Access arrangement final decision Envestra Ltd 2013–17 Part 2: Attachments

Revised proposal

1. 2013–17 access arrangement period

Victorian Network

Envestra's revised proposal forecast total net capex of $521.8 million ($2011, escalated direct costs, including NMF) for the 2013–17 access arrangement period. This is a reduction of $243.1 million ($2011, escalated direct costs, including NMF) from Envestra's initial proposal of $764.9 million ($2011, escalated direct costs, including NMF). The major differences between Envestra's initial and revised proposal are:

• 
  Mains—Envestra revised its volumes down from an initial volume of 636 kilometres to 475 kilometres subject to the provision of the pass through. Envestra proposed a new unit rate methodology, which resulted in a reduced average unit rate.
  
• 
  Connections—Envestra proposed revised unit rates based on the weighted average of 2010/11 and 2011/12 historical unit rates. Envestra no longer proposed adjustments to its unit rates for increases driven by changes in the regions where connections are occurring and newer contracts.
  
• 
  Meters—Envestra proposed a new unit rate forecast methodology based on the weighted average of 2010/11 and 2011/12 historical unit rates. This differed from the bottom-up forecast it provided in its initial proposal.
  
• 
  Augmentation—Envestra altered the scope of its Dandenong to Crib Point augmentation, revising the expenditure down from $18.3 million ($2011, unescalated direct costs, excluding overheads and NMF) to $10.8 million ($2011, unescalated direct costs, excluding overheads and NMF).
  
• 
  Other non-demand—Envestra adopted the AER's draft decision on 14 of its other non-demand projects. Envestra re-submitted 4 other non-demand projects, which the AER did not accept in its draft decision.
  
• 
  Overheads—Envestra adopted the AER's draft decision on overheads, leading to a downwards revision of $49.4 million ($2011).
  

Table 4.6 Victorian network - Envestra revised proposal of conforming capital expenditure 2013–17 ($million 2011, escalated direct costs, including NMF)

Category	2013	2014	2015	2016	2017	Total
Mains replacement	45.5	53.3	56.0	27.6	1.2	183.7
Residential connections	22.6	22.6	22.7	22.6	23.0	113.6
Commercial/industrial connections	12.5	12.1	12.3	9.6	10.7	57.1
Residential meter replacement	2.8	6.2	3.9	10.4	3.1	26.4
Commercial/industrial meter replacement	1.4	1.8	2.5	1.9	1.7	9.3
Augmentation	4.2	8.0	2.1	13.6	11.9	39.7
IT	5.7	7.6	3.1	0.2	0.7	17.3
SCADA	0.2	0.2	0.2	0.2	0.2	1.0
Other	4.5	5.9	4.7	2.9	2.6	20.7
Gas Extensions - Other	12.9	-	-	-	-	12.9
Gas Extensions - Energy for the Regions	-	-	3.7	0.7	0.2	4.6
Overheads	12.3	10.5	9.1	8.3	7.1	47.4
GROSS TOTAL CAPITAL EXPENDITURE	124.6	128.2	120.4	98.0	62.4	533.6
Customer contributions	3.0	1.3	4.1	1.9	1.5	11.8
Government contributions	-	-	-	-	-	-
NET TOTAL CAPITAL EXPENDITURE	121.6	126.8	116.3	96.1	60.9	521.8

Source: Envestra revised proposal.

Albury Network

Envestra's revised proposal forecast total net capex of $6.7 million ($2011, escalated direct costs, including NMF) for the 2013–17 access arrangement period. This is a reduction of $1.5 million ($2011, escalated direct costs, including NMF) from Envestra's initial proposal of $8.2 million ($2011, escalated direct costs, including NMF). The substantial changes from its initial proposal are the same as for the Victorian network.

Table 4.7 Albury network - Envestra revised proposal of conforming capital expenditure 2013–17 ($million 2011, escalated direct costs, including NMF)

Category	2013	2014	2015	2016	2017	Total
Mains replacement	0.01	0.01	0.01	0.01	0.01	0.04
Residential connections	0.53	0.63	0.65	0.67	0.67	3.14
Commercial/industrial connections	0.11	0.11	0.11	0.11	0.11	0.56
Residential meter replacement	0.07	0.06	0.09	0.05	0.04	0.32
Commercial/industrial meter replacement	0.06	0.06	0.07	0.05	0.05	0.27
Augmentation	0.01	0.00	0.00	0.00	0.47	0.48
IT	0.21	0.28	0.11	0.00	0.03	0.63
SCADA	0.02	0.02	0.02	0.02	0.02	0.10
Other	0.01	0.02	0.01	0.01	0.01	0.04
Gas Extensions - Other	0.00	0.00	0.00	0.00	0.00	0.00
Gas Extensions - Energy for the Regions	0.00	0.00	0.00	0.00	0.00	0.00
Overheads	0.20	0.23	0.21	0.21	0.25	1.10
GROSS TOTAL EXPENDITURE	1.22	1.40	1.27	1.13	1.65	6.68
Customer contributions	0.00	0.00	0.00	0.00	0.00	0.00
Government contributions	0.00	0.00	0.00	0.00	0.00	0.00
NET TOTAL EXPENDITURE	1.22	1.40	1.27	1.13	1.65	6.68

Source: Envestra revised proposal.

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