LTRCM 2019-2021 Dec 2020

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.

NBN Co's regulatory information

On 30 October 2020, NBN Co lodged its submission of regulatory information for 2019-20, 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 2019-20 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 are available below.

ACCC preliminary view

On 21 December 2020, the ACCC notified NBN Co of its preliminary view in relation to the capital and operating expenditure amount proposed by NBN Co in its 2019-20 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.

Draft determination

On 27 April 2021, the ACCC published its LTRCM draft determination for the 2019-20 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 2019-20 financial year satisfies the requirements outlined 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 welcomes submissions from interested parties on the LTRCM draft determination. Submissions are due by 5 pm on Tuesday 25 May 2021.

Final determination

On 25 June 2021, the ACCC published its final determination on NBN Co’s LTRCM and price compliance for the 2019–20 financial year.

The ACCC has accepted NBN Co’s proposed values (and the inputs to these values) for the Annual Building Block Revenue Requirement (ABBRR), Regulatory Asset Base (RAB) and Initial Cost Recovery Account (ICRA) in accordance with clause 1E.1.2 of NBN Co’s SAU.

The ACCC is also satisfied that NBN Co’s prices for 2019–20 did not exceed the maximum regulated prices as set out in the SAU.

Correction to LTRCM final determination

As part of its 2020-21 LTRCM process, the ACCC revoked and substituted the 2019-20 LTRCM final determination to correct for a typographical error. The correction results in an adjustment to the closing value of the nominal Regulatory Asset Base (RAB) in the 2019-20 LTRCM final determination. The corrected value was included in the ACCC’s 2020-21 LTRCM final determination. The ACCC has set out details regarding the correction in section 3 of the 2020-21 LTRCM final determination.