The Commission is the economic regulator of certain South Australian ports. Under the Essential Services Commission Act 2002 (ESC Act), the Commission’s principal; objective is to protect the long-term interests of South Australian consumers with respect to the price, quality and reliability of essential services.
The principle objective of this review into the South Australian ports price regulatory regime is to examine whether or not price regulation should continue and, if so, what form should it take.
The Review has commenced with the release of a Discussion Paper to discuss some of the key issues identified by the Commission. Interested parties are encouraged to consider the issues raised and to provide their views in written submissions.
Publications
The Commission has received 7 submissions in response to its Discussion Paper released in November 2002.
Submissions
The Commission further released a Progress Report in May 2003 to examine the forms of price regulation that could be applied to Essential Maritime Services from 31 October 2004.
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There were 5 submissions received in response to the Progress Report.
Submissions
The Commission has reached draft conclusions in its review of price regulation of Essential Maritime Services (EMS) in Proclaimed Ports, which is required under the Maritime Services (Access) Act 2000 (MSA Act).
Whilst the Commission found that EMS presents a potential opportunity for the exercise of market power, it is of the view that the effects on economic efficiency of any misuse in this area would be limited. The Review’s draft findings also recognise that many port customers have reached commercial agreements for port use with the regulated operators, involving a variety of price and service combinations. The Commission would therefore not wish to hinder such activity.
The draft findings also concluded that a light-handed form of price regulation would be most appropriate for EMS. This should focus on removing the incentive for regulated operators to earn excess profits from that subset of customers over whom they could exercise market power, without applying undue regulation in other areas, and without unduly hindering the striking of commercial agreements between the parties.
The Commission invites comment from interested parties on this Ports Price Review’s Draft Report. Submissions are due by 17 September 2003.
Publications
The Commission has received 8 submissions to its Ports Price Review Draft Report.
The Commission is currently considering all the submissions and intends to release a Final Report in November 2003.
Submissions
The Commission has concluded its Ports Price Review. Having considered the submissions from interested parties, the Commission has concluded that a new form of ports price regulation is necessary.
The new form of price regulation for Essential Maritime Services (EMS) will involve 2 parts:
- price monitoring of Essential Maritime Services for a three year period; and
- negotiate/arbitrate arrangements in relation to grain berths2 – achieved by extending the
existing Ports Access Regime to cover cargo services at these berths.
The Commission is of the view that price monitoring allows regulated operators and their customers the freedom to negotiate commercial agreements, with the threat of re-regulation acting as an ongoing deterrent against the misuse of market power by regulated operators. Furthermore, the extension of the negotiate/arbitrate model of the Ports Access Regime will also provide ongoing regulatory support to commercial negotiations in the areas of greatest market power concerns.
To give effect to the final findings, the Commission will make a price determination under Part 3 of the Essential Services Commission Act 2002 (ESC Act), replacing the First Pricing Determination (FPD). This would set out a price monitoring regime across the full suite of EMS.
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