On 22 December, the Economic Regulation Authority (ERA) released its draft decision not to approve the DBNGP (WA) Transmission Pty Ltd’s (DBP) proposed revised access arrangement for the Dampier to Bunbury Natural Gas Pipeline (DBNGP) 2016-2020.
In order to be able to approve the proposal, the ERA is recommending a 24% reduction to regulated revenue over the period and retention of the existing price cap methodology, rather than moving to a revenue cap arrangement as proposed by DBP. Driving the revenue reduction are:
- a reduction in nominal post tax cost of capital to 6.02% from the 8.36% proposed;
- reductions to forecast operating costs and capital costs of 9% and 27% respectively; and
- an adjustment to the value of the opening tax base.
DBP has until 22 February to respond to the draft decision and the ERA has called for public submissions on the draft decision and any subsequent submission from DBP by 22 March 2016.