The Australian Energy Regulator has issued its draft decision on the access arrangement proposal for the Roma to Brisbane Pipeline for the period 12 April 2012 to 30 June 2017.
“The AER’s draft decision is expected to increase a typical residential customer’s bill by around $2 in the first year of the access arrangement period,” AER chairman Andrew Reeves said.
The pipeline is both owned and operated by APT Petroleum Pipeline Pty Limited (APTPPL) which is a part of the APA Group. Natural gas is transported from the gas hub near Roma to the markets of Brisbane and the regional centres along the pipeline route.
Customers include Incitec, CS Energy’s Swanbank Power Station, BP’s Bulwer Island Refinery, the South West Queensland Producers, energy retailers AGL and Origin Energy.
The AER’s draft decision has resulted in total revenue of $263.4 million over the access arrangement period of 12 April 2012 to 30 June 2017. APTPPL had proposed a total revenue of $296.4 million, an increase of 73.4 per cent over approved revenue in the earlier access arrangement period.
Differences between the AER’s draft decision and APTPPL’s access arrangement proposal are principally driven by the weighted average cost of capital (WACC), capital expenditure and operating expenditure. These are influenced by different approaches to pipeline coverage, forecast capacity utilisation, and extension and expansion requirements.
“If the AER were to accept APTPPL’s proposed WACC of 9.63 per cent, the draft decision would have resulted in total revenue increasing by a further $26.6 million over the access arrangement period,” Mr Reeves said.
For the draft decision, the AER has adopted an indicative WACC of 8.55 per cent. The financial measures that make up the WACC will be updated closer to the time of the AER’s final decision. The AER assessed APTPPL’s revenue proposal under the National Gas Rules.
The AER did not approve APTPPL’s proposed auction-based queuing requirements as the AER is of the view that the proposed queuing requirements do not comply with the requirements of the National Gas Rules.
APTPPL has until 25 May 2012 to respond to the AER's draft decision and submit a revised access arrangement proposal. Submissions on the AER's draft decision and any revised access arrangement proposal are invited from interested parties by 25 June 2012.
In making this draft decision, the AER took into account advice from independent experts and submissions from interested parties.