NCP Inquiry 
Productivity Commission 
PO Box 80 
BELCONNEN ACT 2616 

Dear Commissioner 

Re: National Competition Policy Inquiry 

Thank you for the opportunity to respond to the National Competition Policy Inquiry. 

Power and Water Corporation is currently the sole utility service provider for public electricity, water and sewerage services in the Territory. Power and Water become a Government Owned Corporation on 1 July 2002. 

In the Northern Territory context the most significant areas of reform affecting Power and Water have been those relating to the electricity market, water pricing and management, and corporatisation.  

Providing for competition will not necessarily result in competition In 1he NT electricity market, given the existing barriers to entry, which include: 
•	only one source of gas; any competing generator in the NT would be subject to the same gas price as Power and Water (or higher fuel costs if diesel was used) 
•	limited gas is available for sale to new market entrants 
•	there has been slow growth in electricity demand, reflecting low population growth and slow industry development 
•	no network interconnection 
•	the NT electricity market is a very small size 
•	Power and Water's generation plant efficiency, size and mix is established 
•	few opportunities for price differentiation 
•	pre-existing power purchase agreements 
•	pre-existing gas transportation agreement 
•	potential substantial diseconomies of scale and scope could occur with more than one supplier in the small Territory electricity market. 

Reforms aimed at introducing a regulatory framework for a competitively neutral electricity market have not, by themselves, resulted in competition in the Northern Territory electricity market. In the NT context a regulated monopoly may result in the best net benefit outcome.

Kim Wood 
Managing Director 
9 June 2004 

GPO Box 1921, Darwin NT 0801 
Power and Water Corporation
ABN 15 947 351 260
Telephone 1800 245 092
www.powerwater.com.au