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Australia: Open Arms, Open Access, and the Outback

Fortnightly Magazine - June 15 1996

to 1,200 in pursuit of best practices. "And my sense is we can do better than that," Spalding adds. Employees have been told as the distco gets better every day, the logical outcome is fewer human resources. "On the other hand, there are opportunities for us to expand our business presence," the executive says. "You can bid out your own workforce to build lines or connections for a customer in somebody else's service territory."

Farell insists that reliability and service in Victoria will increase. "It has to," he says. "We have something to prove. We need to prove to the government and the public here that privatization works and is going to be successful."

The way to improve reliability and service is to improve processes, he says. You get rid of work that doesn't need to be done, and organize work around process flow. For example, he offers, Eastern Energy discovered it had eight points of contact with a customer on a service request; the number was cut to two or three. And although the company's employees have dropped from 1,400 to 1,000 over two years, customer growth has increased 2 percent annually.

"I think the public's going to have to judge the companies on fundamentals," he says. "Are we really responding by improving service? Are we maintaining and improving reliability? It's up to individual companies to prove that." t

Joseph F. Schuler, Jr. is associate editor of PUBLIC UTILITIES FORTNIGHTLY. Email:

U.S. Distco Acquisitions to Date

. United Energy, the first distco auctioned, was bought by Australian institutions and UtiliCorp United's UtilCo Group for $1.21 billion.

. General Public Utilities' Energy Initiatives acquired a 50-percent stake in Solaris Power, Ltd., a 230,000-customer distribution company, for $746 million.

. PacifiCorp's unregulated subsidiaries, PacifiCorp Holdings, Inc., and PacifiCorp Australia Holding, Pty., Ltd., bought Powercor, another distco, for $1.6 billion. Some 1,250 Powercor employees serve 537,000 customers and bring in revenues of $557 million.

. Entergy Corp.'s holding company, Entergy Power Group, bought Citi-Power for $1.2 billion. CitiPower serves nearly 250,000 customers.

. Texas Utilities Co.'s new unregulated subsidiary, Texas Utilities Australia, Pty., Ltd., bought Eastern Energy, Ltd. for $1.6 billion. The distco's 1,000 employees serve 470,000 customers.

Pooling in Victoria

Competition among participants in Victoria's electric supply industry takes the form of the Victoria Power Exchange's (VPX's) trading forum: VicPool.

VicPool is transitional. A National Electricity Market has been proposed for Australia, scheduled to start up by January 1997. Participants include generators, distributors/retailers, and industrial users or nonfranchise, "contestable" customers with demand over 1 Mw.

The market revolves around a spot price. Wholesale or pool price for power can vary on the half-hour, depending on demand, bid prices, and availability of generation and transmission.

Each Wednesday, generators submit bids to the pool for their generating units, advising how much electricity they're prepared to produce, for the following Sunday to Saturday. Customers can bid the amount they're prepared to reduce their demand to if the pool price rises above a nominated level. The load reduction is under control of the VPX. However, customers