ACCC confirms reduction in regulated transmission prices

23 Oct 2020

Wholesale transmission services prices in many regional and rural parts of Australia are to be reduced ‘substantially’, following the Australian Competition and Consumer Commission’s (ACCC’s) decision to reduce the regulated prices for the declared Domestic Transmission Capacity Service (DTCS). In a press release regarding the matter, the ACCC noted that it regulates transmission services in areas where there is little competition between transmission providers or limited infrastructure. In its 2020 DTCS final access determination (FAD) the regulator has set pricing which it said is significantly lower than the previous regulated prices. As an example, it said that regulated prices for high capacity services will be 60% lower than the previous FAD, while low capacity services will see prices fall by 35%. The prices set out in the FAD are reportedly based on a benchmarking model developed by the ACCC in 2016, which uses transmission prices on competitive routes to determine appropriate prices on regulated routes. According to the regulator, the 2020 FAD reflects the overall decline in prices since 2016, while also considering the higher costs and risk for providing undersea cable services to Tasmania and Christmas Island. The prices for the DTCS will apply until 31 March 2025.

Commenting on the matter, ACCC chair Rod Sims said: ‘We expect these lower prices will promote competition in downstream retail markets which will lead to lower prices as well as new, innovative services for consumers … The downward trend in commercial transmission prices has continued over the past five years, which is reflected in the lower regulated DTCS pricing.’