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

Terms and conditions for changing receipt or delivery points

1. Final decision

1557. 
      The AER approves Envestra's terms and conditions for changing receipt or delivery points.
      

1. Revised proposal

1558. 
      The AER's draft decision did not approve Envestra's proposed terms and conditions for changing receipt or delivery points. The draft decision required Envestra's proposed access arrangement to be amended to include a policy for the change of receipt or delivery points in the same terms as the policy proposed by SP AusNet.¹¹⁰⁹
      
1559. 
      In its revised proposal, Envestra included the AER's required amendments, subject to some minor changes.
      
1560. 
      Envestra made the required change with respect to the change of a receipt point.
      

1. Assessment approach

1561. 
      The AER's assessment approach is set out in section 12.5.3 in chapter 12 of part 2 of the draft decision.
      

1. Reasons for decision

1562. 
      For the reasons set out in its draft decision, the AER is satisfied that Envestra's revised proposal complies with the NGR and is consistent with the NGO.¹¹¹⁰
      

1. Review dates

   1. Final decision

1563. 
      The AER approves Envestra's review submission date. It does not approve Envestra's revision commencement date. The AER proposes a defined revision commencement date of 1 January 2018 to make Envestra's access arrangement acceptable.
      

1. Revised proposal

1564. 
      Envestra adopted the amendment to its review submission date as required by the AER in its draft decision and maintained its revision commencement date as approved by the AER in its draft decision.¹¹¹¹
      

1. Assessment approach

1565. 
      The AER's assessment approach is set out in section 12.6.3 in chapter 12 of part 2 of the draft decision.
      

1. Reasons for decision

1566. 
      In its draft decision, the AER accepted the review commencement date proposed by Envestra which is the same as put forward in its revised proposal. However, on further review, the AER informed Envestra that the date proposed was not workable for the following reasons. The NGR and former Code definition of a revisions commencement date refers to a date. It doesn’t refer to processes or mechanisms to determine dates. A revision commencement date must be a specific time, that is, a fixed, singular date. The AER proposed amending clause 9.2 of Envestra's access arrangement to provide for a revision commencement date of 1 January 2018, so as to remove the 'floating' aspect of what Envestra had proposed which could potentially cause confusion in future Access Arrangement decisions.¹¹¹²
      
1567. 
      On 21 February 2013 Envestra stated that it did not agree with the AER's interpretation of the NGR but it nonetheless agreed to the definition of the revisions commencement date as proposed by the AER.¹¹¹³
      
1568. 
      Taking into account the above relevant information, the AER does not approve the revision commencement date in Envestra's revised proposal. The AER proposes the fixed date of 1 January 2018 which the AER considers is consistent with r.50(1) of the NGR.
      
1569. 
      The AER considers that Envestra's review submission date is consistent with the general rule in r.50(1) of the NGR.
      

1. Amendments

1570. 
      The AER proposes the following revisions to make Envestra's revised access arrangement proposal acceptable:
      
1571. 
      Revision 13.1: In sub-clause 3.3 of the Albury access arrangement, delete the words 'or the Current User'.
      
1572. 
      Revision 13.2: Amend sub-clause 9.3 as follows:
      
1573. 
      Insert the following phrase between the words 'DP' and 'the'
      
1574. 
      and the Network User requests that the equipment be removed.
      
1575. 
      Revision 13.3: Delete sub-clause 19.3
      
1576. 
      Revision 13.4: Delete sub-clause 26.3
      
1577. 
      Revision 13.5: Amend clause 6.4 of its access arrangement as follows:
      
1578. 
      Delete point (g) and everything following it
      
1579. 
      Revision 13.6: Amend sub-clause 27.2(a) as follows:
      
1580. 
      Delete the passage ', not exceeding the amount permitted by law.'
      
1581. 
      Insert 'reasonably' between 'amount' and 'requested'.
      
1582. 
      Revision 13.7: Amend sub-clause 28.2 as follows:
      
1583. 
      At the beginning of sub-clause 28.2(a) and (b) insert 'Subject to clauses 23 and 27'.
      
1584. 
      At the end of sub-clause 28.2(a) insert the following:
      
1585. 
      ...and the Network User fails to pay the amount due within 14 days after it receives a written notice specifying the amount that is due.
      
1586. 
      Revision 13.8: Delete sub-clause 33.3
      
1587. 
      Insert a new sub-clause 33.3 as follows:
      
1588. 
      Subject to the other terms of this Agreement, the Network User will indemnify Envestra against injury caused to an officer, servant, agent or contractor of Envestra as a result of any negligent act or omission on the part of the Network User, its officers, servants or agents in connection with the provision to the Network User of Distribution Services pursuant to the Agreement or the operation, maintenance, repair, administration or management of the Network or any part of it.
      
1589. 
      Revision 13.9: Amend clause 34 as follows:
      
1590. 
      Delete sub-clause 34.2
      
1591. 
      Delete the second sentence in sub-clause 34.7
      
1592. 
      Insert a new clause 'Envestra's Insurance'
      
1593. 
      Insurance Required
      
1594. 
      Envestra must obtain and maintain insurance throughout the term against whatever risks a person carrying on a business of managing and operating a gas delivery network would prudently insure, with reputable insurers.
      
1595. 
      Insurance Information
      
1596. 
      Whenever reasonably requested by the Network User, Envestra must give the Network User a certificate of currency for the insurance.
      
1597. 
      Envestra must promptly notify the Network User if Envestra fails to obtain or maintain any insurance required under this Agreement.
      
1598. 
      Revision 13.10: Amend sub-clause 35.5(c) as follows:
      
1599. 
      Insert 'reasonable' before each reference to 'risk'.
      
1600. 
      Revision 13.11: Amend clause 39 as follows:
      
1601. 
      Amend sub-clause 39.1 by replacing 'Network User may' with 'parties must'.
      
1602. 
      Delete sub-clauses 39.3 and 39.4.
      
1603. 
      Insert a new sub-clause 39.3:
      
1604. 
      The Network User must not assign any of its rights or obligations under this Agreement unless it has:
      
1605. 
      Received the explicit informed consent to the registration of the assignee in AEMO's Metering Register as the FRO for that Supply Point from the Subject Customer in relation to each Supply Point that is the subject of the assignment (defined terms have the meaning given in version 5.0 of AEMO's Retail Market Procedures (Victoria))
      
1606. 
      A transfer request has been delivered to AEMO in relation to each Supply Point for which explicit informed consent has been obtained, specifying a prospective date for registration of the transfer (defined terms have the meaning given in version 5.0 of AEMO's Retail Market Procedures (Victoria))
      
1607. 
      Envestra has delivered a Transfer Request Notification in respect of the Transfer Request (defined terms have the meaning given in version 5.0 of AEMO's Retail Market Procedures (Victoria))
      
1608. 
      The prospective assignee has entered into an agreement with Envestra under which the assignee agrees to be bound, from the commencement of the assignment, by the agreement between Envestra and the assignor as if the assignee stood in the shoes of the assignor
      
1609. 
      the prospective assignee meets the requirements of Envestra’s Network User Policy
      
1610. 
      the prospective assignee holds the requisite licences or authorisations to retail gas and is registered as a participant in the relevant gas markets
      
1611. 
      the prospective assignee has provided Envestra with the same credit support as Envestra holds from the assignor for the charges payable by the assignee; and
      
1612. 
      Envestra has given its consent to the assignment of rights and obligations to the assignee (with such consent not to be unreasonably withheld).
      
1613. 
      Revision 13.12: Delete clause 9.2 of Envestra's access arrangement and replace it with the following:
      
1614. 
      The nominated revision commencement date is 1 January 2018.
      
1615. 
      
      
1616. 
      
      
1617. 
      
      
1618. 
      
      

1 Under s.8 of the NGL a service provider is a person who owns, controls or operates a gas pipeline.

2 Providers of gas distribution services typically negotiate contracts to sell pipeline services to customers such as energy retailers. Section 322 of the NGL provides that contracts between service providers and users may differ from those approved by the AER as part of an access arrangement review. In the event of a dispute, however, a user or prospective user may request dispute resolution by the AER under Chapter 6, Part 3 of the NGL. In the event that the AER makes an access determination in order to resolve the dispute, it must give effect to the access arrangement: s. 189.

3 NGR, r. 40.

4 NGL, s. 28(1).

5 NGL, s. 28(2).

6 NGR, r. 41(1).

7 NGR, r. 41(2).

8 NGL, s. 132.

9 NGR, r. 58(1).

10 NGR, r. 58(2).

11 NGR, r. 59(1); r. 71(2).

12 NGR. r. 59(4).

13 NGR, r. 59(2).

14 NGR, r. 59(2).

15 NGR, r. 60(1).

16 NGR, r. 60(2). For example, the AER might approve amendments to the access arrangement proposal to deal with a change in circumstances of the service provider's business since submission of the access arrangement proposal.

17 NGR, r. 59(5)(b) & (c)

18 NGR, r. 62(1).

19 NGR, r. 62(2).

20 NGR, r. 62(4).

21 NGR, r. 64(1).

22 NGR, r. 65(2).

23 NGR, r. 64(4).

24 NGR, r. 64(3).

25 NGR, r. 64(6).

26 NGR, r. 62(7).

27 NGR, r. 11.

28 NGR, r. 11(1)(c).

29 NGR, r. 13.

30 NGL, ss. 324 to 329 (Division 1 of Part 2 of Chapter 10 of the NGR).

31 NGL, s. 329(1).

32 NGL, s. 2.

33 NGR, r. 101(2).

34 NGR, r. 48(1)(a).

35 NGR, r. 48(1)(b).

36 NGR, r. 48(1)(c) and r. 48(1)(d).

37 AER, Draft decision: Envestra access arrangement proposal for 1 January 2013 – 31 December 2017, September 2012, p. 6.

38 AER, Draft decision: Envestra access arrangement proposal for 1 January 2013 – 31 December 2017, September 2012, p. 2.

39 AER Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017, September 2012, p. 1.

40 AGL, Submission to the AER: SP AusNet, Envestra and Multinet access arrangement proposals, 7 January 2013, Attachment B.

41 Envestra, Revised Access Arrangement Proposal, 9 November 2012, clause 2.2.3.

42 AER Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017, September 2012, pp. 2-–5.

43 Rule 100(b) of the NGR requires the provisions of an access arrangement to be consistent with the Procedures as in force when the terms and conditions of the access arrangement are revised. Part 15B of the NGR provides for AEMO to make Procedures, including Retail Market Procedures (Victoria).

44 AGL, Submission to the AER: SP AusNet, Envestra and Multinet access arrangement proposals, 7 January 2013, Attachment B.

45 AGL, Submission to the AER: SP AusNet, Envestra and Multinet access arrangement proposals, 7 January 2013, Attachment B.

46 AGL, Submission to the AER: SP AusNet, Envestra and Multinet access arrangement proposals, 7 January 2013, Attachment B.

47 Information request Fd15a, 5 February 2013.

48 Envestra, Response to information request Fd15a, 12 February 2013.

49 Envestra, Response to information request Fd15a, 12 February 2013.

50 Envestra, Response to information request Fd15a, 12 February 2013.

51 Envestra, Response to information request Fd15a, 12 February 2013.

52 Envestra, Response to information request Fd15a, 12 February 2013.

53 Envestra, Revised Access Arrangement Proposal, 9 November 2012, clause 2.2.1.

54 Version 5.

55 Retail Market Procedures (Victoria) Version 5, s. 1.1.1.

56 Envestra, Response to information request Fd15a, 12 February 2013.

57 Envestra, Response to information request Fd15a, 12 February 2013.

58 National Energy Retail Rules 2012, Parts 1 and 2.

59 Envestra, Attachment 8.1- Response to draft decision: Capital base, November 2012, p. 1.

60 AER, Draft decision: Envestra access arrangement proposal for 1 January 2013 – 31 December 2017, September 2012, p. 21–22.

61 Envestra, Access arrangement proposal: 8.1 Response to Draft Decision: capital base, November 2012, p. 2.

62 Envestra, Response to AER information request FD13, 14 February 2013.

63 The AER's detailed assessment of the forecast capex allowance is set out in attachment 4.

64 The AER's assessment of the proposed forecast depreciation allowance is set out in attachment 6.

65 Based on the forecast depreciation allowed by the AER in this determination, adjusted for CPI.

66 NGR r. 90.

67 NGL, s. 23. And NGL s. 24.

68 NGL, s. 23. And NGL s. 24.

69 NGR, r. 77(2).

70 NGR, r. 79(1).

71 NGR, r. 74(2).

72 NGR, r. 77(2).

73 NGR, r. 79(1).

74 NGR, r. 74(2).

75 NGR, r. 77(2).

76 NGR, r. 77(2).

77 NGR, r. 77(2).

78 NGR, r. 77(2).

79 NGR, rr. 79(1), 74(2).

80 NGR, r. 79(1).

81 NGR, rr. 79(1), 74(2).

82 AER, Draft decision: Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2 – Attachments, September 2012, p. 32.

83 NGR, r. 79(1).

84 NGR, r. 74(2).

85 NGR, r. 79(1).

86 NGR, r. 74(2)(b).

87 NGR, r. 79(1).

88 NGR, r. 79(1).

89 NGR, r.79(1)

90 NGR, r.79(2)(c)(i)-(iii)

91 NGR, r.79(1)(a).

92 NGR, r. 74(2)(b).

93 NGR, r. 79(1).

94 Envestra, Access arrangement proposal, 30 March 2012, 120330 Attachment 7.4 Mains Replacement Plan (confidential), pp.25-26; Envestra, Access arrangement proposal, 30 March 2012, 120330 Attachment 7.6 Capex Forecast Model (confidential).xls.

95 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 4 Confidential appendices, September 2012, pp.4,8, AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, pp.58-59.

96 The ESC approved 420 km for 2008-11 (570 km for 2008-12).

97 Envestra, Response to information request 8, received 26 June 2012, p.7.

98 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 4 Confidential appendices, September 2012, p.8; AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, p.59.

99 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 4 Confidential appendices, September 2012, pp.9-13; AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, pp.60-63.

100 The congestion factor captures area characteristics which are likely to influence the cost of mains replacement including the relative street width, area of green verge versus paving, shopping strip density, traffic density, housing (service) density.

101 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 4 Confidential appendices, September 2012, p.14; AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, p.63.

102 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 4 Confidential appendices, September 2012, p.14; AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, p.63.

103 Energy Users Coalition of Victoria, Submission to the AER: Draft decision and SP AusNet, Envestra and Multinet revised access arrangement proposals, January 2013, p.17.

104 Minister for Energy and Resources, Submission to the AER: Draft decision and SP AusNet, Envestra and Multinet revised access arrangement proposals, 14 January 2013, p.2.

105 Minister for Energy and Resources, Submission to the AER: Draft decision and SP AusNet, Envestra and Multinet revised access arrangement proposals, 14 January 2013, p.2.

106 Origin, Submission to the AER: Draft decision and SP AusNet, Envestra and Multinet revised access arrangement proposals, 7 January 2013.

107 However, at the end of the access arrangement period, as part of the capital base roll forward, the capital base decreases to remove the total forecast depreciation. This removes the excess depreciation allowance that the service provider recovered over the access arrangement period.

108 Envestra, Revised Access Arrangement Information: Attachment 7.7 Response to Draft Decision - Capital Expenditure, 9 November 2012, p.12.

109 Envestra, Revised Access Arrangement Information: Attachment 7.7 Response to Draft Decision - Capital Expenditure, 9 November 2012, p.11.

110 Envestra, Revised Access Arrangement Information: Attachment 7.7 Response to Draft Decision - Capital Expenditure, 9 November 2012, p.11.

111 Envestra, Email " Vic GAAR - Envestra - AER information request - FD2a", received 17 December 2012, 121217-MR Volumes-Further Response.docx

112 Envestra, Revised Access Arrangement Information: Attachment 7.7 Response to Draft Decision - Capital Expenditure, 9 November 2012, p.11.

113 NGR, r. 79(1)(a).

114 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 4 Confidential appendices, September 2012, p.6; AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, pp.56-57.

115 Gas Safety Act 1997, ss.45-6.

116 Gas Safety Act 1997 s.40.

117 Gas Safety Act 1997 s.44(2)

118 Gas Safety Act 1997 s.10

119 Envestra, Revised Access Arrangement Information: Attachment 7.7 Response to Draft Decision - Capital Expenditure, 9 November 2012, p.34; Envestra, Response to information request 8, received 26 June 2012, MRP letter from ESV to Envestra 7 May 20120.pdf.

120 NGR, r 79(2).

121 NGR, r. 79(1).

122 NGR, r. 79(2)