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ActewAGL loses ACT govt contract

Date

Chris Johnson

ActewAGL's headquarters in Civic.

ActewAGL's headquarters in Civic.

ActewAGL, a premier sponsor of Canberra's centenary celebrations, has lost a major contract to supply the government electricity.

In an embarrassing blow for the power retailer, the ACT government has sidelined the organisation it part-owns and has awarded a significant contract to Queensland company ERM Power Retail.

The decision, taken largely by the Territory and Municipal Services Directorate, has caused ActewAGL to begin reassessing its community sponsorship.

The Canberra Times understands that Treasurer Andrew Barr was ''more than surprised'' by the outcome of the tender process. ActewAGL is a million-dollar sponsor of Canberra Centenary and is its ''principal partner''.

But in this 100th birthday year for the nation's capital, the local company has seen more than half of the retail business it provides the government go interstate.

The tender was awarded to ERM on December 21 and a two-year contract to provide energy to the government's major outlets began on January 1.

The Queensland company now provides power to the ACT government's larger offices and establishments, including its hospitals, jails and schools.

The contract is worth $16 million over the two years.

ActewAGL was successful in securing only two smaller contracts totaling about $6 million over the two years to provide energy to unmetered street and traffic lights, and smaller government departments.

It still provides the network and in an ACT community-wide sense remains Canberra's majority supplier.

Government sources said the decision was ''ludicrous'' and could be ''severely embarrassing'' in this centenary year.

''This year is supposed to be about Canberra celebrating all things Canberra, and yet some bureaucrats have decided a local retailer that employs local people - and who, by the way, is spending big bucks on the centenary celebrations - is not who they want to be providing their own government's electricity,'' one said.

Another contact said that ActewAGL was outraged at the decision and is taking a fresh look at all of its substantial community sponsorships.

TAMS Minister Shane Rattenbury noted that such procurement decisions are not made by ministers and they do not contribute to the decision-making process.

''I understand that overall the evaluation team concluded that ERM presents the best value for the ACT government, for the contract which the firm has been awarded,'' he said.

''The evaluation team comprised officials from several directorates.

''ActewAGL is a big contributor - and a valued one - to the community in the ACT and I look forward to that continuing.''

The acting chief executive of ActewAGL, John Knox, said although it was unsuccessful in winning the full portion of the tender, it stood by its competitive position in the ACT.

He said that was evident in ActewAGL's steady growth in customer numbers.

''We remain committed to our customers, to supporting our local community through our sponsorship program, delivering excellent customer service and helping our customers manage their energy costs,'' Mr Knox said.

''We will continue to be the proud principal partner of Canberra Centenary and are pleased to celebrate this milestone with our local community.''

Mr Knox did not directly answer when asked if any sponsorship it provided the ACT community would be reduced or terminated.

Canberra Centenary executive director Jeremy Lasek said ActewAGL had told him it would not be reducing its sponsorship to his organisation.

''ActewAGL remains the principal partner and we are totally thrilled to have their support,'' he said.

TAMS's director of the ACT Property Group, Daniel Bailey, said ministers were not informed of the tender outcome until after the decision was made. He also said that as part of its contract, ERM had committed to providing community sponsorship in the near future.

Mr Barr could not be contacted for comment.

19 comments

  • As a Queensland based former Canberran .... I thank the ACT Government's for its confidence in our companies. It would be interesting to see if any ACT Government imposed cost structures had an impact - may not have, but would be an interesting analysis.

    Commenter
    Spin Sick
    Date and time
    January 17, 2013, 9:30AM
    • Maybe ActewAGL has no one to blame other than itself. Its highly likely the assumption was made that they would win the tender regardless, especially given the ACT Government's share holding, and did not put in the required effort to win the tender on a competitive basis. Good on the Territory and Municipal Services Directorate I say for doing their job properly, and indirectly saving us all some pennies.

      If sponsorships are reduced as a result good, lets hope the savings are passed on to their customers who pay for a product, not for sponsorships

      Also has anyone else noticed that ActewAGL service charges increased at the same rate (approx 18%) as usage charges imposed the carbon tax - didn't know that the carbon tax applied to service charges.

      Commenter
      Steve
      Date and time
      January 17, 2013, 9:36AM
      • In the long run it will just cost us the same as ACTEW/AGL will just gouge us all more to recoup the money.

        Commenter
        Economist
        Date and time
        January 17, 2013, 10:14AM
    • Why is anyone surprised by this as the tender process should not be swayed by "sponsorship" (a.k.a "gifts", albeit at much higher level than would be the norm), and should bring the BEST value for the tax payers dollar. Seems ACTEW needs to review how they do business and not rely on emotion, ownership or high profile contacts (like every other business).

      Commenter
      Julia Rudd
      Date and time
      January 17, 2013, 9:42AM
      • It comes down to dollars. If the Queensland supplier was cheaper why not go with them. We've all seen our bills from ACTEWAGL go up and up. Looks like the ACT Government want to keep their bills down. Just because they are an ACT business doesn't mean you have to go with them out of loyalty. This decision should make them take a long look at how they do business in the ACT.

        Commenter
        Tomas
        Location
        Turner
        Date and time
        January 17, 2013, 9:49AM
        • Darn it, lost tender means less sponsorship $$$'s and I was so looking forward to the day that new sign on Majura Rd, ACTEWAGL CANBERRA INTERNATIONAL DRAGWAY was erected, oh well, "boom boom".

          Commenter
          Nitro Gangster
          Location
          ACT
          Date and time
          January 17, 2013, 10:38AM
          • LOL *facepalm*

            Commenter
            Deutsch
            Location
            Canberra
            Date and time
            January 17, 2013, 1:00PM
        • I would be disappointed if 'sponsorship' was part of the criteria for winning a supply contract. In any case the dollars spent on sponsorships and other forms of largesse are yours and my dollars which would be better spent on providing a more cost effective supply of services to the ACT community. How ACTEWAGL could stump up a million bucks for the Centenary is nothing short of amazing. Good on the public servants who made this decision and shame on the politicians who on the face of it appear to be running for cover. Don't blame them! They are doing what they are paid to do...achieving value for money.

          Commenter
          Grange
          Location
          Canberra
          Date and time
          January 17, 2013, 10:40AM
          • I just hope that the additional dividends from ACTEW that the ACT Government would have received had the contract stayed with ActewAGL were factored into the calculations by TAMS. In 2011/12 ActewAGL made $162.6m profit (of which 50% was attributable to ACTEW) on a turnover of $722.1m. ACTEW is 100% owned by the ACT Government. That means on average 11.26c of every dollar earned by ActewAGL comes back into the ACT Government and is money they don't need to take from us through direct taxes like Rates. On a $16m contract that means ERM should have had to beat ActewAGL by at least $1.8m for Canberrans to be better off.

            Commenter
            James Daniels
            Location
            Canberra
            Date and time
            January 17, 2013, 11:27AM
            • EXCELLENT point!

              Commenter
              Robert
              Location
              Canberra
              Date and time
              January 17, 2013, 12:55PM

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