Comparison of recent WA gas access arrangements

Cost of Capital

Aug 20
Comparison of recent WA gas access arrangements

Over the past 10 months, the ERA has been working on three major access arrangements for gas suppliers:

  • DBP (Dampier to Bunbury Natural Gas Pipeline) 2016-2020;
  • GGT (Goldfields Gas Pipeline) 2015-2019; and
  • ATCO Gas Australia 2014-2019.

Whilst the draft decisions for DBP and GGT are outstanding, the latest proposals from service providers and the final decision by the ERA for ATCO are outlined below for comparison.

 

Company Revenue requirement Opex forecast Capex forecast Depreciation methodology Cost of capital
DBP – initial proposal $2,199.39m $560.85m $106.67m Current cost straight line 8.36%
GGT – initial proposal $393.76m $132.02m $13.99m Historic cost straight line 9.64%
ATCO – revised proposed $1,124.52m $407.08m $592.22m Transition to historic cost 7.64%
ERA – final decision $914.04m $369.91m $446.60m Current cost straight line 5.97% (2014)
6.01% (2015)
Variation in final decision -18.7% -9.1% -24.6% N/a -1.63%

The ERA’s final decision for ATCO was 1 July 2015.  GGT’s Final Decision is expected by 15 September 2015 and no date has yet been set for the DBP final decision although this is expected to be towards the end of 2015.

For additional information, below are the recent (2015-16) AER determinations on the Weighted Average Cost of Capital for various service providers.

Final decisions:

  • 6.75% TransGrid
  • 6.68% for Ausgrid, Endeavour Energy and Essential Energy
  • 6.38% for ActewAGL
  • 6.37% for TasNetworks
  • 5.45% for Directlink

Preliminary decisions:

  • 5.85% for Energex and Ergon
  • 5.45% for SA Power Networks