FEDERAL COURT OF AUSTRALIA SPI Electricity Pty Ltd v Australian Competition Tribunal [2012] FCAFC 186 Citation: SPI Electricity Pty Ltd v Australian Competition Tribunal [2012] FCAFC 186 Appeal from: Application by United Energy Distribution Pty Ltd [2012] ACompT 1 Application by United Energy Distribution Pty Ltd (No 2) [2012] ACompT 8 Parties: SPI ELECTRICITY PTY LTD v AUSTRALIAN COMPETITION TRIBUNAL and AUSTRALIAN ENERGY REGULATOR File number: VID 338 of 2012 Judges: MANSFIELD, BESANKO and MCKERRACHER JJ Date of judgment: 20 December 2012 Catchwords: ADMINISTRATIVE LAW – judicial review of a decision of the Australian Competition Tribunal (Tribunal) – construction of Part 6, Division 3A, Subdivision 2 of the National Electricity Law – where multiple service providers sought review by the Tribunal of distribution determinations of the Australian Energy Regulator (AER) – where the Tribunal found reviewable error in distribution determination of another service provider – where error common to both that service provider and the applicant's distribution determinations – whether s 71O(2) of the National Electricity Law prevented the applicant from raising the issue in its review before the Tribunal – where applicant had raised the matter before the AER but subsequently not pursued the contention – Tribunal found that s 71O(2), inter alia, prevented applicant from agitating matter before the Tribunal – s 71O(2) did not prevent applicant from raising the matter before the Tribunal – error of law committed by the Tribunal when reviewing a distribution determination of the Australian Energy Regulator. Legislation: Administrative Decisions (Judicial Review) Act 1974 (Cth) Judiciary Act 1903 (Cth) National Electricity (South Australia) Act 1996 (SA) National Electricity (Victoria) Act 2005 (Vic) Energy Legislation Amendment Act 2012 (Vic) Energy Legislation Amendment Bill 2012 (Vic) National Electricity (Victoria) Law National Electricity Rules Cases cited: Hope v Bathurst City Council (1980) 144 CLR 1 Application by Ergon Energy Corporation Limited (Street Lighting Services) (No 6) [2010] ACompT 14 Application by United Energy Distribution Pty Ltd [2012] ACompT 1 Application by Envestra Ltd (No 2) [2012] ACompT 3 Application by United Energy Distribution Pty Ltd (No 2) [2012] ACompT 8 Dates of hearing: 5, 6 September 2012 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 71 Counsel for the Applicant: Mr P. Bick QC and Mr D. Farrands Solicitor for the Applicant: Ms S Taylor of SP AusNet Counsel for the Second Respondent: Mr P.R.D. Gray SC and Mr T. Clarke Solicitor for the Second Respondent: Corrs Chambers Westgarth Counsel for the Minister for Energy and Resources (intervening): Mr G.R. McCormick Solicitor for the Minister for Energy and Resources (intervening): Minter Ellison IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 338 of 2012 BETWEEN: SPI ELECTRICITY PTY LTD Applicant AND: AUSTRALIAN COMPETITION TRIBUNAL First Respondent AUSTRALIAN ENERGY REGULATOR Second Respondent JUDGE: MANSFIELD, BESANKO and MCKERRACHER J DATE OF ORDER: 20 DECEMBER 2012 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The parties within 28 days confer and submit to the Court the agreed form of orders to give effect to the reasons for judgment, or if the form of orders is not agreed each party separately make submissions in writing as to the appropriate orders to give effect to the reasons for judgment. 2. The parties within 28 days submit to the Court their agreed form of orders as to costs of this application, or alternatively if there is no such agreement each party make brief submissions in writing as to the appropriate order for costs to be made on the application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 338 of 2012 BETWEEN: SPI ELECTRICITY PTY LTD Applicant AND: AUSTRALIAN COMPETITION TRIBUNAL First Respondent AUSTRALIAN ENERGY REGULATOR Second Respondent JUDGEs: MANSFIELD, BESANKO and MCKERRACHER Jj DATE: 20 DECEMBER 2012 PLACE: MELBOURNE REASONS FOR JUDGMENT The Court 1 This application is to review two decisions of the Australian Competition Tribunal (the Tribunal): Application by United Energy Distribution Pty Ltd [2012] ACompT 1 (the January Decision) and Application by United Energy Distribution Pty Ltd (No 2) [2012] ACompT 8 (the April Decision). The present application is brought under the Administrative Decisions (Judicial Review) Act 1974 (Cth) (the ADJR Act), as well as s 39B of the Judiciary Act 1903 (Cth). 2 The two decisions of the Tribunal concerned applications for review by the five registered distribution network service providers (DNSPs) in the State of Victoria of each of their respective distribution determinations made by the Australian Energy Regulator (AER), under the National Electricity (Victoria) Law (NEL) and the National Electricity Rules (NER). The applicant (SPI) is one of those DNSPs. The five DNSPs are SPI, United Energy Distribution Pty Ltd (UED), Jemena Electricity Networks (Vic) Ltd (JEN), Powercor Australia Ltd (Powercor) and CitiPower Pty Ltd (CitiPower). 3 Each DNSP has the exclusive right, for the relevant period, to provide electricity distribution services in a specific geographical area. The bases on which these services are supplied are the subject of the AER's determinations. Such determinations prescribe, among other things, the allowable revenue of each DNSP. The AER is to make distribution determinations in accordance with Chapter 6 of the NER. 4 The NEL, as set out in the Schedule to the National Electricity (South Australia) Act 1996 (SA) applies as a law of Victoria by virtue of s 6(a) of the National Electricity (Victoria) Act 2005 (Vic). Section 9 of the NEL gives the NER the force of law in Victoria. 5 SPI ultimately pursues its contention that the Tribunal had fallen into reviewable error in one respect only. Its application for review had raised two grounds, one relating to the implementation of an incentive mechanism (the S Factor Scheme issue). The second related to the period for which SPI's regulatory asset base (RAB) should be indexed for inflation (the RAB Indexation issue). Subsequent to the application to the Court the S Factor Scheme issue became redundant because of the Energy Legislation Amendment Act 2012 (Vic), assented to on 18 September 2012. That enactment, in short, appears to preserve the intended operation of the network performance incentive schemes put in place by the Essential Services Commission of Victoria (ESCV), including the S Factor Scheme, in respect of the previous regulatory period. Consequently, following the hearing, SPI indicated that it no longer pursued that issue. 6 These reasons for decision, therefore, deal only with the RAB Indexation issue. 7 The two issues were alive at the time listed for the commencement of the hearing. The Court declined to adjourn the hearing of the application, following an application made at its commencement, at a time when the Energy Legislation Amendment Bill 2012 (Vic) was still before the Parliament. The Bill was still before the Legislative Council, with the Second Reading debate to continue on 6 September 2012 and, if passed, then to be read a third time and then to come into force when it received the Royal Assent. The Royal Assent was given on 18 September 2012. 8 The Court declined to adjourn the hearing because, on the submissions, it was apparent that SPI would pursue the RAB Indexation issue in any event and the background and statutory provisions relevant to both that issue and to the S Factor Scheme issue were to a large degree common. The Court therefore considered it more efficient and effective to continue with the hearing, rather than adjourning it and then later having to reconstitute and for counsel and the solicitors to prepare for the hearing again, even if then confined to the RAB Indexation issue. In reaching its view on that question, the additional time required to put submissions on the S Factor Scheme issue, so as to avoid the possible need to return to Court to present those submissions if the anticipated legislation were not passed and assented to, was regarded as a sensible use of the Court's and the parties' time and resources. 9 The Minister for Energy and Resources of the State of Victoria (the Minister) was given leave to intervene on the hearing, confined to arguing that the Tribunal's decision on the non-application of the S Factor Scheme was not the result of jurisdictional error on the part of the Tribunal. In the circumstances referred to above, the hearing of the application involved submissions on both the S Factor Scheme issue and the RAB Indexation issue, including the submissions of the Minister on the S Factor Scheme issue, but as this issue is no longer pursued, it is not necessary to address them. 10 The parties are agreed that, in relation to the S Factor Scheme issue, each party should bear its own costs, being half of their respective costs of the application, including the hearing. 11 One final preliminary matter needs to be mentioned. The application to the Court was made on 2 May 2012, obviously more than 28 days after the January Decision. The January Decision gave reasons for the S Factor Scheme determination of the Tribunal. However, it is clear that the Tribunal contemplated that SPI (and other DNSPs) should be able to seek judicial review of that element of the January Decision after the April Decision: see the January Decision at [238]. If it had been necessary, the Court would have extended the time within which SPI could seek review of the Tribunal decision concerning the S Factor Scheme issue to 2 May 2012, under s 11(1)(c) of the ADJR Act. The AER did not oppose that course. However, for obvious reasons it is not necessary to do so. The decisions of the aer and the tribunal 12 The process of regulatory decision making for SPI took the following, standard, course. On 30 November 2009, pursuant to rule 6.8.2(a) of the NER, SPI submitted its regulatory proposal for the period 2011 to 2015 (the initial regulatory proposal). On 4 June 2010, under rule 6.10.2 of the NER, the AER published a draft determination as well as its reasons for that determination, the Victorian distribution draft decision 2011-2015 (the Draft Decision). Following the Draft Decision SPI, along with the other DNSPs and other interested parties made further submissions to the AER. On 29 October 2010, under rule 6.11.1 of the NER, the AER made a distribution determination for SPI entitled Final: SPI Electricity Pty Ltd Distribution determination 2011-2015 (the Final Determination). 13 Relevantly to this application, the Final Determination reflected the AER's decision to adjust SPI's RAB for six years' inflation. The reasons for that decision, along with the other bases for the Final Determination, are set out by the AER in its Final decision: Victorian electricity distribution network service prodders Distribution determination 2011-2015 (the Final Decision). 14 The Final Determination constituted the first electricity determination made by the AER on the price control regime to apply to the DNSPs. The previous determination (i.e. that which applied for the regulatory period 2006 – 2010) had been made by the ESCV. 15 The AER, in closing out the ESCV S Factor Scheme, purported to be exercising the power granted by rules 6.4.3(a)(6) and 6.4.3(b)(6) of the NER. Those rules relevantly provide: 6.4.3 Building block approach (a) Building blocks generally The annual revenue requirement for a Distribution Network Service Provider for each regulatory year of a regulatory control period must be determined using a building block approach, under which the building blocks are: … (6) the other revenue increments or decrements (if any) for that year arising from the application of a control mechanism in the previous regulatory control period – see paragraph (b)(6); and … (b) Details of the building blocks For the purposes of paragraph (a): … (6) the other revenue increments or decrements referred to in paragraph (a)(6) are those that are to be carried forward to the current regulatory control period as a result of the application of a control mechanism in the previous regulatory control period and are apportioned to the relevant year under the distribution determination for the current regulatory control period; and … 16 A DNSP's RAB is, put simply, the value of those assets that are used by the DNSP to provide regulated services, but only to the extent that they are used to provide such services: NER rule 6.5.1. The RAB is to be calculated in accordance with rules 6.5.1 and Schedule S6.2 of the NER. 17 Rule 6.5.1(e)(3) of the NER provides that the roll forward of the RAB be adjusted for actual inflation consistent with the method used for indexation during the preceding regulatory control period. For both SPI and JEN the method used for indexation in the preceding regulatory control period was that in the ESCV's last price determination. 18 SPI had, in its initial regulatory proposal, sought six months' indexation of its RAB for inflation for the period from March 2003 to September 2003, in addition to the period accepted by the AER, being September 2003 to September 2009. JEN had also sought escalation for a period of six and a half years. SPI, following the AER's rejection of its timeframe in the Draft Decision, accepted the timeframe propounded by the AER. This approach was followed by the AER in the Final Decision and in the Final Determination. 19 In substance, the issue which SPI then sought to ventilate before the Tribunal was whether its RAB should have been indexed for six years of inflation only (a proposition to which it had apparently acquiesced after its initial regulatory proposal and the Draft Decision) or six and a half years of inflation. It shared with JEN the initial claim for six and a half years of indexation, but after the Draft Decision JEN had expressly persisted with that claim. The AER made the same decision on both claims, allowing six years' indexation. 20 The difference between the approaches taken by SPI and JEN assumed critical importance before the Tribunal and in submissions before this Court. As has been noted, both SPI and JEN sought indexation for a period of six and a half years, albeit a different six and a half years. Following the AER's rejection of this approach in the Draft Decision JEN maintained that its approach was the correct and preferable one and pressed its submission that its RAB should be indexed for six and a half years of inflation. In contrast, SPI accepted the AER's position and said, in its revised regulatory proposal, following the Draft Decision: [SPI] accepts the Draft Determination characterisation of the ESCV CPI modelling underlying the 2006 EDPR Final Decision and has modified its modelling accordingly. 21 This was an acceptance of the correctness of the AER's approach and that, at that time, SPI's approach was not to be preferred. 22 In the Draft Decision, the AER recorded at [9.5.3] that: The AER questioned Jemena's and SP AusNet's rationale to include additional six months of inflation in their calculations. In its response, SP AusNet stated that there is no additional six months CPI as (SP AusNet, Response to AER information request, 5 February 2010). • all the expenditure benchmarks set in the 2006 EDPR Final Decision are expressed in June 2004 dollars. For the purposes of the RIN, all these data need to be converted into December 2010 dollars to allow the like-for-like comparisons to be made with actual expenditure data • all actual expenditures are expressed in nominal terms. For the purposes of the RIN, all these data also need to be converted into December 2010 dollars • applying the 15 month lag methodology will generate the December 2010 dollars for the benchmark and actual expenditure to allow for like-for-like comparison. 23 The AER removed the additional indexation period applied for by SPI (and JEN) as it regarded it as being inconsistent with the method used for indexation during the preceding regulatory control period. In doing so, it had explained why, in respect of the 2004 data – relevant only to SPI – it had reached that view. 24 It should be noted that in the Final Decision the AER maintained its approach but again specifically referred, inter alia, to SPI's claim. It said at [9.5.3.1] and [9.5.3.2] of the Final Decision: SP AusNet applied a March to September annual CPI to adjust the RAB for actual inflation for 2004 data values. JEN applied a September to September annual CPI throughout its modelling, with a further forecast six month inflation to convert asset values from July 2010 to December 2010 dollar terms. The AER examined the ESCV's models and confirmed that costs prior to 2004 were escalated by the annual CPI as per the control mechanism, which used a September CPI value. The AER considered that the inflation adjustments of the RAB proposed by JEN and SP AusNet were incorrect because the annual CPI adjustment was approximated by September inflation which will be applied to the asset values and PTRM. The AER considered it appropriate to maintain consistency with the ESCV's treatment of CPI between building block revenue requirements, asset values and the CPI-X price control throughout the 2011-15 regulatory control period by continuing to apply the ESCV's indexation methodology for the current control mechanism and in the subsequent roll forward calculations. Accordingly, the AER removed the additional CPI applied by SP AusNet (for 2004 data) and JEN (for 2010 data) as this was inconsistent with the escalation of the 2006-10 regulatory period's control mechanism. … SP AusNet accepted and modified its modelling in accordance with AER's draft decision, reflecting the ESCV's inflation modelling underlying the 2006 EDPR final decision (SP AusNet, Revised regulatory proposal, p.295). 25 JEN successfully applied to the Tribunal to review that part of the AER's Final Determination in relation to it. The Tribunal agreed with JEN that it should receive six and a half years' indexation of its RAB. 26 Rule S6.2.1(c)(1) of the NER sets out the RAB that was to be indexed for each DNSP. These values are expressed, relevantly, "as at 1 January 2006 in July 2004 dollars." The AER had submitted to the Tribunal that this was inaccurate and that the figures were actually expressed in September 2003 dollars. The Tribunal, at [376]-[377] of the January Decision, concluded that it was not "convinced that the figures in the table were in fact expressed in September 2003 dollars" and that it was irrelevant as "looking behind the table which forms part of cl S6.2.1(c)(1) of the NER in order to undermine the statements made therein is an impermissible exercise." 27 The relevant part of the January Decision is, under the heading "Issue 6 – Indexation of the Regulatory Asset Base for Inflation", contained in [338]-[386] of that decision. 28 The Tribunal noted at [338] of the January Decision that only JEN had maintained to the Final Decision a contention that the AER had erred in its approach to the question of indexing the RAB for inflation in the Draft Decision. It also noted that SPI had also initially sought indexation for inflation from March 2003 to September 2009. The Tribunal, at [341]-[352] of the January Decision then addressed in detail the AER's reasons for excluding the adjustment JEN proposed. 29 The Tribunal noted that all of the DNSPs wished to challenge the AER's decision on the point and to argue that the position adopted by JEN is the correct and reasonable position. The AER argued before the Tribunal that none of the DNSPs except JEN, including SPI, should be permitted to do so because they had not taken issue with AER's approach at the appropriate time during the regulatory process, such that s 71O(2) of the NEL prevented them from doing so. However, it acknowledged to the Tribunal that the issue was a common one for all DNSPs, and "could not truly be treated as an issue which concerned only JEN": January Decision at [357]. The Tribunal therefore indicated that it might need to revisit those matters if it determined that JEN should succeed on the ground of review. 30 As to the position of SPI and the other DNSPs, the Tribunal in its January Decision at [386] added: As far as the impact of the decision on other DNSPs is concerned, we defer further consideration of that matter and will make appropriate directions for additional submissions to be made in respect of that matter. The Tribunal ordered in respect of SPI, inter alia, that SPI and the AER have liberty to apply in respect of the consequences of its decision in respect of the indexation of the JEN's RAB in its review application before the Tribunal. The January Decision contained the reasons for decision on each of the applications for review by the five DNSPs. 31 The Tribunal held, at [376]-[383] of the January Decision, on the application of JEN that the AER was obliged to index JEN's RAB for actual inflation from July 2004 to a date "as close as possible to the date upon which the new regulatory control period [was] to commence", being 1 January 2011. According to the Tribunal, the decision of the AER to index for six years of inflation only was erroneous and unreasonable in all the circumstances, at least insofar as the decision was applied to JEN: January Decision at [384]. 32 Hence, the Tribunal reached the conclusion that the AER had fallen into reviewable error because, in its view, the NER required the AER to roll forward the RAB values by adjusting those values for actual inflation consistently with the method used for the indexation of the relevant control mechanism in the 2006-2010 regulatory period. That indexation was required to cover the period commencing 1 July 2004 and ending on a date prior to the date of the final decision. The end point of the period of escalation had to be reasonable and had to be as close as possible to the date upon which the regulatory control period is to commence. But it was still to consider whether SPI and the other DNSPs should benefit from that decision. 33 In light of the Tribunal's decision in the January Decision that the AER erred in its choice of the indexation period for JEN's RAB, UED, SPI, CitiPower and Powercor applied to the Tribunal for this determination to be applied more widely as well. This was opposed by the AER and the Minister. 34 The same issue arose in respect of the S Factor Scheme issue upon which UED had succeeded. The Tribunal concluded that SPI could not raise that as a ground of review because it did not seek or obtain leave to raise that matter in their review applications (April Decision at [67]), and because the Tribunal would not accede in its discretion to permitting that now to be done. It said at [68] of the April Decision: The maintenance of the integrity of the review system by requiring a review applicant to articulate its case with precision at the earliest opportunity must be given significant weight. The need for consistency as between decisions cannot overcome the importance of this factor. 35 The Tribunal, at [49]-[60] of the April Decision, gave extensive consideration to the statutory scheme governing the scope of the review by the Tribunal. The Tribunal concluded this consideration by saying at [60] of the April Decision: It would make a nonsense of this carefully drawn review framework were the Tribunal to allow persons who were not parties to a review application and who had not been granted a right to intervene in that application to raise matters in respect of the reviewable regulatory decision under consideration which had not been raised by the review applicant and which were not legitimately raised by the AER under s 71O(1) of the NEL. 36 The Tribunal then turned its attention to the specific applications before it. It restated that the essence of its decision in respect of the S Factor Scheme issue "was that the approach taken by the AER in its final determination in respect of UED was not authorised by the NEL or the NER": April Decision at [62]. This led to the Tribunal determining that UED had made out the grounds for review in s 71C(1)(c) and (d) of the NEL: April Decision at [65]. 37 The Tribunal stated that, while SPI had criticised the AER for seeking to apply its ESCV S Factor Scheme methodology during the regulatory process, it had done so on a different basis to that argued by UED: April Decision at [63]. 38 The Tribunal then said: 67 In our view, none of SP AusNet, CitiPower or Powercor can raise as a ground of review in their review applications the current challenge which they seek to make to the application of the ESCV S Factor Scheme closeout methodology by the AER. They are prevented from doing so by the fact that they did not seek or obtain leave to raise that matter in those applications and therefore did not in fact raise that matter in those applications. 68 Even if those DNSPs were entitled to raise this point now, we would not accede to it in the exercise of our discretion. The maintenance of the integrity of the review system by requiring a review applicant to articulate its case with precision at the earliest opportunity must be given significant weight. The need for consistency as between decisions cannot overcome the importance of this factor. Parties are presumed to act carefully in their own interests. They may have very good reason for not challenging a particular decision or for not putting a particular argument. It is for the parties to set the agenda for the review process and to do so at the start of that process. Except to the limited extent provided for in the NEL, the process does not permit the officious interference in that process by third parties, especially at the very end of that process. The Tribunal's power to review a reviewable regulatory decision is not at large. It is limited by the requirements of Pt 6, Div 3A, Subdiv 2 of the NEL. The need for finality and certainty in the regulatory process militates very strongly against allowing late applications of the kind now sought to be made. 69 In addition, the AER has not satisfied us that the application of its closeout methodology relates to some other ground already legitimately raised by SP AusNet, CitiPower and Powercor in their review applications in respect of which leave was sought and granted. Nor has it satisfied us that there was a basis under s 71O(1)(b) to raise the matter. 70 Finally, we think that the provisions of s 71O(2) also prevent SP AusNet, CitiPower and Powercor from agitating this matter at this stage. … 72 The AER has also failed to persuade us that it can legitimately raise this issue in JEN's review application. It has not satisfied s 71O(1) of the NEL. There is no other basis upon which it can now legitimately bring forward fresh material or fresh issues in JEN's application. 73 For these reasons, we would reject all of the applications made in respect of the ESCV S Factor Scheme closeout methodology. 39 The Tribunal then separately said that the provisions of s 71O(2) also prevent SPI from agitating that issue at that stage of the proceedings. In respect of the RAB Indexation issue, although the AER gave one set of reasons in support of its five separate reviewable regulatory decisions made in respect of each of the DNSPs, and considered the issues and arguments together, correctly, the Tribunal said that each review application must be considered on its own merits according to the legislative review governing its consideration: April Decision at [83]. 40 SPI had separately applied to the Tribunal to review that part of the AER Final Determination in relation to its RAB indexation. In SPI's case, however, the Tribunal did not consider that it could set aside the Final Determination because s 71O(2) of the NEL prevented SPI from raising the RAB Indexation issue before the Tribunal. 41 While SPI had sought indexation of its RAB for a different period to JEN, it was not suggested that this would preclude it from benefiting from the Tribunal's conclusion should s 71O(2) not prevent it from raising the issue. Both SPI's initial proposal and the position maintained by JEN sought indexation for a period of six and a half years, in order to ensure consistency with the method used for indexation in the preceding regulatory control period. SPI's proposal was not substantially different, in purpose or effect, to JEN's. 42 For the reasons it rejected SPI's (and the other DNSPs') application in respect of the S Factor Scheme issue, the Tribunal also rejected SPI's application made in respect of the RAB Indexation issue: April Decision at [82]. 43 It accordingly, in that respect, affirmed the decision of the AER. 44 As noted, following the passage of the Energy Legislation Amendment Bill 2012 (Vic) and the Bill receiving Royal Assent, SPI, by letter to the Court dated 3 October 2012, no longer pursued its application insofar as it related to the S Factor Scheme issue. It has been desirable to set out the detail of the Tribunal's decisions on that issue so as to properly inform its decision on the RAB Indexation issue. CONSIDERATION 45 In summary, in this application SPI submits that it was not prevented by s 71O(2) of the NEL from raising the RAB Indexation issue before the Tribunal. It supports this submission by reference to its initial regulatory proposal, in which it sought indexation for six and a half years of inflation. This, SPI says, constitutes raising the matter "before the reviewable regulatory decision was made" and its subsequent acceptance of the AER's modelling does not render it otherwise. Section 71O(2), in SPI's submission, does not require a DNSP to maintain an issue throughout the course of the regulatory process until the reviewable regulatory decision was made. 46 The AER submits that this application raises the question of whether, by expressly accepting the AER's proposed indexation methodology, SPI should be held to have effectively waived its right to raise the matter before the Tribunal. The AER submits that this question should be answered in the affirmative and suggests that the concept of 'raising a matter' should not be read as including a case where a DNSP has done so but has later expressly abandoned it and accepted the AER's proposed decision. 47 Section 71O of the NEL operates to limit the matters that parties may raise in a review. It provides: 71O—Matters that parties to a review may and may not raise in a review (1) The AER, in a review under this Subdivision, may raise— (a) a matter not raised by the applicant or an intervener that relates to a ground for review, or a matter raised in support of a ground for review, raised by the applicant or an intervener; (b) a possible outcome or effect on the reviewable regulatory decision being reviewed that the AER considers may occur as a consequence of the Tribunal making a determination setting aside or varying the reviewable regulatory decision. (2) A party (other than the AER) to a review under this Subdivision may not raise any matter that was not raised in submissions to the AER before the reviewable regulatory decision was made. 48 As already mentioned, the Tribunal determined that SPI was barred from raising the RAB Indexation issue because SPI had accepted the AER's approach following the Draft Decision. This raises a constructional point about s 71O(2), namely whether a matter can be regarded as not raised for the purposes of the section if it is not pursued by the DNSP beyond its initial regulatory proposal and the Draft Decision of the AER. 49 There is no dispute before the Court that SPI had raised the RAB Indexation issue in submissions to the AER before the Draft Decision. In the "roll-forward" model accompanying its initial regulatory proposal SPI proposed that six and a half years of inflation should be applied. As noted above, at [20], SPI accepted the AER's approach following the Draft Decision to allow only six years of inflation and JEN was the only DNSP to maintain its contention for six and a half years of inflation in both its initial and revised regulatory proposals. 50 The AER has not disputed on this application that the Tribunal's decision on the RAB Indexation issue as it applied to JEN was correct. Nor has the AER disputed that SPI, but for the application of s 71O(2) of the NEL, should have also had its RAB escalated for an additional six months. The April Decision of the Tribunal addressed that particular issue. The Tribunal, at [10]-[14] of the April Decision, under the heading "The RAB Indexation Decision" identified the matter it was then addressing. It specifically recorded (in terms which are disputed by SPI) that only JEN had raised the RAB Indexation issue before the Tribunal. It did, however, note that SPI contended before the Tribunal that the matter is within the scope of its review application and of the leave granted to it by the Tribunal pursuant to s 71B of the NEL, although "it concedes that it did not advance this contention to the AER during the regulatory process" (also a matter that SPI disputes). It was in the light of that assessment of SPI's position that the Tribunal identified the ultimate issue, relevantly, as whether in respect of the indexation of the RAB for inflation, at that very late stage in the process, SPI should be permitted to seek to obtain the benefit of the Tribunal's decision on the point in respect of JEN. 51 Section 71B(1) of the NEL provides that leave is required before an application to the Tribunal for review of a decision of the AER may be made. Sections 71E, 71F, 71G and 71H of the NEL set out the criteria that must be satisfied before the Tribunal may grant leave and the Tribunal's discretion in doing so. In this matter, as with others in the Tribunal, an application for leave was made and determined prior to the hearing of the substantive issues. 52 SPI submits that it is implicit in the April Decision that the Tribunal found that it did not have the leave required by s 71B(1) of the NEL to raise the RAB Indexation issue: see the April Decision at [10], [12] and [82]. SPI submits that if the Tribunal made such a finding, it was incorrect. It should be noted that, while the above mentioned paragraphs may be read in the way suggested by SPI, paragraph [13] appears to be ambiguous as to whether SPI had leave and paragraph [14] appears to accept that SPI did have such leave. 53 On 18 February 2011 the Tribunal gave directions on the leave applications of each of the five DNSPs. SPI was granted leave to apply for review "in respect of all grounds specified in its application dated 19 November 2010, and its particulars dated 10 December 2010." The particulars dated 10 December 2010 specified the RAB Indexation issue. Thus, whatever the Tribunal's view on the question of leave in the April Decision, it is clear that such leave was granted. 54 The AER accepts that SPI had leave to apply for review of the RAB Indexation issue. 55 The AER points to apparently differing authority in the Tribunal as to the application of s 71O(2). In Application by Envestra Ltd (No 2) [2012] ACompT 3 (Envestra) the applicant had raised with the AER concerns about the data being used on at least three occasions before the making of the access arrangement under review. In its final communication with the AER, shortly prior to the making of the access arrangement, Envestra again raised the issue, but indicated that it would not have a material impact and that it would not challenge the use of the data. There the Tribunal said at [337]: It cannot be said that, because Envestra conceded that the impact of the proposed change would be minimal, that Envestra had not raised the matter. Further, the fact that Envestra may have said that it would not further challenge the use of the data, does not mean that the matter was not raised. 56 In Application by Ergon Energy Corporation Limited (Street Lighting Services) (No 6) [2010] ACompT 14 (Ergon No 6) the applicant had contested the AER's proposed classification of street lighting services in its response to the AER's draft framework and approach paper, which preceded the iterative process leading to the final determination. In its regulatory proposal, however, Ergon positively accepted the AER's classification. The Tribunal held that, as Ergon had not taken issue with the proposed classification in the iterative process commencing from its regulatory proposal, it had not raised the matter within the meaning of s 71O(2). 57 We do not consider that there is any inconsistency in the application of s 71O(2) of the NEL in those two cases. The brief description of them is sufficient to make that point. Envestra, on its facts, indicates that that company maintained at material times its concerns about the use of certain data by the AER. Ergon No 6, on its facts, indicates that that company had raised the classification issue in a preliminary way, but had not done so in the iterative process of its initial and revised regulatory proposals and in response to the draft and final directions of the AER. 58 SPI submits that s 71O(2) does not require the matter to have been maintained throughout the submissions made to the AER until the reviewable regulatory decision was made, and stresses that the issue was put to the AER before that decision. The AER acknowledges that a literal reading of the section supports SPI's contention, but submits that the concept of "raising a matter" should not be read as including a case where the DNSP has done so but later ceased to pursue it and accepted the proposed decision. The AER's contends that, by accepting the AER's modelling and the inclusion of that modelling in its revised regulatory proposal, SPI can no longer be taken to have raised the issue before the AER. 59 Clearly enough, the purpose of s 71O(2) is to ensure that all relevant issues are canvassed before the regulator. This affords the regulator the opportunity to consider the issue in detail, to obtain expert reports if desirable and to receive submissions on the issue from other interested parties. It is intended to ensure therefore that the regulator is apprised of all issues, and the review by the Tribunal is truly that. The DNSP cannot take the regulator by surprise, either by ventilating a matter that the regulator has not had the chance to consider, or by presenting material to the Tribunal which it did not provide to the Tribunal: see s 71R of the NEL. The review by the Tribunal is confined to the material before the AER, except in limited circumstances. 60 It is appropriate to determine whether, for the purposes of s 71O(2), the RAB Indexation issue was raised by SPI, in the light of the nature of the limited merits review contemplated by the provisions requiring leave to seek review, the restriction of the issues for review if leave has been given and to material available to be considered by the Tribunal. 61 In ordinary language, it is clear in our view that the RAB Indexation issue was raised by SPI before the AER. The Draft Decision gave a ruling on the topic. SPI was not then obliged to repeat what it had earlier put to the AER, although it may have indicated more clearly that it maintained its contention but did not wish to present further argument or material. Its acceptance of the ruling in the Draft Decision, by incorporating it into its revised regulatory proposal, in context, did not mean that the issue had not been "raised" before the AER. 62 There is nothing to be gained from requiring a DNSP to pursue a submission if the AER has indicated that it will not accept it and has had adequate opportunity to consider it. Apparently all that SPI had wished to say and present on the point had been said and presented and the AER had formed a contrary view about the matter. 63 Apart from the purpose of s 71O(2), there is no apparent textual or contextual reason why there should be inserted into s 71O(2) additional words such as "and maintained through all submissions" or simply "and maintained" after the word "raised". Such a requirement could have readily been inserted if that was intended. 64 The broad object of the NEL is the achievement of an optimal outcome by the regulator in its decision about the access terms to the relevant infrastructure in the long term interests of consumers. That is the National Electricity Objective: see NEL s 7. Section 71O(2) should be understood in such a manner that promotes the achievement of that outcome. 65 In this case SPI submitted to the AER that its RAB should be indexed for six and a half years of inflation. This submission was subject to scrutiny by the AER and could have been the subject of public submissions. There was an appropriate opportunity for this submission to be scrutinised and tested. In theory, the regulatory process may have benefited from further submissions on this matter but that is speculative. The regulatory process may also sometimes benefit from higher quality submissions, lengthier submissions or additional expert reports. As long as the issue is raised, however, s 71O(2) does not prevent a DNSP from seeking review of it merely because it may have been raised more forcefully or more compellingly. 66 The legislation does not place any additional requirement on a DNSP other than that it raise the matter, during the regulatory process, before the reviewable regulatory decision was made. This was done by SPI. Its subsequent acceptance of the approach of the AER does not mean that s 71O(2) should prevent it from raising that issue before the Tribunal. 67 Accordingly, in deciding that s 71O(2) prevented SPI from raising the matter, we consider that the Tribunal was in error. In the April Decision, at [82], it appears that the Tribunal considered that the RAB Indexation issue shared a similar factual basis to the S Factor Scheme issue. This overlooked the fact that SPI had raised the RAB Indexation issue with the AER. In our view, that means that the Tribunal erred in law, within the terms of s 5(1)(f) of the ADJR Act. On the facts as they existed, in our view s 71O(2) did not prevent SPI raising before the Tribunal the RAB Indexation issue. That is that claim by SPI came within the scope of s 71O(2), properly construed: cf Hope v Bathurst City Council (1980) 144 CLR 1 at 7 per Mason J. There is no need to expand on that conclusion, because the AER on this application did not contend that if the Court found error of the nature asserted by SPI, that would not constitute reviewable error for the purposes of the ADJR Act. 68 Given the Court's conclusion that SPI did raise the RAB Indexation issue with the AER, it is not necessary to consider SPI's alternative contentions that it was entitled to rely on JEN's submissions to the AER as raising the issue for the purposes of SPI's review, that the AER raised the issue before the Tribunal pursuant to s 71O(1)(a) of the NEL or that the Tribunal should have applied its determination on the issue to SPI under s 71P(1) of the NEL. 69 The application should be allowed and that part of the Tribunal's orders as precluded SPI from having the Tribunal consider, on its review application, the RAB Indexation issue should be set aside. In this matter, once that step is taken, the AER accepts that its decision should be reconsidered for the limited purpose of adjusting the allowances for the RAB to accommodate the extra six months' indexation which should have been taken into account. 70 The Court proposes to allow the parties 28 days to agree upon the appropriate form of orders, or alternatively to make submissions as to the appropriate orders to be made. 71 In addition, the parties are given 28 days to make such submissions as to costs of this application as they consider appropriate. In this matter, as the availability of the RAB Indexation issue to SPI on the review was contentious because of SPI's response to the Draft Decision of the AER, it may be appropriate for there to be no costs of the application. I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Mansfield, Besanko and McKerracher. Associate: Dated: 20 December 2012