Long Term Revenue Constraint Methodology 2022-233 Nov 2023
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, the Regulatory Asset Base, 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.
As the Initial Regulatory Period ended on 30 June 2023, NBN Co’s 2022-23 LTRCM proposal is the last such proposal under the SAU.
NBN Co's regulatory information
On 31 October 2023, NBN Co lodged its submission of regulatory information for 2022-23, 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 2022-23 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 12 December 2023, the ACCC notified NBN Co of its preliminary view in relation to the capital and operating expenditure amount proposed by NBN Co in its 2022–23 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.
Re-submission of NBN Co's regulatory information
- increasing the allowable revenue for 2022-23 by $187.8 million
- decreasing the closing value of the Nominal RAB as at 30 June 2023 by $187.8 million
- increasing the closing value of the Nominal ICRA as at 30 June 2023 by $187.8 million.
The ACCC has made its draft determination based on these updated figures.
Draft determination
On 28 March 2024, the ACCC published its LTRCM draft determination for 2022-23, in accordance with Schedule 1E.1.2 of the SAU.
The ACCC’s draft determination is that the regulatory information submitted by NBN Co under Schedule 1F of the SAU for 2022-23 satisfies the requirements outlined in the SAU. The ACCC proposes to accept NBN Co’s values for the annual building block revenue requirement, regulatory asset base and the initial cost recovery account. We are also satisfied that NBN Co has complied with the relevant price controls in the SAU.
The ACCC welcomes submissions from interested parties on its draft determination by 19 April 2024.
Final determination
On 6 June 2024, the ACCC published its final determination on NBN Co’s LTRCM and decision on price compliance for 2022-23.
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 the 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 2022-23 did not exceed the maximum regulated prices as set out in the SAU.
This is the final year the ACCC is required to make an LTRCM determination for NBN Co, as established under the SAU. Future regulatory assessments for the remainder of the SAU period will be made on regulatory cycles of between 3 and 5 years (unless fewer than 3 years remain in the regulatory period) and will include in-depth assessments of the prudency and efficiency of NBN Co’s expenditures. This will include both ex-ante and ex-post reviews.