Application by East Australian Pipeline Limited - [2005] ACompT 3

AUSTRALIAN COMPETITION TRIBUNAL
Application by East Australian Pipeline Limited [2005] ACompT 3
APPLICATION UNDER S 39(1) OF THE GAS PIPELINE ACCESS LAW FOR REVIEW OF THE DECISION OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION ON 8 DECEMBER 2003 TO APPROVE ITS OWN ACCESS ARRANGEMENT PURSUANT TO THE PROVISIONS OF THE NATIONAL THIRD PARTY ACCESS CODE FOR NATURAL GAS PIPELINE SYSTEMS AND THE GAS PIPELINE ACCESS LAW
NO 8 OF 2003
GYLES J (Deputy President), MR RC DAVEY and MISS MM STARRS
3 MAY 2005
SYDNEY

IN THE AUSTRALIAN COMPETITION TRIBUNAL

NO 8 OF 2003

RE:

APPLICATION UNDER S 39(1) OF THE GAS PIPELINE ACCESS LAW FOR REVIEW OF THE DECISION OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION ON 8 DECEMBER 2003 TO APPROVE ITS OWN ACCESS ARRANGEMENT PURSUANT TO THE PROVISIONS OF THE NATIONAL THIRD PARTY ACCESS CODE FOR NATURAL GAS PIPELINE SYSTEMS AND THE GAS PIPELINE ACCESS LAW

BY:

EAST AUSTRALIAN PIPELINE LIMITED

APPLICANT

THE TRIBUNAL:

GYLES J (Deputy President)

MR RC DAVEY

MISS MM STARRS

DATE:

3 MAY 2005

PLACE:

SYDNEY

THE TRIBUNAL DIRECTS THAT:
EAPL submit a revised Access Arrangement.

IN THE AUSTRALIAN COMPETITION TRIBUNAL

NO 8 OF 2003

RE:

APPLICATION UNDER S 39(1) OF THE GAS PIPELINE ACCESS LAW FOR REVIEW OF THE DECISION OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION ON 8 DECEMBER 2003 TO APPROVE ITS OWN ACCESS ARRANGEMENT PURSUANT TO THE PROVISIONS OF THE NATIONAL THIRD PARTY ACCESS CODE FOR NATURAL GAS PIPELINE SYSTEMS AND THE GAS PIPELINE ACCESS LAW

BY:

EAST AUSTRALIAN PIPELINE LIMITED

APPLICANT

THE TRIBUNAL:

GYLES J (Deputy President)

MR RC DAVEY
MISS MM STARRS

DATE:

3 MAY 2005

PLACE:

SYDNEY

REASONS FOR DECISION

East Australian Pipeline Limited (EAPL) has now submitted Short Minutes of Orders which the Tribunal should make to give effect to its reasons which attach a revised Access Arrangement. The Australian Competition and Consumer Commission (ACCC) has drawn attention to some aspects of the matter. The first point is the tariff path. The Tribunal is satisfied that the tariff path proposed is appropriate.
The second point arises from the fact that the EAPL models originally provided for an amount of $40.849 million to be added to the capital base as at 1 July 2005 and treated as new capital expenditure in order to compensate EAPL for the fact that, while the Access Arrangement approved by the ACCC has been in force since 1 January 2004, the variations will not take effect until 1 July 2005. The ACCC pointed out that that figure appeared to have been calculated for the period from 1 July 2003 rather than 1 January 2004 and suggested that the amount for the shorter period was $34.35 million. It also drew attention to the fact that there are various means by which that amount could be treated. EAPL has accepted the amount of $34.35 million for the purposes of having the Access Arrangement approved. The practical effect of what is proposed is to increase the tariff from now on above the rate that…

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: [2005] ACompT 3
Decision Date: 3 MAY 2005

CaseChat Overview and Summary

East Australian Pipeline Limited (EAPL) applied to the Australian Competition Tribunal for a review of a decision made by the Australian Competition and Consumer Commission (ACCC) on 8 December 2003. The ACCC approved EAPL's own access arrangement under the National Third Party Access Code for Natural Gas Pipeline Systems and the Gas Pipeline Access Law. EAPL sought to challenge this decision on several grounds, including the appropriateness of the tariff path and the calculation of compensation for delays in settling the Access Arrangement.

The Tribunal had to decide whether the tariff path proposed by EAPL was appropriate and whether the compensation for the delay in settling the Access Arrangement was justified. The ACCC argued that the compensation proposed by EAPL would result in an increase in tariffs for future consumers, which it believed was inappropriate. EAPL contended that there was no legal impediment to incorporating the under-recovery in the tariff calculation. The Tribunal examined the Gas Code and the Gas Law to determine if they provided any legal basis for such compensation. The Tribunal found that neither the Gas Code nor the Gas Law authorised the incorporation of under-recovery in the tariff calculation.

The Tribunal concluded that the tariff path proposed by EAPL was appropriate but rejected the compensation for delays. The Tribunal emphasised that the purpose of the exercise was to fix a proper tariff for the service provided, not to compensate EAPL for delays. The Tribunal ruled that the tariff should not be increased as a result of backdating the Access Arrangement. The Tribunal directed EAPL to submit a revised Access Arrangement in accordance with these reasons.

The final orders required EAPL to submit a revised Access Arrangement that adhered to the Tribunal's reasons. The Tribunal did not approve the compensation for delays, ensuring that future consumers would not be levied for the theoretical loss of revenue caused by the delay in settling the Access Arrangement. The revised Access Arrangement was to be submitted within the specified timeframe.

Orders