Application by Energex Limited (No 2) - [2010] ACompT 7

AUSTRALIAN COMPETITION TRIBUNAL
Application by Energex Limited (No 2) [2010] ACompT 7

Citation: Application by Energex Limited (No 2) [2010] ACompT 7

Review from: Australian Energy Regulator

Parties:
ENERGEX LIMITED (ACN 078 849 055)

ERGON ENERGY CORPORATION LIMITED
(ACN 078 646 062)

ETSA UTILITIES (ABN 13 332 330 749)

File number(s): 2 of 2010
3 of 2010
4 of 2010

Members: MIDDLETON J (DEPUTY PRESIDENT),
MR R DAVEY AND MR R SHOGREN

Date of delivery of Reasons: 13 October 2010

Date of hearing: 13, 14, 15, 16, 17, 20 and 21 September 2010

Place: Melbourne

Category: No Catchwords

Number of paragraphs: 151

Counsel for Energex Limited: Mr S Doyle SC with Mr Pomerenke

Solicitor for Energex Limited: Allens Arthur Robinson

Counsel for Ergon Energy Corporation Limited: Mr P O’Shea SC with Mr Bradley

Solicitor for Ergon Energy Corporation Limited: Minter Ellison Lawyers

Counsel for ETSA Utilities: Ms M Sloss SC with Mr CA Moore and Mr M Borsky

Solicitor for ETSA Utilities: Gilbert + Tobin

Counsel for Australian Energy Regulator: Mr P Hanks QC with Mr Gray, Ms R Ellyard, Mr T Clarke and Mr L Merrick

Solicitor for Australian Energy Regulator: Corrs Chambers Westgarth

IN THE AUSTRALIAN COMPETITION TRIBUNAL

File No 2 of 2010

RE:
APPLICATION UNDER SECTION 71B OF THE NATIONAL ELECTRICITY LAW FOR A REVIEW OF A DISTRIBUTION DETERMINATION MADE BY THE AUSTRALIAN ENERGY REGULATOR IN RELATION TO ENERGEX LIMITED PURSUANT TO CLAUSE 6.11.1 OF THE NATIONAL ELECTRITICY RULES

BY:
ENERGEX LIMITED (ACN 078 849 055)
Applicant

File No 3 of 2010

RE:
APPLICATION UNDER SECTION 71B OF THE NATIONAL ELECTRICITY (QUEENSLAND) LAW FOR A REVIEW OF A DISTRIBUTION DETERMINATION MADE BY THE AUSTRALIAN ENERGY REGULATOR IN RELATION TO ERGON ENERGY CORPORATION LIMITED PURSUANT TO CLAUSE 6.11.1 OF THE NATIONAL ELECTRICITY RULES

BY:
ERGON ENERGY CORPORATION LIMITED
(ACN 078 646 062)
Applicant

File No 4 of 2010

RE:
APPLICATION UNDER SECTION 71B OF THE NATIONAL ELECTRICITY LAW FOR A REVIEW OF A DISTRIBUTION DETERMINATION MADE BY THE AUSTRALIAN ENERGY REGULATOR IN RELATION TO ETSA UTILITIES PURSUANT TO CLAUSE 6.11.1 OF THE NATIONAL ELECTRITICY RULES

BY:
ETSA UTILITIES (ABN 13 332 330 749)
Applicant

MEMBERS:

MIDDLETON J (DEPUTY PRESIDENT),
MR R DAVEY AND MR R SHOGREN

DATE OF PUBLICATION OF REASONS FOR DECISION:

13 OCTOBER 2010

WHERE MADE:

MELBOURNE

REASONS FOR DECISION
INTRODUCTION

Each applicant is:
(a)the owner and operator of an electricity distribution network; and
(b)registered as a distribution network service provider (DNSP) under the National Electricity Rules (the ‘Rules’).
The Australian Energy Regulator (the ‘AER’):
(a)is responsible for the economic regulation of distribution services provided by means of, or in connection with, distribution systems that form part of the national grid; and
(b)must make a distribution determination for each distribution network service provider and, in doing so, must follow the process set out in Part E of Chapter 6 of the Rules.
In May 2010, the AER for each applicant made a distribution determination for the period 2010-11 to 2014-15 (the ‘distribution determinations’).
Each distribution determination…

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 Energex Limited (No 2)

Details

AGLC: Application by Energex Limited (No 2) [2010] ACompT 7
Case: [2010] ACompT 7
Decision Date: 13 October 2010

CaseChat Overview and Summary

The Australian Competition Tribunal considered an application by Energex Limited for review of a distribution determination made by the Australian Energy Regulator (AER) under the National Electricity Law. The determination regulated the charges that Energex could impose for the provision of electricity distribution services. Energex argued that the AER erred in determining the value of one component of the formula used to estimate the cost of corporate income tax, known as gamma. The Tribunal found that the AER erred in its estimation of the distribution ratio, one of the two parameters from which gamma is derived. The Tribunal also found that the AER erred in its approach to estimating the utilisation rate, the other parameter from which gamma is derived. The Tribunal concluded that the AER's approach to estimating the utilisation rate was illogical and arbitrary, rendering the decision unreasonable. The Tribunal ordered the AER to provide a report addressing the errors found and further comments of the Tribunal. The Tribunal proposed directions for the AER to seek a re-estimation of the parameters from a newly-commissioned dividend drop-off study that is "state of the art". The Tribunal also requested the AER to provide relevant extrinsic material explaining the rationale for including the gamma component in the formula for calculating the estimated cost of corporate income tax and how it relates to the rest of the building blocks.

Orders