On 25 October 2016, the Economic Regulation Authority (ERA) published its revised decision on the Mid-West and South-West gas distribution network for ATCO Gas Australia. This follows the determination from the Australian Competition Tribunal published on 13 July 2016 which directed the ERA to make certain revisions to its Amended Final Decision (published in September 2015), namely to recalculate regulated revenue with reference to a gamma of 0.25 (rather than the 0.4 used previously). Simply, reducing gamma lowers the value of imputation credits and in turn increases net tax, which as one of the regulatory building blocks, increases regulated revenue.
This changes key elements of the revenue requirement as follows (real $000’s at 30 June 2014).
|Building block||Final decision
|Regulatory Operating Expenditure||326.43||326.15|
|Return on Capital||316.78||319.01|
|Regulatory Corporate Income Tax||11.74||14.56|
Revised tariffs based on the revised regulated revenue figure will apply from 1 January 2017. With the exception of standing charges to residential customers, all ATCO Gas Australia’s tariffs are forecast to reduce over the remainder of the access arrangement period. However, with the increase in regulated revenue illustrated above, the reductions are slightly less than those from the ERA’s Amended Final Decision.