"In response to the ACCC's final decision, EAPL submitted a revised access arrangement on 23 October", said ACCC chairman, Graeme Samuel.
"This revised access arrangement did not fully comply with the amendments required in the decision. As a consequence the ACCC has drafted and approved its own access arrangement as required under the Gas Code. The access arrangement will come into effect on 1 January 2004".
The ACCC considered the decision by the Federal Minister for Industry, Tourism and Resources to revoke coverage between Moomba and Marsden with effect from 11 December 2003. The Minister also determined that coverage of the MSP mainline between Marsden and Wilton and the regional laterals is to stand.
The ACCC considers that the access arrangement (including reference tariffs) it has drafted and approved accommodates this partial revocation of coverage.
"For instance reference tariffs in the final approval have been established on a cents/GJ/km basis. This would have translated into a starting tariff of $0.50/GJ on the Moomba to Sydney segment of the pipeline (GST exclusive) which compares with the $0.66/GJ currently being charged by EAPL. Separate tariffs have been set for gas being transported along the regional laterals.
"Even though the ACCC has approved a lower tariff, EAPL's cash flows will not be substantially affected in the short term", Samuel said. "This is because EAPL has a contractual arrangement with its main customer, AGL, under which AGL is required to make minimum monthly payments to EAPL regardless of the level of regulated tariff.
"The ACCC considers that proceeding to the final approval ensures that regional NSW centres which do not have alternative gas transmission services can benefit from the access arrangement.
The Australian Pipeline Trust (APA) had previously described the ACCC decision on tariffs for the MSP as, 'a useful improvement on the previous draft determination, but still representing a fundamental difference of opinion in the method of determining the value of the asset'.
The fundamental difference resulted in the ACCC slashing $220million from the value of the pipeline.
While the ACCC agreed with aspects of EAPL's proposed access arrangement, such as proposed capital expenditure and volumes, the ACCC could not agree to EAPL's proposal for the value of the pipeline assets at $779 million or operating costs of $23 million per annum.
The ACCC concluded that the value should be $559 million and that $18 million per annum was a better estimate of the efficient costs of operating the pipeline.
