The Australian Competition and Consumer Commission has issued a final determination accepting NBN Co’s submission on its revenue controls for 2015-16.
The ACCC is required to make annual determinations on NBN Co’s revenue controls. The decision sets the amount of revenue that NBN Co is allowed to earn each financial year in order to recover the costs of providing services. The ACCC has also determined that NBN Co’s prices did not exceed the maximum regulated prices in 2015-16.
“The ACCC’s final decision accepts NBN Co’s proposed allowable revenues for 2015-16,” ACCC Commissioner Cristina Cifuentes said.
“The ACCC has required additional testing to ensure that NBN Co’s costs are incurred in a prudent and efficient manner and meet the expenditure criteria set out in the Special Access Undertaking.”
This decision includes values for NBN Co’s actual capital and operating expenditure for 2015-16, as well as values for regulated assets and accumulated losses.
The SAU also caps the prices that NBN Co is allowed to charge for its services, and sets out the process for pricing new products. As part of this process, NBN Co is required to certify that its prices have not exceeded these caps.
The ACCC’s final determination, its reasons for making the final determination, and NBN Co’s 2015-16 LTRCM proposal and supporting documents are available on here: NBN Co – Special Access Undertaking – LTRCM 2015-16
The ACCC is required to make a determination on NBN Co’s revenue controls each year. This is conducted in accordance with the Long Term Revenue Constraint Methodology (LTRCM), which is set out in NBN Co’s Special Access Undertaking (SAU). The SAU is a key component of the regulatory framework for the National Broadband Network and contains provisions that encourage NBN Co to incur expenditure efficiently.
The LTRCM determines NBN Co’s allowable revenues to cover the costs of providing its services each financial year. Where NBN Co is unable to recover its allowed revenue in a particular year, the difference between allowed revenue and actual revenue goes into a cost recovery account. NBN Co will have the opportunity to recover these accumulated losses over time as the take up of NBN services increases.
The ACCC published a draft determination in April 2017, seeking submissions on the NBN Co’s proposed LTRCM. The ACCC’s consultation period in respect of its draft determination ended in May 2017. No submissions were received.