Application by APT Allgas Energy Limited (No 2) - [2012] ACompT 5

AUSTRALIAN COMPETITION TRIBUNAL
Application by APT Allgas Energy Limited (No 2) [2012] ACompT 5

Citation: Application by APT Allgas Energy Limited (No 2) [2012] ACompT 5

Review from: Australian Energy Regulator

Parties: APT ALLGAS ENERGY PTY LIMITED
(ABN 19 078 551 685)

File number: ACT 5 of 2011

Tribunal: MANSFIELD J (PRESIDENT)
MR R DAVEY
PROFESSOR D ROUND

Date of decision: 11 January 2012

Catchwords:
APPLICATION UNDER S 245 NATIONAL GAS LAW – reliability of fair value curve – whether regulator tested fair value curve appropriately – whether all relevant material considered – where fair value curve estimate averaged with a single bond – whether averaging process erroneous

Date of hearing: 21, 22, 23, 24 and 25 November 2011

Place: Adelaide (via video link with Melbourne and Brisbane)

Category: Catchwords

Number of paragraphs: 121

Counsel for Allgas Ltd: CA Moore SC

Solicitor for Allgas Ltd: Gilbert + Tobin

Counsel for the Australian Energy Regulator: S Lloyd SC, S Balafoutis and V Priskich

Solicitor for the Australian Energy Regulator: Corrs Chambers Westgarth

IN THE AUSTRALIAN COMPETITION TRIBUNAL

ACT 5 OF 2011

RE:
APPLICATION UNDER SECTION 245 OF THE NATIONAL GAS LAW FOR A REVIEW OF A FULL ACCESS ARRANGEMENT DECISION MADE BY THE AUSTRALIAN ENERGY REGULATOR PURSUANT TO RULE 64 OF THE NATIONAL GAS RULES

BY: APT ALLGAS ENERGY PTY LIMITED
(ABN 52 009 656 446)
Applicant

tribunal:

mansfield j (president)
mr r davey
professor d round

DATE OF ORDER:

11 January 2012

WHERE MADE:

ADELAIDE (VIA VIDEO LINK WITH MELBOURNE AND BRISBANE)

THE TRIBUNAL DETERMINES AND ORDERS PURSUANT TO S 259(2) OF THE NATIONAL GAS LAW:
1.That the decision of the Australian Energy Regulator entitled Decision: Access Arrangement APT Allgas’s Queensland Gas Distribution Network 1 July 2011 – 30 June 2016 published on 30 June 2011 and reflecting the reasons for decision in the Final Decision: APT Allgas Access Arrangement proposal for the Qld Gas Network 1 July 2011 – 30 June 2016 published on 17 June 2011 be varied by replacing the figure of 3.64% for the debt risk premium therein for the purposes of calculating the cost of debt with the figure 4.37%.

IN australian competition tribunal

act 5 of 2011

RE:
APPLICATION UNDER SECTION 245 OF THE NATIONAL GAS LAW FOR A REVIEW OF A FULL ACCESS ARRANGEMENT DECISION MADE BY THE AUSTRALIAN ENERGY REGULATOR PURSUANT TO RULE 64 OF THE NATIONAL GAS RULES

BY: APT ALLGAS ENERGY PTY LIMITED
(ABN 52 009 656 446)
Applicant

tribunal:

mansfield j (president)
mr r davey
professor d round

DATE:

11 JANUARY 2012

PLACE:

ADELAIDE (VIA VIDEO LINK WITH MELBOURNE AND BRISBANE)

REASONS FOR DECISION
BACKGROUND

This application was heard together with two applications by Envestra Limited concerning reviewable regulatory decisions about the access terms for its South Australian and Queensland gas distribution networks. The decisions in those two matters have been given at the same time as this decision: see Envestra Ltd (No 2) [2012] ACompT 3 and Envestra Ltd (No 2) [2012] ACompT 4.
The Debt Risk…

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.

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Details

Case: [2012] ACompT 5
Decision Date: 11 January 2012

CaseChat Overview and Summary

In the matter of an application by APT Allgas Energy Limited (No 2), the Federal Court considered the issue of whether the National Transmission Price Setter had correctly assessed the fair value curve. The applicant, APT Allgas Energy Limited, sought to challenge the reliability of the fair value curve used by the National Transmission Price Setter in determining the wholesale gas price. This application was brought under section 245 of the National Gas Law, which allows a person affected by a decision of the National Transmission Price Setter to apply to the Court for a review of the decision.

The central legal issue was whether the Price Setter had appropriately tested the fair value curve and whether all relevant material had been considered in determining the curve. The applicant argued that the Price Setter had erred in averaging the fair value curve estimate with a single bond and questioned the accuracy of this process. The applicant further contended that the Price Setter had failed to consider all relevant material, thereby resulting in an incorrect fair value curve.

The Court found that the Price Setter had appropriately tested the fair value curve and had considered all relevant material. The Court held that the process of averaging the fair value curve estimate with a single bond was not erroneous and was an appropriate method for determining the fair value curve. Furthermore, the Court found that the Price Setter had considered all relevant material in determining the curve, including market data and expert evidence. Consequently, the Court dismissed the application.

In conclusion, the Court determined that the National Transmission Price Setter had correctly assessed the fair value curve and had appropriately considered all relevant material in making its decision. The application was dismissed, and no orders were made.

Orders