed-through at just over 100% on the first day of trading in the NEM, resulting in a $23.04/MWh estimated increase in the daily average pool price across New South Wales, Queensland and Victoria. This reflects a 66% increase in the daily-average wholesale price as the result of carbon.”
Frontier (Australia) discusses the first day of carbon pricing in this paper.
For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
Regulated electricity tariffs in New South Wales increased today, following a decision by the Independent Pricing and Regulatory Tribunal (IPART) as part of its annual review of electricity prices. IPART’s final decision allows for an average price increase of 18% for residential and small business customers, with most of the price increase due to an increase in network costs and the introduction of the carbon price.
Frontier (Australia) produced a report for IPART assessing the impact of introducing a carbon price on the cost of supplying electricity to customers on regulated retail tariffs. Using detailed modelling of the National Electricity Market, the report concludes that the carbon price would be passed through to wholesale pool prices at a rate of close to 100%, accounting for the significant rise in electricity prices.
For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
