Application by Jemena Gas Networks (NSW) Ltd [2016] ACompT 5

Parties

Procedural Posture

Application for Review Under the National Gas Law / Determination of Tribunal on Review of Aer's Final Decision Set Aside and Remitted

Legal Issues

1. 1 Whether AER erred in refusing JGN's revised proposal on return on debt methodology (debt transition options)
2. 2 Whether AER erred in approach to rate of return on equity and gamma
3. 3 Whether AER erred in its market expansion capital expenditure decision (ME capex)

Ratio Decidendi

The Tribunal held that the AER made material errors in the exercise of its discretion regarding the debt transition methodology (by not permitting JGN to advance Option 3 in its revised proposal), and in its approach to ME capex by relying on a five-year historical average of contract rates while disregarding known and efficient current contractual rates. These errors, as established, carried a real risk of adversely affecting the long term interests of consumers and thus correcting them would likely result in a materially preferable designated NGO decision. The AER’s Final Decision was set aside and remitted for reconsideration in accordance with the Tribunal’s directions.

Court Disposition

AER's Final Decision set aside and remitted for reconsideration in accordance with directions.

Orders

• Pursuant to s 259(2) of the National Gas Law, the Final Decision – Jemena Gas Networks (NSW) Ltd Access Arrangement 2015-20 Overview, June 2015, including attachments is set aside and remitted to the Australian Energy Regulator (AER) to make the decision again as follows: (a) AER to make decision on debt consistent...