In its revised proposal, Envestra proposed total regulatory depreciation allowances for the 2013–17 access arrangement period of:630
$88.5 million ($nominal) for Envestra Victoria as set out in table 6.3
$3.9 million ($nominal) for Envestra Albury as set out in table 6.4.
Envestra adopted the standard economic lives and remaining economic lives as set out in the AER's draft decision to calculate the revised proposed depreciation allowances.
Source: Envestra Albury, Revised proposal PTRM, November 2012.
Assessment approach
The AER's assessment approach for the regulatory depreciation allowance is set out in its draft decision. See section 5.3, attachment 5 of the draft decision for a detailed explanation of the assessment approach.
There were no submissions that commented on Envestra's depreciation allowance.
Reasons for decision
The AER's final decision on Envestra's regulatory depreciation allowances for the 2013–17 access arrangement period is:
$88.1 million ($nominal) for Envestra Victoria. This is a reduction of 0.4 million ($nominal) or 0.4 per cent of the revised proposed regulatory depreciation allowance.
$3.8 million ($nominal) for Envestra Albury. This is a reduction of 0.1 million ($nominal) or 1.8 per cent of the revised proposed regulatory depreciation allowance.
The AER accepts Envestra's revised proposed standard economic lives for the 2013–17 access arrangement period. The AER also accepts Envestra's revised proposed weighted average method to calculate the remaining economic lives as at 1 January 2013.
These regulatory depreciation allowances reflect the AER's final decision on other elements of Envestra's revised proposal that impact on the proposed regulatory depreciation allowances (discussed in the relevant attachments).
Standard economic lives
The AER accepts Envestra's revised proposed standard economic lives for the 2013–17 access arrangement period. These revised proposed standard economic lives reflect the revisions proposed by the AER in its draft decision.631
The AER's draft decision accepted most of Envestra's proposed standard economic lives (except for the 'Land & buildings' and the 'SCADA' asset classes).632 The AER considered that these proposed standard economic lives are consistent with the standard economic lives the ESC approved in the 2008–12 access arrangement period.633 However, as a result of the AER's draft decision to split the 'Land & buildings' asset class into two separate asset classes to apply from 1 January 2013, the AER assigned a standard economic life of 50 years to the 'Buildings' asset class. The AER did not assign a standard economic life to the 'Land' asset class.634 In relation to the 'SCADA' asset class, the AER's draft decision required that the proposed standard economic life of 10 years be increased to 15 years. The AER considered that a standard economic life of 15 years for the 'SCADA' asset class is consistent with the requirements of the NGR.
Envestra's revised proposal adopted all the standard economic lives as set out in the draft decision.635
The AER's final decision on Envestra's standard economic lives is set out in Table 6 .54.
Remaining economic lives
Consistent with the draft decision, the AER accepts Envestra's proposed weighted average method for calculating the remaining economic lives as at 1 January 2013 for this final decision.636 Based on the AER's final decision on the roll forward of the opening capital base (discussed in attachment 2), the AER has updated the remaining economic lives for this final decision.
The AER's final decision on Envestra's standard economic lives and remaining economic lives for its Victorian and Albury distribution businesses for the 2013–17 access arrangement period is set out in Table 6 .54.
Table 6.54 AER's final decision on Envestra's standard and remaining economic lives as at 1 January 2013 (years)
Asset class
AER final decision – standard economic life
AER final decision – Envestra Victoria remaining economic life
AER final decision - Envestra Albury remaining economic life
