Long Term Revenue Constraint Methodology 2015-1628 Oct 2016
Under Schedule 1E.1.2 of the SAU, the ACCC must publish an annual Long Term Revenue Constraint Methodology (LTRCM) determination in respect of the Annual Building Block Revenue Requirement (ABBRR), the Regulatory Asset Base (RAB) and the Initial Cost Recovery Account (ICRA) for the Initial Regulatory Period. In making its determination, the ACCC will assess whether NBN Co has complied with the relevant criteria, including prudency criteria, set out in the SAU.
On 28 October 2016, the ACCC published a consultation letter advising stakeholders that it will soon be commencing the LTRCM assessment process for 2015-16 and inviting comments on the process.
NBN Co’s regulatory information
On 31 October 2016, NBN Co lodged its submission of regulatory information for 2015-16, in accordance with Schedule 1F of NBN Co’s SAU. The regulatory information submitted by NBN Co will be used by the ACCC to inform its LTRCM determination for 2015-16 and to assess NBN Co’s compliance with the price controls set out in the SAU.
Public versions of NBN Co’s regulatory information documents
ACCC preliminary view
On 22 December 2016, the ACCC formed a preliminary view in relation to the capital and operating expenditure amount proposed by NBN Co in its 2015–16 LTRCM proposal under clause 1E.1.2(c)(vii) of the SAU.
The ACCC’s preliminary view is that it does not intend to determine a substitute amount of Capital Expenditure in accordance with clause 1D.3.2(d) of the SAU or a substitute amount of Operating Expenditure in accordance with clause 1E.8.2(c) of the SAU.
LTRCM Draft Decision
On 28 April 2017, the ACCC published an LTRCM Draft Determination for the 2015-16 financial year, in accordance with Schedule 1E.1.2 of the SAU.
The ACCC’s draft decision is that the regulatory information submitted by NBN Co under Schedule 1F of the SAU for the 2015-16 financial year satisfies the requirements set out in the SAU. The ACCC proposes to accept NBN Co’s proposed values (and inputs to the values) for the Annual Building Block Revenue Requirement (ABBRR), Regulatory Asset Base (RAB) and the Initial Cost Recovery Account (ICRA).
The ACCC invites interested parties to make submissions on the LTRCM draft determination. Submissions were due by Friday 26 May 2017.
Submissions to the LTRCM determination
Submissions to the draft determination closed on 26 May 2017. The ACCC did not receive any submissions in response to its draft determination.
LTRCM final determination
On 23 June 2017, the ACCC published its final determination on NBN Co’s LTRCM and price compliance for the 2015-16 financial year.
The ACCC has accepted NBN Co’s proposed values (and the inputs to these values) for the Annual Building Block Revenue Requirement, Regulatory Asset Base and Initial Cost Recovery Account in accordance with clause 1E.1.2 of NBN Co’s SAU.
The ACCC is also satisfied that NBN Co’s prices for 2015-16 did not exceed the maximum regulated prices as set out in the SAU.