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

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

Review from: Economic Regulation Authority

File number: ACT 10 of 2015

Tribunal: MIDDLETON J (PRESIDENT)
PROFESSOR KT DAVIS (MEMBER)
MR R STEINWALL (MEMBER)

Date of Determination: 13 July 2016

Catchwords: ENERGY AND RESOURCES – application under s 245 of the National Gas Law (NGL) for review of an access arrangement decision by the Economic Regulation Authority – national gas objective (NGO) – interrelationship of constituent components and preferable reviewable regulatory decision by the ERA under s 28(1)(b)(i) and (1)(b)(iii) – role of the Tribunal on review –limited discretion under r 40(2) of the NGR – topics for review – sustaining capital expenditure – depreciation – corporate support operating expenditure – reference tariff variation mechanism – return on equity – gamma – materially preferable NGO decision

Legislation:
Economic Regulation Authority (National Gas Access Funding) Regulations 2009 (WA)

Gas Standards Act 1972 (WA)

Gas Standards (Gas Supply and System Safety) Regulations 2000

National Gas (South Australia) Act 2008 (SA)

National Gas Access (WA) Act 2009 (WA)

National Gas Access (WA) (Local Provisions) Regulations 2009 (WA)

National Gas Amendment (Price and Revenue Regulation of Gas Services) Rules 2012

National Gas Rules

Statutes Amendment (National Electricity and Gas Laws – Limited Merits Review) Act 2013 (SA)

Cases cited:
Application by ActewAGL Distribution [2010] ACompT 4

Application by ActewAGL Distribution [2015] ACompT 3

Application by APA GasNet Australia (Operations) Pty Limited (No 2) [2013] ACompT 8

Application by ATCO Gas Australia Pty Ltd [2015] ACompT 7

Application by ElectraNet Pty Limited (No 3) [2008] ACompT 3

Application by Envestra Ltd (No 2) [2012] ACompT 3

Application by WA Gas Networks (No 3) [2012] ACompT 12

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

Applications by Public Interest Advocacy Centre Ltd, Ausgrid, Endeavour Energy and Essential Energy [2015] ACompT 2

Australian Competition and Consumer Commission v Australian Competition Tribunal (2006) 152 FCR 33

Dates of hearing: 15-18 February 2016; 26-27 April 2016

Registry: Western Australia

Category: Catchwords

Number of paragraphs: 693

Counsel for ATCO Gas Australia Pty Ltd: Mr P Gray QC with Mr D Farrands

Solicitor for ATCO Gas Australia Pty Ltd: Johnson Winter & Slattery

Counsel for the Economic Regulation Authority: Mr N O’Bryan SC with Mr E Heenan

Solicitor for the Economic Regulation Authority: Holman Fenwick Willan

IN THE AUSTRALIAN COMPETITION TRIBUNAL

ACT 10 of 2015

RE:
APPLICATION UNDER SECTION 245 OF THE NATIONAL GAS LAW FOR A REVIEW OF A FULL ACCESS ARRANGEMENT DECISION MADE BY THE ECONOMIC REGULATION AUTHORITY IN RELATION TO ATCO GAS AUSTRALIA PTY LTD PURSUANT TO RULE 64 OF THE NATIONAL GAS RULES

BY:
ATCO GAS AUSTRALIA PTY LTD (ABN 90 089 531 975)

Applicant

TRIBUNAL:

MIDDLETON J (PRESIDENT)
PROFESSOR KT DAVIS (MEMBER)
MR R STEINWALL (MEMBER)

DATE OF DETERMINATION:

13 July 2016

THE TRIBUNAL DETERMINES THAT:
1.Pursuant to s 259(2)(c) of the National Gas Access (Western Australia) Law (‘NGL’), the Final Decision on Proposed Revisions to the…

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: [2016] ACompT 10
Decision Date: 13 July 2016

CaseChat Overview and Summary

In the matter of an application by ATCO Gas Australia Pty Ltd, the parties were seeking a review of an access arrangement decision made by the Economic Regulation Authority (ERA) under the National Gas Law (NGL). The central dispute was whether the ERA's decision aligned with the national gas objective (NGO) as outlined in the NGL, specifically focusing on the interrelationship of its constituent components and the preferable reviewable regulatory decision. The application was brought before the Australian Competition Tribunal (ACT), which was tasked with determining the legality and appropriateness of the ERA's decision.

The legal issues before the court encompassed the interpretation and application of the NGO, particularly the interrelationship of its components, and the extent to which the Tribunal should review the ERA's decision. The application also questioned the role and discretion of the Tribunal in such reviews, considering the limited discretion provided under rule 40(2) of the National Gas Rules (NGR). Further, the application sought to address specific topics for review, including the sustaining capital expenditure, depreciation, corporate support operating expenditure, reference tariff variation mechanism, return on equity, and the gamma component of the NGO.

The Tribunal, in its judgment, clarified that while the NGO's components were interrelated, they were not necessarily interdependent. The Tribunal held that the role of the Tribunal on review was to ensure the ERA's decision was materially preferable in the context of the NGO. The court emphasised the limited discretion available to it under the NGR and examined each of the topics for review, finding that the ERA's decision was within the permissible bounds. Consequently, the application was dismissed, affirming the ERA's decision as materially preferable under the NGL.

Orders