A key aspect of Power and Water Corporation's licence conditions is the requirement that certain business units be 'ring-fenced' to ensure that Power and Water Corporation does not use its dominant market position in an anti-competitive manner.

In other jurisdictions, the electricity industry has undergone structural reform which has reduced the likelihood that monopoly activities could be used to subsidise contestable activities. The Territory Government’s decision to maintain Power and Water Corporation as a vertically integrated business has considerably increased the need for effective ring-fencing.

The objective of the Ring-fencing Code is to create an environment where the price, quantity and quality of electricity sold to end-use consumers - be they contestable or non-contestable customers - are not biased as a result of Power and Water Corporation's vertical integration, irrespective of the degree of integration. The Code aims to ensure that monopoly businesses in regulated industries affiliated to contestable businesses do not discriminate against a competitor of that affiliated business, or financially or competitively advantage that affiliated business to the detriment of a competitor of that affiliated business.

Ring-Fencing Procedures:

Clause 5 of the Code requires Power and WAter Corporation to submit accounting, cost allocation and information procedures to the Commission for approval.

These procedures have been developed by Power and Water Corporation in conjunction with the Commission and approval was based on information submitted to the Commission by the Corporation during on-going discussions.

Compliance with Ring-Fencing Procedures:

Under the Ring-fencing Code, Power and Water Corporation is obliged to establish and maintain a separate set of financial accounts and reports in respect of each of its prescribed businesses and its electricity business as a whole ('Regulatory Accounts')

The Regulatory Accounts, which are submitted to the Commission annually, are assessed for compliance with Ring-fencing Code and the related Accounting and Cost Allocation Procedures in so far as they relate to the preparation and disclosure of financial accounts for ring-fencing purposes.

Publicly available extracts of the Regulatory Accounts: