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

Revisions

632. 
     The AER proposes the following revisions to make the revised access arrangement proposals acceptable:
     
633. 
     Revision 6.1: Make all necessary amendments to reflect the AER’s final decision on the regulatory depreciation allowances for the 2013–17 access arrangement period, as set out in Table 6 .50 and Table 6 .51.
     
634. 
     Revision 6.2: Make all necessary amendments to reflect the AER’s final decision on the remaining economic lives as at 1 January 2013, as set out in Table 6 .54.
     

7Operating expenditure

635. 
     Operating expenditure (opex) refers to the operating, maintenance and other non-capital costs incurred in providing pipeline services.⁶³⁷ It incorporates labour costs associated with operating the gas distribution network.
     
636. 
     The AER is required to assess Envestra's forecast opex to decide whether it is satisfied the forecast opex complies with applicable criteria prescribed by the NGL and NGR.⁶³⁸ This includes that any forecast or estimate must be arrived at on a reasonable basis and represent the best forecast or estimate possible in the circumstances.⁶³⁹
     

32. Final decision

    1. Envestra Victoria

The AER's final decision is not to approve a forecast opex of $328.0 million ($2011) for the 2013–17 access arrangement period for Envestra's Victorian network. The AER instead considers forecast opex of $308.7 million ($2011) reflects a forecast opex that complies with the criteria governing opex and the criteria for forecasts and estimates.⁶⁴⁰

637. 
     The differences between the AER's final decision on forecast opex and Envestra's revised opex forecast proposal primarily reflects different views about forecast step changes above base year opex and forecast labour cost escalation.
     
638. 
     Table 7 .55 compares the AER's final decision to Envestra's initial and revised proposal for the Victorian network and the AER's draft decision for each year of the 2013–17 access arrangement period.
     

Table 7.55 Comparison of Envestra Victoria's initial and revised proposals, and AER draft and final decisions ($million, 2011)

	2013	2014	2015	2016	2017	Total
Envestra initial proposal	63.8	71.8	75.4	76.0	77.8	364.8
AER draft decision	57.5	58.2	58.9	59.6	60.3	294.5
Envestra revised proposal	64.2	66.0	65.6	65.5	66.7	328.0
AER final decision	59.0	60.8	62.0	62.9	63.9	308.7

Note: Totals may not add due to rounding.

Source: AER analysis.

2. Envestra Albury

The AER's final decision is not to approve a forecast opex of $10.9 million ($2011) for the 2013–17 access arrangement period for Envestra's Albury network. The AER instead considers forecast opex of $10.41 million ($2011) reflects a forecast opex that complies with the criteria governing opex and the criteria for forecasts and estimates.⁶⁴¹

639. 
     The differences between the AER's final decision on forecast opex and Envestra's revised opex forecast proposal primarily reflects different views about forecast step changes above base year opex and forecast labour cost escalation.
     
640. 
     Table 7 .56 compares the AER's final decision to Envestra's initial and revised proposal for the Albury network and the AER's draft decision for each year of the 2013–17 access arrangement period.
     

Table 7.56 Comparison of Envestra Albury's initial and revised proposals, and AER draft and final decisions ($million, 2011)

	2013	2014	2015	2016	2017	Total
Envestra initial proposal	2.14	2.41	2.53	2.56	2.69	12.33
AER draft decision	2.65	2.67	2.70	2.71	2.73	13.46
Envestra revised proposal	2.17	2.22	2.18	2.15	2.18	10.91
AER final decision	2.04	2.05	2.09	2.10	2.13	10.41

Note: Totals may not add due to rounding.

Source: AER analysis.

1.