AUSTRALIAN COMPETITION TRIBUNAL Application by APA GasNet Australia (Operations) Pty Limited (No 3) [2013] ACompT 9 Citation: Application by APA GasNet Australia (Operations) Pty Limited (No 3) [2013] ACompT 9 Parties: APA GASNET AUSTRALIA (OPERATIONS) PTY LIMITED File number: ACT 2 of 2013 Tribunal: MANSFIELD J (PRESIDENT) PROFESSOR D ROUND (MEMBER) MR R STEINWALL (MEMBER) Date of decision: 3 October 2013 Date of hearing: Heard on the papers Date of last submissions: 30 September 2013 Place: Adelaide Category: No Catchwords Number of paragraphs: 14 Counsel for the Applicant: CA Moore SC and B Kremer Solicitor for the Applicant: Gilbert + Tobin Lawyers Counsel for the Australian Energy Regulator: M O'Bryan SC, C Horan and R Scheelings Solicitor for the Australian Energy Regulator: Australian Government Solicitor IN THE AUSTRALIAN COMPETITION TRIBUNAL ACT 2 of 2013 RE: APPLICATION UNDER SECTION 245 OF THE NATIONAL GAS LAW FOR A REVIEW OF A FULL ACCESS ARRANGEMENT DECISION MADE BY THE AUSTRALIAN ENERGY REGULATOR IN RELATION TO APA GASNET AUSTRALIA (OPERATIONS) PTY LIMITED PURSUANT TO RULE 64 OF THE NATIONAL GAS RULES BY: APA GASNET AUSTRALIA (OPERATIONS) PTY LIMITED Applicant TRIBUNAL: MANSFIELD J (PRESIDENT) PROFESSOR D ROUND (MEMBER) MR R STEINWALL (MEMBER) DATE OF ORDER: 3 OCTOBER 2013 WHERE MADE: ADELAIDE THE TRIBUNAL DETERMINES THAT: 1. The decision of the Australian Energy Regulator under rule 64(4) of the National Gas Rules (NGR) dated 29 April 2013 entitled Access arrangement decision: APA GasNet Australia (Operations) Pty Ltd 2013-17 (Access Arrangement Decision) is remitted to the AER to make the decision again in accordance with the following directions: (a) The revision commencement date stated in the 2008 GasNet Australia Access Arrangement is 1 July 2013 (being the date on which the revisions to that access arrangement actually commenced), so that there is no interval of delay upon which rule 92(3) of the NGR operated in respect of the period 1 January 2013 to 30 June 2013; and (b) In determining the opening capital base for the 2013-17 access arrangement period in accordance with rule 77(2) of the NGR, the opening capital base as at the commencement of the earlier access arrangement period should be adjusted for the difference between estimated and actual capital expenditure by removing the amount of that difference, and no further adjustment should be made to remove the return on capital on that amount. 2. There be no order as to costs. IN THE AUSTRALIAN COMPETITION TRIBUNAL ACT 2 of 2013 RE: APPLICATION UNDER SECTION 245 OF THE NATIONAL GAS LAW FOR A REVIEW OF A FULL ACCESS ARRANGEMENT DECISION MADE BY THE AUSTRALIAN ENERGY REGULATOR IN RELATION TO APA GASNET AUSTRALIA (OPERATIONS) PTY LIMITED PURSUANT TO RULE 64 OF THE NATIONAL GAS RULES BY: APA GASNET AUSTRALIA (OPERATIONS) PTY LIMITED Applicant TRIBUNAL: MANSFIELD J (PRESIDENT) PROFESSOR D ROUND (MEMBER) MR R STEINWALL (MEMBER) DATE: 3 OCTOBER 2013 PLACE: ADELAIDE REASONS FOR DECISION 1 The Australian Competition Tribunal (the Tribunal) published reasons for decision in Matter No ACT 2 of 2013 on 18 September 2013: Application by APA GasNet Australia (Operations) Pty Limited (No 2) [2013] ACompT 8. 2 The Tribunal determined that the decision of the Australian Energy Regulator (AER) under rule 64(4) of the National Gas Rules (NGR) dated 29 April 2013 entitled Access arrangement decision: APA GasNet Australia (Operations) Pty Ltd 2013-17 (Access Arrangement Decision) involved reviewable error in two respects, namely: (1) the revision commencement date stated in the 2008 GasNet Australia Access Arrangement is not 1 January 2013 but 1 July 2013 (being the date from which the revisions to that access arrangement actually commenced), so that there is no interval of delay upon which rule 92(3) of the NGR operated in respect of the period 1 January 2013 to 30 June 2013; and (2) in determining the opening capital base for the 2013-17 access arrangement period in accordance with rule 77(2) of the NGR by fixing the opening capital base as at the commencement of the earlier access arrangement period adjusted for the difference between estimated and actual capital expenditure by removing the amount of $20 million (nominal), and for the removal of the return on capital during the earlier access arrangement period on that difference between estimated and actual capital expenditure when the adjustment for the removal of the return on capital should not have been made. 3 Pursuant to the Tribunal's reasons, the Tribunal directed that: (a) the parties confer with a view to agreeing where possible on the orders which the Tribunal should make to give effect to the reasons for decision: and (b) the parties either provide to the Tribunal the form of orders to give effect to the reasons, or separately file and serve the form of orders which they respectively propose, together with such written submissions as they may be advised in support of those orders by 27 September 2013, subsequently extended to 30 September 2013. 4 The respective submissions have been received and considered. 5 APA GasNet and the AER have been unable in the time available to agree upon the form of orders which the Tribunal should make to give effect to its decision. 6 The AER has proposed that the Access Arrangement Decision be remitted to the AER to make the decision again with directions that, in those two respects, it give effect to the Tribunal's decision. 7 APA GasNet has proposed that the appropriate course is for the Tribunal to extend the time within which it may make its determination for a further period of three months, pursuant to s 260(2) of the National Gas Law (NGL), in effect to give the parties a further opportunity to resolve upon the appropriate form of order. It points out that, by reason of the matter in [2](a) above, the AER proposes to conduct modelling of revenue over 4.5 years from 1 July 2013 to 31 December 2017, to give effect to the Tribunal's decision and that is a complex process. There is no agreement yet as to how that modelling should take place. 8 It submits that, at least, the extension of time would enable the parties to identify whether there is ultimately any dispute as to the appropriate variations to be made to the Access Arrangement Decision, to crystallise the extent of any such dispute, and to make submissions as to the order which should be made to give effect to the Tribunal's decision if there still is then agreement, or ultimately at that point to remit the matter to the AER to make the decision again. It contends that simply remitting the matter to the AER to make the decision again at this point is premature. 9 There is one preliminary matter to address. APA GasNet also requests an opportunity to be heard about the appropriate form of order to be made by the Tribunal in view of the AER's submission and its proposed minutes to give effect to its decision. When the Tribunal published its decision on 18 September 2013, and gave directions for the parties to confer, it specifically provided that, if there was no agreement between the parties as to the formal orders to be made, they should separately file and serve their proposed form of orders and such written submissions as they may be advised. Each of APA GasNet and the AER has provided written submissions. The Tribunal does not propose to give APA GasNet the opportunity to make yet further submissions on what orders it should make. It is mindful that, by reason of s 260(1) of the NGL, the date by which it should make its decision is 4 October 2013, and the directions given on 18 September 2013 were intended to ensure that it could meet that requirement. 10 It is the Tribunal's view that, in general terms, in the absence of agreement between the parties as to the appropriate form of orders, it should order that the Access Arrangement Decision is remitted to the AER to make the decision again in accordance with directions which reflect its reasons for decision published on 18 September 2013. 11 There is no assurance that, with further significant time, the parties will be able to reach agreement. If the AER makes a further access arrangement decision in accordance with the directions, and if APA GasNet is dissatisfied with it, then subject to the provisions of the NGL, it may seek leave to apply to review that decision, in particular if it disagrees with the form of modelling undertaken by the AER. The Tribunal is also mindful that it has, in essence, made its determination. It does not consider it routinely appropriate to exercise the power under s 260 of the NGL for the purposes of allowing the parties to negotiate at some length upon the correct, or an acceptable, way in which the decision should be given effect to. Thirdly, it would be most regrettable, bearing in mind the time limits imposed under the NGL, if at the expiration of a further three months, APA GasNet and the AER have still been unable to agree upon the form of appropriate orders and further significant time has been lost in the course of that negotiation. It is also mindful that, if the matter is remitted to the AER with appropriate directions, APA GasNet may still be given the opportunity to make submissions to the AER as to how its modelling might be undertaken. 12 For those reasons, the Tribunal in general terms accepts the proposal of the AER. 13 There is one qualification. At present, the Tribunal does not say why there is any complexity in the AER giving effect to the specific amendments to the opening capital base for the current access arrangement period by adjusting the opening capital base for the previous access arrangement period by removing the deduction which the AER made for the return on capital on the difference between the estimated and actual capital expenditure during the earlier access arrangement period. There may well be however consequential changes to which the AER should give effect in its revised access arrangement decision. 14 Accordingly, the Tribunal determines that the decision of the Australian Energy Regulator under rule 64(4) of the National Gas Rules (NGR) dated 29 April 2013 entitled Access arrangement decision: APA GasNet Australia (Operations) Pty Ltd 2013-17 (Access Arrangement Decision) is remitted to the AER to make the decision again in accordance with the following directions: (a) The revision commencement date stated in the 2008 GasNet Australia Access Arrangement is 1 July 2013 (being the date on which the revisions to that access arrangement actually commenced), so that there is no interval of delay upon which rule 92(3) of the NGR operated in respect of the period 1 January 2013 to 30 June 2013; and (b) In determining the opening capital base for the 2013-17 access arrangement period in accordance with rule 77(2) of the NGR, the opening capital base as at the commencement of the earlier access arrangement period should be adjusted for the difference between estimated and actual capital expenditure by removing the amount of that difference, and no further adjustment should be made to remove the return on capital on that amount. There should be no order as to costs. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Decision herein of Justice Mansfield (President), Professor D Round and Mr R Steinwall (Members). Associate: Dated: 3 October 2013