ENVESTRA LIMITED
(ACN 078 551 685)
ACCESS ARRANGEMENT
For the
RIVERLAND PIPELINE
Contents
1.INTRODUCTION......
1.1Purpose of this Document......
1.2Commencement Date......
1.3Interpretation......
1.4Contact Details......
2.SERVICES POLICY......
2.1Services......
2.2Haulage Reference Service......
2.3Negotiated Services......
2.4Request for Services......
2.5Pipeline Service Standards......
3.REFERENCE TARIFFS AND REFERENCE TARIFF POLICY......
3.1Reference Tariffs......
3.2Reference Tariff Policy......
3.2.1New Facilities Investment......
3.2.2Imposts......
3.2.3Asset Base and Rate of Return......
3.2.4Redundant Capital......
3.2.5Depreciation......
3.2.6Reference Tariff Adjustments......
3.2.7Incentive Mechanism......
3.2.8Tariff Schedules......
4.TERMS AND CONDITIONS......
4.1Haulage Reference Service......
4.2Negotiated Services......
4.3Pre-conditions to Pipeline Services......
4.4Credit Policy......
4.5Pre-existing rights......
5.CAPACITY MANAGEMENT POLICY......
6.TRADING POLICY......
6.1Bare Transfers......
6.2Other Transfers......
6.3Change of User Delivery Points and User Receipt Points......
6.4Procedure......
7.QUEUING POLICY......
8.EXTENSIONS and EXPANSIONS POLICY......
8.1Coverage......
8.2Tariffs......
8.2.1Effect on Haulage Reference Tariffs......
8.2.2Relationship to Reference Tariff Policy......
9.REVIEW OF THE ACCESS ARRANGEMENT......
9.1Revisions Submission Date......
9.2Revisions Commencement Date......
10.GLOSSARY......
Appendix AMap of the Riverland Pipeline
Appendix bterms and conditions
Appendix ctariff schedule
DISCLAIMER
This document has been prepared solely for the purpose of compliance with the Gas Pipelines Access (South Australia) Act 1997 and the National Third Party Access Code for Natural Gas Pipeline Systems.
This document is not intended for any other purpose and should not be relied upon as the basis for any decision to buy or sell, or otherwise deal in, Envestra’s securities or for any other purpose.
1Error! Bookmark not defined. 91Error! Bookmark not defined.
1.INTRODUCTION
1.1Purpose of this Document
This Access Arrangement is submitted by Envestra Limited (‘Envestra’) to the Australian Competition and Consumer Commission (‘the Regulator’) in accordance with section 2 of the National Third Party Access Code for Natural Gas Pipeline Systems (‘the Code’).
The Access Arrangement applies to Envestra’s gas transmission pipeline from Angaston to Berri (‘the Riverland Pipeline’).
A map of the Riverland Pipeline is included as Appendix A of this Access Arrangement. Further information about the Riverland Pipeline is included in the Access Arrangement Information.
Details of the policies and terms and conditions which will apply in relation to third party access to the Riverland Pipeline are set out in section 4 and Appendix B of this Access Arrangement.
Access Arrangement Information relating to this Access Arrangement has been submitted to the Regulator in accordance with section 2 of the Code.
1.2Commencement Date
This Access Arrangement will come into effect on the date on which its approval takes effect under section 2 of the Code.
1.3Interpretation
Section 10 of this Access Arrangement is a glossary, which sets out the definitions given to some terms used in this Access Arrangement.
Terms which are defined in the Code or in this Access Arrangement commence with capital letters. Unless otherwise defined in this Access Arrangement, terms used have the same meaning as they have in the Code. Unless specified otherwise, references to section numbers are references to sections in this Access Arrangement.
1.4Contact Details
The contact person for further details in relation to this Access Arrangement is:
Mr Des Petherick
Manager, Corporate and Public Affairs
Envestra Limited
Level 10, 81 Flinders Street
Adelaide SA 5000
Ph: (08) 8227 1500
Fax: (08) 8227 1511
2.SERVICES POLICY
2.1Services
Envestra offers the following Pipeline Services to Pipeline Users and Prospective Pipeline Users:
- a Haulage Reference Service; and
- a Negotiated Service.
To the extent practicable and reasonable, a Pipeline User or Prospective Pipeline User may obtain a Pipeline Service which includes only those elements that the Pipeline User or Prospective Pipeline User wishes to be included in the Pipeline Service.
To the extent practicable and reasonable, Envestra will provide a separate Tariff for an element of a Pipeline Service if requested to do so by a Pipeline User or Prospective Pipeline User.
2.2Haulage Reference Service
The Haulage Reference Service comprises:
- accepting a quantity of Gas at a Transmission Receipt Point;
- the firm physical forward haulage of Gas from that Transmission Receipt Point to a Transmission Delivery Point; and
- delivering an equivalent quantity of Gas at a Transmission Delivery Point.
The Haulage Reference Service is provided in accordance with, and subject to, the terms and conditions referred to in section 4 and Appendix B of this Access Arrangement.
The Haulage Reference Service also includes:
- the provision and maintenance of Metering Equipment at each Transmission Delivery Point;
- the provision of System Use Gas; and
- reading of Metering Equipment and the provision of metering data in electronic form to a Pipeline User on a daily basis.
on and subject to the terms and conditions referred to in section 4 and Appendix B of this Access Arrangement
The Haulage Reference Service does not include any of the Services that are Negotiated Services.
2.3Negotiated Services
Any Pipeline User or Prospective Pipeline User may request Envestra to provide a Negotiated Service. A Negotiated Service is a Pipeline Service that is different from the Haulage Reference Service.
The terms and conditions on which Envestra will provide a Negotiated Service will be the same as the terms and conditions referred to in section 4, where Envestra determines that those terms and conditions are appropriate and applicable to the Negotiated Service requested by the Pipeline User or Prospective Pipeline User.
2.4Request for Services
A Prospective Pipeline User that is seeking the provision of a Pipeline Service must make a Request to Envestra. A Request must be submitted on or in accordance with any application forms provided or approved by Envestra and must include all relevant information required by Envestra to consider that Request. There is no charge for making a Request.
2.5Pipeline Service Standards
Envestra will provide each Pipeline Service, including the Haulage Reference Service, in accordance with and subject to the requirements of any Pipeline Licence or applicable law.
3.REFERENCE TARIFFS AND REFERENCE TARIFF POLICY
3.1Reference Tariffs
The Reference Tariff for the Haulage Reference Service is as set out in the Tariff Schedule from time to time. The initial Tariff Schedule forms Appendix C to this Access Arrangement.
The Reference Tariff set out in Appendix C is that which will apply from 1 July 1999 to 30 June 2000. The Reference Tariff will be adjusted with effect from 1 July each year in accordance with the adjustment mechanism in section 3.2.6.
The Reference Tariff set out in Appendix C does not include GST (as defined in A New Tax System (Goods and Services Tax) Act 1999).
The Reference Tariff set out in the Tariff Schedule does not apply to the provision of the Haulage Reference Service in respect of Gas that is delivered to the Mildura Transmission Delivery Point.
3.2Reference Tariff Policy
In this section 3.2, unless stated otherwise, a reference to the percentage change in the CPI is a reference to the percentage change between the March quarter CPI in the then current year and the March quarter CPI in the previous year.
3.2.1New Facilities Investment
The Reference Tariff for the Haulage Reference Service will vary in accordance with the Extensions and Expansions Policy set out in section 8.
Where only part of any New Facilities Investment that is included as part of the Riverland Pipeline satisfies section 8.16 of the Code, then:
- the Capital Base will be increased by that part of the New Facilities Investment that satisfies section 8.16 (the ‘Recoverable Portion’); and
- Reference Tariffs for that part of the New Facilities Investment that satisfies section 8.16 of the Code will be determined in accordance with section 8.2 of this Access Arrangement.
Where part or all of any New Facilities Investment that is included as part of the Riverland Pipeline does not satisfy the requirements of section 8.16 of the Code, Envestra may apply to the Regulator to impose a Surcharge in relation to that New Facilities Investment or agree a Capital Contribution with a User in accordance with section 8 of the Code.
3.2.2Imposts
Whenever Envestra determines that the costs of operating the Riverland Pipeline or performing its obligations under any Agreement have increased or decreased materially as a result of a New Impost or change in an Impost, Envestra will calculate in good faith the amount it believes represents the increase or decrease in its costs and will submit to the Regulator proposed revisions to the Tariff to reflect that increase or decrease in costs.
Any amendment to a Tariff as a result of a New Impost or change in an Impost will be effective from the date of the introduction of the New Impost or change in the Impost.
This element of the Reference Tariff Policy is a Fixed Principle.
3.2.3Asset Base and Rate of Return
3.2.3.1Forecasting the Capital Base
The Capital Base to be adopted for the purposes of forecasting Total Revenue for an Access Arrangement Period, will be the opening value of the Capital Base, as determined in accordance with section 3.2.3.2 (with the exception that for the first Access Arrangement period, the opening value of the Capital Base will be the Initial Capital Base), adjusted by (on an annual basis):
- the forecast percentage change in the CPI;
- forecast depreciation calculated in accordance with section 3.2.5; and
- forecast New Facilities Investment that is proposed to be added to the Capital Base in accordance with the Extensions/Expansions Policy and section 8 of the Code.
This element of the Reference Tariff Policy is a Fixed Principle.
3.2.3.2Capital Base at Review
The Capital Base, when reviewed, shall be adjusted to reflect the following factors, which will be calculated on an annual basis:
- the actual percentage change in the CPI (or if not available, estimates of the percentage change in the CPI);
- depreciation calculated in accordance with section 3.2.5;
- Redundant Capital determined in accordance with section 3.2.4;
- New Facilities Investment that is to be added to the Capital Base in accordance with the Extensions/Expansions Policy and section 8 of the Code.
This element of the Reference Tariff Policy is a Fixed Principle.
3.2.3.3Rate of Return
The following Fixed Principles apply in respect of the Rate of Return:
- consistent with the treatment of the Capital Base, a real Rate of Return is to be applied to the Capital Base;
- the Rate of Return will be determined by calculating a Weighted Average Cost of Capital (WACC) derived from applying the Capital Asset Pricing Model (CAPM). The WACC is to be determined by taking into account 10-year Commonwealth bond yields and 10-year Commonwealth capital indexed bonds over a two-month period as close as practicable to any revisions to the Rate of Return coming into effect; and
- the assumed debt/equity ratio for the purposes of calculating the WACC will be 60/40.
3.2.4Redundant Capital
When reviewed, the Capital Base shall be reduced in the following circumstances and in accordance with the following approach:
- where assets dedicated to providing Pipeline Services to a specific Transmission Delivery Point cease to contribute in any way to the delivery of Pipeline Services, the value attributable to those assets shall be removed;
- where any other assets in the Capital Base cease to contribute in any way to the delivery of Pipeline Services, the value attributable to those assets shall be removed; and
- the value attributable to assets that are sold shall be removed.
This element of the Reference Tariff Policy is a Fixed Principle.
3.2.5 Depreciation
Assets which form the Capital Base for the Riverland Pipeline will be depreciated on a straight line basis such that each asset is fully depreciated over its economic life.
This element of the Reference Tariff Policy is a Fixed Principle.
3.2.6Reference Tariff Adjustments
The Reference Tariff for the Haulage Reference Service will be adjusted on 1 July each year by Envestra with effect on 1 July 2000 by 95% of the percentage change in the CPI.
In the event that amendments to this Access Arrangement in accordance with section 9.2 of this Access Arrangement do not come into effect on or before 1 July 2004, the Reference Tariff will increase by 95% of the percentage change in the CPI on this date.
3.2.7Incentive Mechanism
Subject to section 3.2.2, within any Access Arrangement Period there will be no adjustment to the Total Revenue requirement or Reference Tariffs to reflect any differences between actual and forecast amounts for Non-Capital Costs and revenue.
The Total Revenue requirement for any future Access Arrangement Period will not be adjusted to recover the amount of any gains or provide compensation for any losses achieved by Envestra as a result of any differences between actual and forecast amounts for Non-Capital Costs and revenue in any Access Arrangement Period.
The application of this Incentive Mechanism is subject to Envestra continuing to manage and operate the Riverland Pipeline in accordance with accepted industry practice.
This element of the Reference Tariff Policy is a Fixed Principle.
3.2.8Tariff Schedules
Whenever Envestra wishes to adjust or modify the Reference Tariff in accordance with this Access Arrangement, it will send a revised Tariff Schedule to:
(a)each Pipeline User;
(b)each Prospective Pipeline User whose name appears in the queue established pursuant to section 7 of this Access Arrangement; and
(c)the Regulator.
A copy of the revised Tariff Schedule will also be included in the Information Package and on Envestra’s internet site while that revised Tariff Schedule remains in effect.
Each revised Tariff Schedule will specify the period during which it is to be in effect and will be effective as the Tariff Schedule during and after that period, unless another revised Tariff Schedule comes into effect pursuant to this Access Arrangement.
4.TERMS AND CONDITIONS
4.1Haulage Reference Service
The Haulage Reference Service will be provided to Pipeline Users on and subject to the terms of an Agreement which will comprise:
(a)the terms and conditions set out in Appendix B; and
(b)the Specific Terms and Conditions agreed between Envestra and the Pipeline User.
The Specific Terms and Conditions that form part of an Agreement between Envestra and a Pipeline User will comprise:
(a)the details of each User Receipt Point at which Gas is to be delivered to Envestra by or for the account of that Pipeline User pursuant to the Agreement;
(b)the details of each User Delivery Point at which Gas is to be delivered by Envestra to or for the account of that Pipeline User pursuant to the Agreement;
(c)the period for which the Agreement is to remain in force (assuming it is not terminated earlier in accordance with the terms and conditions set out in Appendix B) (which period must be at least 12 months);
(d)the date on which Envestra is to commence providing Reference Services pursuant to the Agreement;
(e)(for each User Delivery Point) the maximum Quantity of Gas which Envestra is obliged to deliver to or for the account of the Pipeline User pursuant to the Agreement through that User Delivery Point on any Pipeline Day (MDQ);
(f)(for each User Delivery Point) the maximum Quantity of Gas which Envestra is obliged to deliver to or for the account of the Pipeline User pursuant to the Agreement through that User Delivery Point during any period of 60 minutes (MHQ);
(g)the date on which the Agreement will terminate (assuming it is not terminated earlier in accordance with the terms and conditions set out in Appendix B) (which date must be at least 12 months after the date of the Agreement); and
(h)an address and facsimile number for the purposes of the service of notices on the Pipeline User pursuant to the Agreement.
4.2Negotiated Services
A Negotiated Service is a Pipeline Service that is different from the Haulage Reference Service. If a Pipeline User or Prospective Pipeline User requires a Service on terms and conditions that differ in any way from the terms and conditions set out in Appendix B or with Specific Terms and Conditions that do not correspond with the Specific Terms and Conditions described in section 4.1, then the Pipeline User or Prospective Pipeline User requires a Negotiated Service.
The terms and conditions on which Envestra will provide a Negotiated Service will be determined through negotiation between Envestra and the Pipeline User or Prospective Pipeline User who has requested that Negotiated Service or, in default of agreement, through dispute resolution in accordance with section 6 of the Code.
The terms and conditions on which Envestra will provide a Negotiated Service will be the same as the terms and conditions described in section 4.1 to the extent that Envestra determines that those terms and conditions are appropriate and applicable to the Negotiated Service requested by the Pipeline User or Prospective Pipeline User.
4.3Pre-conditions to Pipeline Services
A Prospective Pipeline User who requires a Pipeline Service must satisfy a number of pre-conditions before Envestra is required to provide that Pipeline Service or enter into an Agreement to provide that Pipeline Service. These pre-conditions are as follows:
(a)the Prospective Pipeline User must pay Envestra the amount required pursuant to clause 15.1 of the terms and conditions set out in Appendix B;
(b)the Prospective Pipeline User must satisfy Envestra that the Prospective Pipeline User meets the requirements of Envestra’s Credit Policy;
(c)the Prospective Pipeline User must satisfy Envestra that the Prospective Pipeline User has adequate arrangements in place to ensure that the aggregate Quantity of Gas delivered to Envestra by or for the account of the Prospective Pipeline User is equal at all times to the aggregate Quantity of Gas delivered by Envestra to or for the account of the Prospective Pipeline User;
(d)the Prospective Pipeline User must satisfy Envestra that the Prospective Pipeline User has adequate arrangements in place to ensure that it complies with its obligations to Envestra in relation to the Pipeline Service; and
(e)(if required by Envestra) the Prospective Pipeline User must execute a document setting out or incorporating the terms and conditions on which Envestra is to provide the Pipeline User with the Pipeline Service.
The arrangements mentioned in section 4.3(c) must include apportionment arrangements between the Prospective Pipeline User and other Pipeline Users, together with Envestra and each Transmission Operator and Distribution Operator, to apportion Gas delivered through each Transmission Receipt Point and each Transmission Delivery Point amongst the Pipeline User and other Pipeline Users.
4.4Credit Policy
Envestra will not be required to provide Pipeline Services to a Pipeline User, or a Prospective Pipeline User, who does not meet the requirements of Envestra’s Credit Policy. The Credit Policy requires that: