Apa Group · ASX:APA
Apa — Corporate Update (June 2020)
33 slides from Apa's corporate update, Jun 4, 2020
Slide 1: Amadeus Consumer Reference Group 2021-26 access arrangement revision
Amadeus Consumer Reference Group 2021- 26 access arrangement revision Roundtable 3b. Total revenue, cost allocation and reference tariffs; other access arrangement issues 4 June 2020 via Microsoft Teams
Slide 2: Agenda for today
Agenda for today Agenda item Content Timing 1 Welcome again 5mins Who’s on the line House rules 2 Recap of previous roundtable 10mins 3 Total revenue, cost allocation and reference tariffs 25mins Questions? 4 Other policies: 10mins Queuing policy Capacity trading Extension and expansion Questi
Slide 3: Welcome & house rules
Welcome & house rules • Introductions • House rules • The online format has been introduced due to COVID-19 • This is intended be an open discussion between the reference group and APA • We welcome any issue or question about the access arrangement and its context • The main rule we propose is that
Slide 4: What are we hoping to achieve?
What are we hoping to achieve? 4
Slide 5: Reference tariffs, and other issues
Reference tariffs, and other issues • In this roundtable meeting, we shall: • explain our proposed reference tariffs for the Amadeus Gas Pipeline • briefly discuss a number of other access arrangement issues: reference tariff variation, queuing requirements, capacity trading, extension and expansion
Slide 6: Proposed reference tariffs
Proposed reference tariffs 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Firm service $/GJ MDQ 0.5369 (est.) 0.3672 0.3452 0.3237 0.3051 0.2868 Interruptible service $/GJ n.a. 0.3672 0.3452 0.3237 0.3051 0.2868 • Significantly – 31% – lower firm service tariff: • lower total revenue for the period
Slide 7: Key take-outs from roundtable 3a
Key take-outs from roundtable 3a 7
Slide 8: Brief recap
Brief recap • At roundtable meeting 3a we explained: • our proposed determination of total revenue - the forecast total cost of providing services - for the Amadeus Gas Pipeline • the basis of our forecasting of the demand for services provided using the pipeline • Total revenue and forecast demand
Slide 9: Total revenue
Total revenue • We have used the AER’s Post-tax Revenue Model (the Gas Transmission Service Provider version released in April) to calculate total revenue for the access arrangement period (1 July 2021 to 30 June 2026). • The key inputs to the Post-tax Revenue Model are: • Capital base at the beginn
Slide 10: Opening capital base 1 July 2021
Opening capital base 1 July 2021 ($ million, nominal) 2016-17 2017-18 2018-19 2019-20 2020-21 Opening capital base 111.1 114.7 116.0 119.7 123.6 Actual/estimated CAPEX 5.4 2.8 5.6 5.8 4.5 Regulatory depreciation -1.8 -1.5 -1.9 -1.9 -4.9 Adjustments 0.0 0.0 0.0 0.0 0.0 End of year asset value 114.7 1
Slide 11: Capital base and return 2021-26
Capital base and return 2021 – 26 ($ million, nominal) 2021-22 2022-23 2023-24 2024-25 2025-26 Opening capital base 123.2 124.8 125.5 126.5 127.6 Forecast CAPEX 2.7 2.0 2.5 2.8 2.7 Regulatory depreciation -1.1 -1.3 -1.5 -1.7 -1.9 Adjustments 0.0 0.0 0.0 0.0 0.0 End of year asset value 124.8 125.5 12
Slide 12: Total revenue 2021-26 and X factors
Total revenue 2021- 26 ($million, nominal) and X factors 2021-22 2022-23 2023-24 2024-25 2025-26 Return on capital base 5.9 6.0 6.0 6.1 6.1 Regulatory depreciation 1.1 1.3 1.5 1.7 1.9 Cost of corporate income tax 0.0 0.0 0.0 0.0 0.0 Efficiency gain or loss 2.6 1.6 -1.1 -0.4 0.0 Forecast OPEX 11.9 10
Slide 13: Forecasts: no capacity available for the firm service reference service
Forecasts: no capacity available for the firm service reference service Darwin • All capacity which might otherwise be available for the firm service reference service is contracted under pre-existing agreements for the 53.6 TJ/d Bonaparte Gas Pipeline Ban Ban Springs provision of firm transportatio
Slide 14: Forecasts: capacity is available for interruptible service
Forecasts: capacity is available for interruptible service Pipeline segment 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Ban Ban Springs - Darwin TJ/d 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Ban Ban Springs - Warrego TJ/d 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Mereenie, Palm Valley - Warrego Capacity: Tyler’s P
Slide 15: Cost allocation and reference tariffs
Cost allocation and reference tariffs
Slide 16: National Gas Rules guide tariff setting
National Gas Rules guide tariff setting • Reference services must have reference tariffs. • We must now propose reference tariffs for the firm service reference service and the interruptible service reference service of the Amadeus Access Arrangement. • The National Gas Rules guide the setting of th
Slide 17: Rules 93 and 95
Rules 93 and 95 • Rule 93 requires the allocation of total revenue between reference and other services in the ratio in which costs are allocated between reference and other services. • Rule 95 requires that a tariff for a transmission pipeline reference service be designed to generate from the prov
Slide 18: Allocation of total revenue between reference and other services
Allocation of total revenue between reference and other services • Total revenue is the total cost of providing all services – reference services and other services – using the Amadeus Gas Pipeline. • Services provided under pre-existing agreements use all of the capacity available for the provision
Slide 19: Allocation of total revenue between reference services
Allocation of total revenue between reference services • To enable users and prospective users to understand the pricing of a firm service reference service, should capacity become available for that service, a firm service reference tariff has previously been calculated for the Amadeus Access Arran
Slide 20: Tariff calculation: two key assumptions driving cost allocation
Tariff calculation: two key assumptions driving cost allocation • Users with pre-existing agreements for firm transportation service have maximum transportation capacity of 145 TJ/d under these agreements. • Although around 38 TJ/d of capacity is available for second-priority firm and interruptible
Slide 21: Tariff structure
Tariff structure • We are proposing to retain the structure of the firm service tariff: $/GJ of contracted capacity for transportation between any receipt point and any delivery point on the Amadeus Gas Pipeline. • We retain this simple price per GJ MDQ because the costs of transportation are the fi
Slide 22: Tariff calculation
Tariff calculation 2021-22 2022-23 2023-24 2024-25 2025-26 Smoothed total revenue $m 21.4 20.2 19.0 17.8 16.8 X factors 6.9% 8.2% 8.2% 8.2% 8.2% Firm service (100% load factor) GJ 52,925,000 52,925,000 53,070,000 52,925,000 52,925,000 Interruptible service GJ 5,475,000 5,475,000 5,490,000 5,475,000
Slide 23: Proposed reference tariffs
Proposed reference tariffs 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Firm service $/GJ MDQ 0.5369 (est.) 0.3672 0.3452 0.3237 0.3051 0.2868 Interruptible service $/GJ n.a. 0.3672 0.3452 0.3237 0.3051 0.2868 • The firm and interruptible tariffs are nominally identical. • They are, however, subs
Slide 24: Reference tariff setting
Reference tariff setting • We are proposing a commonly used method for the setting of tariffs for firm and interruptible services. • We have not shown, but you can easily confirm: • when discounted at the proposed rate of return (4.79%), the forecast revenue from firm service has a present value of
Slide 25: Other access arrangement issues
Other access arrangement issues: reference tariff variation, queuing, capacity trading, extension and expansion
Slide 26: Reference tariff variation mechanism
Reference tariff variation mechanism • The tariff variation mechanism in the Amadeus Access Arrangement allows annual variation of the reference tariff for: • current inflation • a change in the rate of return on debt (as required by the National Gas Rules) • a material increase in costs attributabl
Slide 27: Queuing requirements
Queuing requirements • If pipeline capacity is not available to meet a request for access, prospective users can join a queue for access when capacity becomes available (either through termination of an existing transportation agreement, or through the service provider extending or expanding its pip
Slide 28: Capacity trading
Capacity trading • Section 5 of the Amadeus Access Arrangement sets out a basic scheme to facilitate the trading of capacity in the Amadeus Gas Pipeline. • We shall amend this section to recognize capacity trading via the capacity trading exchange administered by the Australian Energy Market Operato
Slide 29: Extension and expansion requirements
Extension and expansion requirements • Extension and expansion requirements, in accordance with rule 104 of the National Gas Rules, are set out in section 7 of the Amadeus Access Arrangement. • In April 2019, the rule 104 was amended to require, among other things, that an applicable access arrangem
Slide 30: Wrapping up and next steps
Wrapping up and next steps 30
Slide 31: Next steps
Next steps • Roundtable 4 has been scheduled for Thursday, 11 June. • At this final meeting, we shall summarize • what we have heard from you, and • how we have used it in our Access Arrangement revision proposal for the Amadeus Gas Pipeline. • We shall provide further opportunity for questions and
Slide 32: Wrap up
Wrap up • Summary of the discussion today • Invite comments from participants Thank you for participating…stay safe. 32
Slide 33: For further information contact
For further information contact: Or visit the APA website: John Williams apa.com.au Manager Regulatory +61 8 6189 4594 john.williams@apa.com.au Or Amadeus engagement webpage: apa.com.au/about-apa/our- Nives Matosin projects/amadeus-gas-pipeline- Manager Regulatory access-arrangement/. +61 2 9693 008