Application by Jemena Gas Networks (NSW) Limited

Jemena Gas Networks (NSW) Limited applied for leave to review a regulatory determination by the Australian Energy Regulator (AER) under the National Gas Law. The dispute centred on the calculation of the value of imputation credits (gamma) in the context of corporate income tax costs for Jemena. The AER had determined the estimated cost of corporate income tax for Jemena for each regulatory year, as required by regulation 72(1)(h) of the National Gas Rules (NGR). The calculation of gamma, which is deducted from the amount needed to provide an appropriate return to investors, was disputed by Jemena. Jemena argued that the AER had incorrectly calculated the distribution rate for imputation credits and the value of distributed imputation credits, asserting that the AER had not appropriately considered the efficient distribution rate for a benchmark entity and had misunderstood the relevant regulation, r 87A of the NGR.

The Tribunal needed to decide whether there were serious issues to be heard and determined and whether the asserted grounds of review, if made out, would result in a materially preferable decision aligned with the National Gas Objective (NGO). The Tribunal also considered the adequacy of Jemena's identification of the grounds of review. The Tribunal concluded that there were significant issues to be heard and determined, and while it appeared provisionally that the errors, if established, would result in a materially preferable NGO decision, the final conclusion would depend on various other considerations.

After careful consideration of the material presented by both Jemena and the AER, the Tribunal granted Jemena leave to apply for review. The Tribunal determined that the identification of the relevant grounds of review would depend on which of Jemena's detailed contentions were made out. The Tribunal also found that the asserted errors, if established, would likely result in a materially preferable NGO decision, although this view was necessarily provisional and subject to further considerations. The final orders were that Jemena was granted leave to apply for review of the AER's determination regarding the value of imputation credits (gamma).