Long Term Revenue Constraint Methodology 2013-14 31 Oct 2014
On 31 October 2014, NBN Co submitted to the ACCC a set of regulatory information for 2013–14 as well as for each prior financial year as required under Schedule 1F of NBN Co’s Special Access Undertaking (SAU).
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.
The regulatory information submitted by NBN Co includes information about its compliance with the price controls set out in the SAU.
Long Term Revenue Constraint Methodology 2013-14
Public versions of NBN Co’s regulatory information reports
ACCC preliminary view
On 10 December 2014, the ACCC formed a preliminary view in relation to the capital and operating expenditure amount proposed by NBN Co in its 2013–14 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 SAU clause 1D.3.2(d) or a substitute amount of Operating Expenditure in accordance with SAU clause 1E.8.2(c).
The letter setting out the ACCC’s preliminary view
LTRCM draft determination
On 19 February 2015, the ACCC published an LTRCM Draft Determination for the 2013-14 financial year, in accordance with Schedule 1E.1.2 of the SAU. This is the first time the ACCC is making an LTRCM Determination under the SAU.
The ACCC has reached the Draft Decision that the regulatory information submitted by NBN Co under Schedule 1F of the SAU for the 2013-14 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, Regulator Asset Base and the Initial Cost Recovery Account.
Submissions to the LTRCM determination
The ACCC received submissions from Optus and NBN Co in relation to the LTRCM Draft Determination.
LTRCM final determination
On 11 June 2015, the ACCC published its Final Determination on NBN Co’s LTRCM and price compliance for the 2013-14 financial year.
The ACCC’s final LTRCM determination is to accept 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 satisfied that NBN Co’s prices for 2013-14 and each preceding financial year from 9 April 2009 did not exceed the maximum regulated prices as set out in the SAU.
Amendment to LTRCM final determination
In its 2014-15 LTRCM submission, NBN Co requested an amendment to the ACCC’s 2013-14 LTRCM final determination to correct for an inadvertent omission in the regulatory information submitted by NBN Co.
The ACCC has considered NBN Co’s request and has amended its 2013-14 LTRCM final determination. The amendment results in an adjustment to the ABBRR and ICRA values in the 2013-14 LTRCM Determination, and subsequently impacts the values in the ACCC 2014-15 LTRCM Determination. The ACCC has set out further details regarding NBN Co’s request for the amendment, the amended values and its reasons for accepting its request in its 2014-15 LRTCM final determination.