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

624 NGR, r.87(2)(a).

625 AER, Final decision: Electricity transmission and distribution network service providers: Review of the weighted average cost of capital (WACC) parameters, 1 May 2009, p. 126.

626 Envestra, Revised Access Arrangement Information, 9 November 2012, Attachment 9.11 Response to Draft Decision – Rate of return, section 3.

627 AER analysis based on Goldman Sachs, APA Group: Non cash significant item leads to FY13 EBITDA guidance upgrade, 24 October 2012, p. 2.

628 NGR, r. 76(b).

629 Regulatory depreciation allowance is the net total of the straight-line depreciation (negative) and the annual inflation indexation (positive) on the projected capital base.

630 Envestra Victoria, Revised proposed PTRM, November 2012; Envestra Albury, Revised proposed PTRM, November 2012.

631 Envestra Victoria, Revised proposal PTRM, November 2012; Envestra Albury, Revised proposal PTRM, November 2012.

632 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017, September 2012, pp. 154-157.

633 ESC, Envestra Vic GAAR 2008 Revenue Model Post Appeal Panel Decision, 2008; ESC, Envestra Albury GAAR 2008 Revenue Model Post Appeal Panel Decision, 2008.

634 Because land is a non-depreciating asset, for modelling purposes, the AER used a term of 'n/a' as the standard economic life input for the 'Land' asset class to apply from 2013.

635 Envestra Victoria, Revised proposal PTRM, November 2012; Envestra Albury, Revised proposal PTRM, November 2012.

636 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017, September 2012, p. 158.

637 NGR, r. 69.

638 NGR, rr. 91, 74(2), 100.

639 NGR, r. 74(2).

640 NGR, rr. 91, 74(2).

641 NGR, rr. 91, 74(2).

642 Envestra, Revised access arrangement proposal Attachment 6.7: Operating Expenditure, 9 November 2012.

643 Envestra, Revised access arrangement proposal Attachment 6.7: Operating Expenditure, 9 November 2012.

644 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, pp. 168–169.

645 Energy Users Coalition of Victoria, Submission to the AER: AER draft decision and revised applications from Envestra, Multinet and SP AusNet, January 2013, pp. 25­–26.

646 Energy Users Coalition of Victoria, Submission to the AER: AER draft decision and revised applications from Envestra, Multinet and SP AusNet, January 2013, p. 25.

647 Minister for Energy and Resources, Victorian Gas Access Arrangement Review – Victorian Government Submission, 14 January 2012, pp. 3–4.

648 Deloitte Access Economics, Forecast growth in labour costs in Victoria –report prepared for the AER, 4 February 2013.

649 An ex ante opex allowance provides an incentive to reduce opex since it allows a network service provider to retain all opex underspends during the access arrangement period. However, since opex is mostly recurrent, the incentive to reduce expenditure declines as the period progresses since the network service provider would not be able to retain the savings for as long. Carryover amounts allow the network service provider to retain opex savings for five years regardless of the year in which the savings are made.

650 Under a revealed cost opex forecasting approach actual opex is used as the basis for determining opex forecasts. Consequently revealed efficiency savings are 'clawed back' when actual opex, including the revealed efficiency savings, is used to forecast opex for the following access arrangement period. This shares the efficiency gains between the network service provider and its customers. However, if something other than actual costs is used to forecast opex revealed efficiencies have no impact on opex forecasts and the efficiencies are retained by the network service provider.

651 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, p. 171.

652 Envestra, Revised access arrangement proposal Attachment 6.7: Operating Expenditure, 9 November 2012, pp. 1–2.

653 Envestra, Revised access arrangement proposal Attachment 6.7: Operating Expenditure, 9 November 2012, p. 2.

654 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, p. 172.

655 NGR, r. 74(2)(b).

656 NGL, s. 24(2).

657 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, p. 174.

658 Envestra, Access arrangement proposal, 30 March 2012, p. 99.

659 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, pp. 174-191.

660 Envestra, Access arrangement proposal, 30 March 2012, pp. 99–100.

661 Envestra proposed this project as capex in its initial proposal. The AER draft decision did not accept Envestra's classification and instead assessed it as an opex step change.

662 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, pp. 174-191.

663 Envestra, Access arrangement proposal, 30 March 2012, pp. 101–104.

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

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

666 NGL, s. 24(2)(b).

667 Minister for Energy and Resources, Victorian Gas Access Arrangement Review – Victorian Government Submission, 14 January 2012, pp. 3–4.

668 Envestra, Revised access arrangement proposal Attachment 6.7: Operating Expenditure, 9 November 2012, pp. 13–14.

669 Envestra, Revised access arrangement proposal Attachment 6.7: Operating Expenditure, 9 November 2012, pp. 9–15.

670 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, pp. 174–175.

671 Envestra, Revised access arrangement proposal Attachment 6.7: Operating Expenditure, 9 November 2012, p. 14.

672 NGL, s. 24(3).

673 NGL, s. 24(2).

674 Envestra, Revised access arrangement proposal Attachment 6.7: Operating Expenditure, 9 November 2012, p. 14.

675 Envestra, Access arrangement proposal, 30 March 2012, p. 99.

676 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, attachment 3.

677 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, p. 176.

678 Envestra, Response to AER information request FD3b sent 11 January 2013, received 17 January 2013.

679 NGR, r. 79(1).

680 NGR, r. 91(1)

681 NGR, r. 91(1), r. 74(2).

682 Envestra, Victorian access arrangement information, 30 March 2012, p. 99.

683 AER, Access arrangement draft decision, Envestra Ltd. 2013-17, September 2012, Attachment 6, p. 177.

684 Envestra, Victorian revised access arrangement information   Attachment 6.7: Operating expenditure, November 2012, p. 15.

685 Envestra, Victorian revised access arrangement information   Attachment 6.7: Operating expenditure, November 2012, p. 15.

686 NGR, r. 74(2).

687 AS 5601  2004 4.13.5(b)

688 NGR, r. 91(1), r. 74(2).

689 Envestra, Victorian access arrangement information, 30 March 2012, p. 100.

690 AER, Access arrangement draft decision, Envestra Ltd. 2013-17, September 2012, Attachment 6, p. 178.

691 Envestra, Victorian revised access arrangement information   Attachment 6.7: Operating expenditure, November 2012, p. 17.

692 NGR, r. 91(1).

693 NGR, r. 74(2).

694 Envestra, Victorian access arrangement information, 30 March 2012, p. 100.

695 AER, Access arrangement draft decision, Envestra Ltd. 2013-17, September 2012, Attachment 6, p. 179.

696 Envestra, Victorian revised access arrangement information   Attachment 6.7: Operating expenditure, November 2012, pp. 18-19.

697 Energy Safe Victoria audit report, 17 November 2010

698 NGR, r. 91(1).

699 NGR, r. 74(2)(a)

700 NGR, r. 91(1).

701 Envestra, Victorian Access arrangement information - Business Case VA33, 30 March 2012, p. 131.

702 Envestra, Victorian Access arrangement information - Business Case VA33, 30 March 2012, p. 1

703 AER, Access arrangement draft decision, Envestra Ltd. 2013-17, September 2012, Attachment 6, p. 190.

704 Envestra, Victorian revised access arrangement information   Attachment 6.7: Operating expenditure, November 2012, p. 16-17..

705 Envestra, Victorian revised access arrangement information - Business Case VA33A, November 2012, p. 4

706 Envestra, Victorian revised access arrangement information   Attachment 6.7: Operating expenditure, November 2012, p. 16.

707 Envestra, Victorian revised access arrangement information - Business Case VA33A, November 2012, p. 5.

708 Envestra Victorian Access arrangement information - Business Case VA33, 30 March 2012, p. 4.

709 Envestra has referred to two different periods of increased rainfall. In its response to AER information request 35 Envestra referred to increased rainfall in the thirty six month period up to July 2011. In its revised proposal it referred to increased rainfall in 2010.

710 Envestra, Response to AER information request 35, 3 August 2012.

711 NGR, r. 91(1).

712 Envestra, Victorian revised access arrangement information - Business Case VA33A, November 2012, p. 5

713 NGR, r. 91(1).

714 Envestra, Victorian revised access arrangement information - Business Case VA33A, November 2012, p. 2; Envestra, Response to AER information request 35, 3 August 2012.

715 NGR, r. 74(2).

716 NGR, r. 74(2).

717 NGR, r. 91(1).

718 Envestra, Victorian access arrangement information, 30 March 2012, p. 102.

719 AER, Access arrangement draft decision, Envestra Ltd. 2013-17, September 2012, Attachment 6, p. 182.

720 AER, Access arrangement draft decision, Envestra Ltd. 2013-17, September 2012, Attachment 3, p. 94.

721 Envestra, Response to information request 18, 7 July 2012, p. 8.

722 Envestra, Victorian revised access arrangement information - Business Case VA23A November 2012, pp. 2–4 (Confidential attachment),.

723 Envestra, Victorian revised access arrangement information - Business Case VA33A, November 2012, p. 4 (Confidential attachment).

724 Envestra, Victorian revised access arrangement information - Business Case VA33A, November 2012, p. 4 (Confidential attachment).

725 NGR, r. 91(1).

726 NGR, r. 91(1).

727 NGR, r. 74(2).

728 NGR, r. 74(2).

729 NGR, r. 91(1).

730 In this sense, the step change is related to an increase in network growth. However, Envestra proposed it as a step change therefore for the purposes of the final decision it has been assessed as a step change.

731 The increase in CTM charges for the Dandenong station was based on fifteen per cent of the estimated capital cost of Envestra's upgrade.

732 Envestra, Response to AER information request 2, 10 May 2012, p. 6.

733 APA GasNet, 2011 Metering Strategy Plan, 20 January 2010.

734 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, p. 183.

735 Envestra, Victorian revised access arrangement information - Business Case V26A, November 2012 (Confidential attachment).

736 NGR, r. 91(1), r. 74(2).

737 AER, Information request FD4a, 28 November 2012; AER, Information request FD10a, 21 December 2012; AER, Information request FD10b, 30 January 2013.

738 AER, Information request FD4a, 28 November 2012;

739 AER, Information request FD10a, 21 December 2012.

740 AER, Information request FD10b, 30 January 2012.

741 AER, Information request FD10a, 21 December 2012.

742 Envestra, Response to information request FD4a, 12 December 2012, p. 3.

743 Envestra, Response to information request FD4a, 12 December 2012, p. 3.

744 Envestra, Response to information request FD10a, 24 January 2013, p. 5.

745 Envestra, Response to information request FD10a, 24 January 2013, p.4- 5.

746 Envestra, Response to information request FD10b, 24 January 2013, p. 2.

747 Envestra, Response to information request FD10c, 14 February 2013.

748 ABS, Wage Price Index: Catalogue number 6345.0, September 2012; ABS, Consumer Price Index: Catalogue number 6401.0, September 2012;

749 AER, Draft decision, SPI Networks (Gas) Pty Ltd 2013 – 17: Part 3, September 2012, p. 83.

750 Envestra, Response to information request 2, 17 May 2012.

751 Envestra, Response to information request FD4a, 12 December 2012, p. 3;

752 Envestra, Response to information request FD10b, 24 January 2013, p. 4. Envestra, Response to information request 2, 17 May 2012.

753 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017: Part 2, September 2012, pp. 188–189

754 Envestra, Revised access arrangement proposal Attachment 6.3A: Network Development, 9 November 2012, p. 1.

755 Envestra, Revised access arrangement proposal Attachment 6.3A: Network Development, 9 November 2012, p. 11.

756 Envestra, Revised access arrangement proposal Attachment 6.7: Operating Expenditure, 9 November 2012, p. 8.

757 Envestra, Access arrangement proposal Attachment 6.3: Network Development Plan, 30 March 2012, p. 26. (Confidential attachment)

758 Minister for Energy and Resources, Victorian Gas Access Arrangement Review – Victorian Government Submission, 14 January 2012, p. 4.

759 NGR, r. 91, NGL s. 23.

760 NGR, r. 91(1)

761 Envestra, Victoria & Albury revised access arrangement information, November 2012, p. 21.

762 AER, Access arrangement draft decision, Envestra Ltd: 2013-17, September 2012, Attachment 6, p. 266.

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

764 Envestra, Victoria & Albury revised access arrangement information, November 2012, p. 21.

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

766 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017 Part 2 attachments, September 2012.

767 Envestra (Vic and Albury), Access arrangement proposal, attachment 9.11 - rate of return, section 3, 30 March 2012. Envestra (Vic), PTRM ‘input’ tab, cell G200. Envestra (Albury), PTRM ‘input’ tab, cell G199.

768 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017 Part 2 attachments, September 2012, p.197. The debt raising costs (as expressed in dollar amount) in this final decision differs from that in Envestra’s revised proposal because of the updated RAB and WACC inputs.

769 Envestra Vic, Envestra (Albury) PTRM ‘liquidity costs’ tab.

770 Envestra, Victoria Access arrangement information, 30 March 2012, p. 163. Envestra, Albury Access arrangement information, 30 March 2012, p. 147.

771 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017 Part 2 attachments, September 2012, p. 198-201.

772 NGO, s. 23,

773 NGO, s. 24; AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017, September 2012, p. 201.

774 NGR, r. 98(1).

775 NGR, r. 98(3); NGL, s. 24(3).

776 NGL, s. 24(6); NGL, s. 24(3); r. 98(3).

777 NGR, r.100(a); NGL, s. 23.

778 NGR, r. 98(1).

779 NGR, r. 98(3); NGL, s. 24(3).

780 NGL, s. 24(6); NGL, s. 24(3); r. 98(3).

781 NGR, r.100(a); NGL, s. 23.

782 Envestra, Revised access arrangement information, Attachment 11-1, 9 November 2012, pp. 4–8.

783 Envestra, Revised access arrangement information, Attachment 11-1, 9 November 2012, p. 9.

784 Envestra, Revised access arrangement information, Attachment 11-1, 9 November 2012, p. 8.

785 Envestra, Revised access arrangement information, Attachment 11-1, 9 November 2012, p. 9.

786 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017, Part 2, September 2012, pp. 205–206.

787 AER, Draft decision, Envestra access arrangement proposal for 1 January 2013 – 31 December 2017, Part 2, September 2012, pp. 203–216.

788 Envestra, Revised access arrangement information, Attachment 11-1, 9 November 2012, pp. 4–7.

789 Multinet, Revised access arrangement information, 9 November 2012, pp. 175–181.

790 Essential Services Commission Appeal Panel, Application by the Albury Gas Company (Envestra Albury), E2/2008, 11 November 2008.

791 Essential Services Commission Appeal Panel, Application by the Albury Gas Company (Envestra Albury), E2/2008, 11 November 2008, paragraph 177.