Public Forum Draft Decision ActewAGL 1 July 2010 to 30 June 2015 - - PowerPoint PPT Presentation

Public Forum

Draft Decision ActewAGL 1 July 2010 to 30 June 2015

Mr Mike Buckley, General Manager

Background

• ActewAGL Network

– Owner: Actew Corp & Jemena Limited – Operated by: Jemena Asset Management (JAM)

• Access arrangement revision for 1 July

2010 to 30 June 2015

• Review process

Overview

• Comprehensive & well supported proposal
• Substantive issues include:

– Efficiency of operating costs – Increase in proposed capex – Higher proposed return on capital

• Higher initial tariffs of 11.6% translating as

an average per annum increase of 7.8%

• ver the 5 year period

Operating expenditure

5 10 15 20 25 30 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Proposed Approved

$2009-10 million

Actual Opex 2009/10

UNFT

(cost pass through)

Capital expenditure

10 20 30 40 50 60 70 80 90 100 2010-11 2011-12 2012-13 2013-14 2014-15 Proposed Approved

$2009-10 million

Capital expenditure - HFL

• Expected to provide 88TJ of gas
• Represents 1257% of the summer peak per day

and 126% of the winter peak per day

• AER issues:

– Upstream gas supply – Risk mitigation strategies and improved information – Inadequacy of ActewAGL’s business case – Nature of services

WACC

N/A 1.25 0.9 6 8.6 Past AA (converted to post tax) 10.14 11.09 Nominal Vanilla WACC (%) 0.65 0.65 Gamma 4.28 4.96 DRP (%) 0.8 1.0 Equity Beta 6.5 7.5 MRP (%) Approved Proposed

Tariffs

23.9

• 11.1

11.6

Nominal Initial Increase (Nominal, %)

6.1 2.5 7.8

Average Annual Increase (Nominal, %) Tariff Meter Data Contract

Components of tariff change

2 4 6 8 10 12 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

$/GJ

Higher Opex Higher WACC New Capex Inflation Area 1 Tariffs

nominal

7.59 8.08 8.73 9.38 10.05 6.80

Tariff variations

• Tariffs change annually by CPI to adjust

for changes in inflation

• Tariffs may also change as a result of the

cost pass through mechanism

• Cost pass throughs approved for:

– STTM – CPRS – National Energy Customer Framework

Non-tariff terms & conditions

• Extensions policy provides the AER with

more discretion as to what extensions are included under the access arrangement

• Trigger events included to account for

national customer and gas connections policy developments

Process – where to from here?

Proposal Submissions Draft decision Revised proposal Final decision Submissions 30 June 2009 11 September 11 November 6 January April 2010 12 February

Questions