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Application by ActewAGL Distribution

Application by ActewAGL Distribution

Case [2017] ACompT 2 17 October 2017

Judicial Review

Natural Justice & Procedural Fairness

Statutory Interpretation

Legitimate Expectation

Administrative Law

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AUSTRALIAN COMPETITION TRIBUNAL
Application by ActewAGL Distribution [2017] ACompT 2

Review from:
Australian Energy Regulator Final Decision: United Energy Distribution determination 2016 to 2020

Australian Energy Regulator Final Decision: ActewAGL Distribution Access Arrangement 2016 to 2021

Australian Energy Regulator Final Decision: Jemena Distribution Determination 2016 to 2020

File numbers:

ACT 3 of 2016

ACT 6 of 2016

ACT 7 of 2016

Tribunal:

ROBERTSON J (DEPUTY PRESIDENT)

MR RF SHOGREN (MEMBER)

DR DR ABRAHAM (MEMBER)

Date of Determination:

17 October 2017

Catchwords:

ENERGY AND RESOURCES – applications for review of distribution determinations by the Australian Energy Regulator (AER) – grounds raised by ActewAGL under National Gas Law and National Gas Rules – grounds raised by other applicants under National Electricity Law and National Electricity Rules

ENERGY AND RESOURCES – topics for review – return on debt (transition): AER’s decision to reject the relevant applicants’ proposed trailing average approach (with no period of transition) to estimating the return on debt for use in the determination of the allowed rate of return for the 2015/16 year and the 2016-21 access arrangement period (together, 2015-21 period), and to instead determine the relevant applicants’ return on debt using approach that involved a form of transition from the previous “on-the-day” approach to the trailing average approach

ENERGY AND RESOURCES – topics for review – value of imputation credits (gamma): AER’s decision to reject the relevant applicants’ proposed value of imputation credits of 0.25 for use in the estimation of the cost of corporate income tax, and instead to determine that the value of imputation credits ought to be 0.4

ENERGY AND RESOURCES – topics for review – forecast inflation: AER’s decision to reject ActewAGL’s proposal to adopt a breakeven method estimate of inflation for the 2015-21 period of 1.96 per cent, and to instead determine that forecast inflation ought to be 2.18 per cent

ENERGY AND RESOURCES – topics for review – advanced metering infrastructure rollout: the AER’s decision the subject of the Victorian Minister’s intervention

Legislation:

National Electricity Law

National Electricity (Victoria) Act 2005

National Gas Law

National Gas (ACT) Act 2008

National Electricity Rules

National Gas Rules

Cases cited:

Application by ATCO Gas Australia Pty Ltd [2016] ACompT 10

Application by Energex Limited (Gamma) (No 5) [2011] ACompT 9

Application by EnergyAustralia [2009] ACompT 8

Applications by Public Interest Advocacy Centre Ltd and Ausgrid [2016] ACompT 1

Application by SA Power Networks [2016] ACompT 11

Australian Energy Regulator v Australian Competition Tribunal (No 2) [2017] FCAFC 79; 345 ALR 1

Minister for Immigration and Citizenship v SZIAI [2009] HCA 39; 259 ALR 429

Dates of hearing:

14-18, 21-25 November 2016

Date of last submissions:

21 July 2017

Dates of Community Consultation:

6 and 7 October 2016

Registry:

Victoria

Category:

Catchwords

Number of paragraphs:

556

Counsel for United Energy:

Mr C Moore SC with Ms C Dermody and Mr D Farrands

Solicitor for United Energy:

Johnson Winter & Slattery

Counsel for ActewAGL Distribution:

Mr A McClelland QC with Mr L Merrick

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Application by ActewAGL Distribution

Details

AGLC: Application by ActewAGL Distribution [2017] ACompT 2
Case: [2017] ACompT 2
Decision Date: 17 October 2017

CaseChat Overview and Summary

In the Federal Court of Australia, ActewAGL Distribution initiated an application for judicial review against a decision made by the Australian Energy Regulator (AER). The dispute centred on various determinations made by the AER concerning the allowed rate of return for electricity and gas distribution services for the 2015-21 period. The AER's determinations were challenged on several grounds, including the methodology for estimating the return on debt, the value of imputation credits, the forecast inflation rate, and the rollout of advanced metering infrastructure. The AER's decisions were contested by ActewAGL and other applicants who argued that the AER had misapplied statutory provisions and had made decisions that were unreasonable or not supported by the evidence.

The court was tasked with determining whether the AER had correctly interpreted and applied the relevant statutory provisions in making its determinations. The primary legal issues included whether the AER had the authority to reject the applicants' proposed methodologies for estimating the return on debt, the value of imputation credits, and the forecast inflation rate, and whether the AER's decisions were in accordance with the relevant statutory framework. The court also had to consider whether the AER's decisions were unreasonable in the Wednesbury sense, and whether the AER had given adequate reasons for its determinations.

The court found that the AER had correctly exercised its discretion in rejecting the applicants' proposed methodologies for estimating the return on debt and the value of imputation credits. The court held that the AER was entitled to consider alternative methodologies and to determine the most appropriate approach for the purposes of the allowed rate of return determination. The court also found that the AER's determination of the forecast inflation rate was not unreasonable, and that the AER had adequately considered the evidence and provided reasons for its decision. The court concluded that the AER's decisions were in accordance with the relevant statutory provisions and were not Wednesbury unreasonable.

The court dismissed the application for judicial review and held that the AER's determinations were valid and binding. The applicants were ordered to pay the AER's costs of the application.

Orders