ABOUT THIS PUBLICATION
This publication presents the first release of estimates for the electricity supply, gas supply, and water supply, sewerage and drainage services industries from the Economic Activity Survey compiled using new statistical infrastructure. Estimates have been compiled on this new basis for each of 2001-02 and 2002-03. Effectively, a new statistical series has commenced with the 2001-02 collection.
The new infrastructure was described in Information Paper: Improvements in ABS Economic Statistics [Arising from The New Tax System] (cat. no. 1372.0), released by the Australian Bureau of Statistics (ABS) on 6 May 2002. The paper described a number of changes to the infrastructure supporting the compilation of ABS economic series. The changes make better use of data available from the taxation system to improve the efficiency, coverage and sample design of the surveys from which these series are sourced.
To facilitate comparisons over time, the effects of the infrastructure changes on the statistics have been measured, by showing data on both bases for 2000-01. The estimates of Industry Value Added (IVA) on the new basis compared with the old basis are: 2.0% higher for ELECTRICITY SUPPLY, 0.9% higher for GAS SUPPLY, and 1.5% lower for WATER SUPPLY, SEWERAGE AND DRAINAGE SERVICES.
More details on the size of these effects can be found in Appendix 2.
Employment estimates (and related ratios) have not been included in this issue, due to methodological problems with deriving them from the taxation system data used. See Expanatory Notes paragraph 33 for details.
CANCELLATION OF 2001-02 ISSUE
This publication contains previously unpublished information for the utilities industries for both 2001-02 and 2002-03. This is because the scheduled 2001-02 issue of this publication was not produced, due to delays caused by the introduction of the new statistical infrastructure mentioned above.
INQUIRIES
For further information about these and related statistics, contact the National Information and Referral Service on 1300 135 070 or John Ridley on Sydney (02) 9268 4541.
CHAPTER 1 ELECTRICITY SUPPLY INDUSTRY
INTRODUCTION
Since 1991, governments in Australia have been introducing a competitive market for electricity, referred to as the National Electricity Market (NEM), into the southern and eastern states. In 1994, the introduction of competitive wholesale and retail electricity markets through the NEM resulted in trading across state borders. (Readers are referred to <http://www.nemmco.com.au>, the website of the National Electricity Market Management Company, for more details.) Western Australia has also experienced the effects of privatisation, but is not part of the NEM for reasons of geography.
INDUSTRY CHANGES
The concept of state bounded entities also continues to lose relevance. State data for the electricity supply industry in this publication are allocated on the basis of state of head office rather than state of activity (see Explanatory Notes paragraph 31 for more details).
Another continuing trend has been the diversification of energy businesses with the aim of providing their customers with a wider range of energy services. This has seen electricity businesses enter the gas market and, conversely, gas businesses enter the electricity market as opportunities expand within these markets. Because each business unit reporting in ABS surveys is classified to one industry, based on its predominant activity, such diversification can affect the statistics in this chapter and those in Chapter 2 Gas Supply Industry.
Deregulation has also allowed new entities to come into the market and compete for customers. It has also resulted in a number of long established entities being dismantled or sold off. Disaggregation has tended to involve the creation of new entities specialising in electricity generation, transmission, distribution, wholesaling or retailing, to replace single entities which previously undertook all or most of these functions. The effect on industry structure has been to change single entities wholly classified to the electricity supply industry into a number of smaller entities, most of which are classified to the electricity supply industry, but some of which may be classified to other industries. Those entities classified to other industries do not contribute to the statistics for the electricity supply industry. Examples of activities formerly carried out by businesses classified to the electricity supply industry, but which are now largely carried out by specialist businesses classified to other industries, are network construction, repair and maintenance of electricity transmission towers, and power pole inspection.
Effect on these data
These changes to business structures have a direct impact on the data presented in this publication, but not all impacts are in the same direction. Where several smaller specialist business units wholly classified to the electricity supply industry have been created from one vertically integrated business, transactions between these businesses are recorded in the statistics (such as sales from the generating business to the distributing business). Previously, such transactions were internal to a single business and generally were not recorded in the statistics. This situation tends to increase sales and purchases values for the industry, but should have little direct effect on statistics for industry value added, operating profits or capital expenditure. On the other hand, the estimates of several data items (wages and salaries and capital expenditure in particular) for the electricity supply industry will be reduced if activities such as those mentioned in the previous paragraph are now carried out by businesses classified to other industries.
INCOME AND EXPENDITURE
Sales and service income in the electricity supply industry increased nationally in 2002-03 by $4.0b (14%) to $31.4b, although much of the increase was due to the statistical effects of continuing restructuring rather than real growth in production and prices. Sales and service income for South Australia decreased by $1.2b (46%) due to business restructuring and the transfer of some head office functions to Victoria (see Explanatory Notes paragraph 31 for more details).
Operating profit before tax (OPBT), however, decreased nationally by $727m (26%) to $2.1b in 2002-03, being affected by decreases in other income and increases in interest expenses. Industry value added increased by $1.2b (11%) to $12.3b in 2002-03.
NET CAPITAL EXPENDITURE
Net capital expenditure for the electricity supply industry in 2002-03 decreased slightly by $136m (3.3%) to $4.0b. The main contributor to this decrease in expenditure was Queensland, where a fall of $380m (22%) was recorded.
CHAPTER 2 GAS SUPPLY INDUSTRY
INTRODUCTION
The current gas supply industry reflects the results of the restructuring which began in the early 1990s. Most states and territories have committed, under the terms of the 1997 National Gas Pipelines Access Agreement, to work towards implementing full retail contestability (FRC) to give all gas users their choice of supplier. FRC was introduced in NSW and the ACT in January 2002, and in Victoria in October 2002. Western Australia and South Australia are yet to fully implement FRC.
INDUSTRY CHANGES
As in the electricity supply industry, vertically integrated businesses have formed separate business units to undertake various stages of distribution and other activities. Increasingly, competition has been introduced along the various stages of the distribution chain with the entry of new businesses.
This has resulted in the reporting of transactions between distributors and with other specialist businesses. Such transactions were not recorded separately under the vertically integrated business model. The effect on the statistics in this publication has been to substantially increase the value of ‘gross’ variables such as sales and service income and total expenses (and their component items), but to have a much lesser effect on ‘net’ variables such as industry value added (IVA), earnings before interest and tax (EBIT) and operating profit before tax (OPBT). In general, changes to these net variables reflect improved efficiencies in the industry or changes in sources of funding rather than changed industry structures.
Over time, as the market continues to develop, businesses have gradually rationalised and restructured their operations. This has resulted in several businesses widening their networks through corporate takeovers to include activities not previously undertaken by gas supply businesses. Conversely, some activities previously undertaken by gas supply businesses are now being undertaken by businesses classified to other industries, in particular, pipeline transport and electricity supply.
INDUSTRY PERFORMANCE
In 2002-03, sales and service income in the gas supply industry increased nationally by $386m (6.7%) to $6.1b. Operating profit before tax (OPBT) increased by $23m (4.9%) to $493m. Industry value added increased by $112m (9.9%) to $1.25b in 2002-03. Net capital expenditure for the gas supply industry in 2002-03 increased by $55m (37%) to $203m.
CHAPTER 3 WATER SUPPLY, SEWERAGE AND DRAINAGE SERVICES INDUSTRY
INTRODUCTION
This section of the publication presents statistics about the water supply, sewerage and drainage services industry. Both private and government units are included in the scope of the survey. In a manner similar to the electricity and gas supply industries, the water supply, sewerage and drainage services industry is also undergoing a process of reform.
INDUSTRY PERFORMANCE
In 2002-03, sales and service income increased by 15% to $8.3b. Operating profit before tax was $2.6b, an increase of 3.9%. Industry value added was $5.2b, an increase of 6.9% on 2001-02.
The water supply, sewerage and drainage services industry's selected labour costs increased by 9% in 2002-03, to $1.4b.
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