Apa Group · ASX:APA
Apa — Corporate Update (December 2019)
62 slides from Apa's corporate update, December 2019
Slide 1: Amadeus Consumer Reference Group 2021-26 access arrangement revision
Amadeus Consumer Reference Group 2021-26 access arrangement revision presented by Barrie Sturgeon, John Williams, Nives Matosin, Patrick Avenell. facilitated by Nicole Conroy, GHD.
Slide 2: Agenda for today
Agenda for today Coffee and muffins From 8:30am 1 Acknowledgement of Country and traditional owners Nicole Conroy – GHD 9am 2 Housekeeping Nicole Conroy – GHD 9:10am (5 mins) 3 Introductions around the table Nicole Conroy– GHD 9:15am (15 mins) 4 Overview of the day Patrick Avenell – APA 9:30am (10 m
Slide 3: Acknowledgement of Traditional Owners
Acknowledgement of Traditional Owners I’d like to acknowledge the Larrakia people whose land we are meeting on today and pay my respects to the Traditional Owners – past, present and emerging.
Slide 4: Housekeeping
Housekeeping • Emergency exits and process. • Bathrooms. • Tea and coffee location. • Scheduled breaks. • GHD support in the room.
Slide 5: House rules
House rules • This is intended be an open discussion between the consumer reference group and APA. • We welcome you to raise any issue or question about the access arrangement. • The main rule we propose is that the discussions during the roundtable are respectful. • We are not intending to attribut
Slide 6: Overview
Overview Patrick Avenell, Communications Advisor
Slide 7: Overview of the day
Overview of the day We have established the Amadeus Gas Pipeline Consumer Reference Group to provide us with customer, consumer and community perspectives about our submissions to the access arrangement for the Amadeus Gas Pipeline. By consulting widely with all interested parties APA will be able t
Slide 8: Outcomes for day
Outcomes for day What we are hoping for: • We wish to better engage with those who are affected by the Amadeus Gas Pipeline. • We want to make our regulatory planning more transparent, accessible and understood by a wider group. • We want to get better an engaging on regulatory processes for our pip
Slide 9: About APA and Amadeus Gas Pipeline
About APA and Amadeus Gas Pipeline Barrie Sturgeon, General Manager Western Australia
Slide 10: Who is APA?
Who is APA? • Amadeus is a gas transmission pipeline owned and operated by APA Group. • APA is a major provider of energy infrastructure services across Australia: • we own and operate major gas transmission pipelines, gas storage facilities, and gas processing plants; we also own and operate a gas
Slide 11: Who is APA?
Who is APA? Our refreshed Purpose and Vision All APA employees work according to our Purpose, Vision, Strategic Imperatives and Culture. Purpose: We strengthen communities through responsible energy. Vision: To be world class in energy solutions. Strategic Imperatives: People and Culture, Operationa
Slide 12: Gas supply chain
Gas supply chain Source: Australian Energy Market Commission
Slide 13: Gas transmission
Gas transmission • Gas transmission: • Pipeline transportation of large volumes of gas at high pressures. • Some large users (for example, gas power generators, mining and minerals processing operations) are supplied directly from transmission pipelines (mainline sales). This is where APA fits in: w
Slide 14: Gas distribution and retail
Gas distribution and retail • Gas distribution: • Pipeline network transportation of smaller volumes of gas at lower pressures. • Gas for distribution is supplied from transmission pipelines. • Distribution pipeline networks typically supply many smaller industrial, commercial, and domestic resident
Slide 15: Amadeus Gas Pipeline
Amadeus Gas Pipeline • Amadeus is a high pressure gas transmission pipeline originally designed to transport gas from Amadeus Basin fields, in central Australia, to Darwin. • Construction of the Amadeus Gas Pipeline was completed in 1986; gas began to flow in January 1987.
Slide 16: Amadeus Gas Pipeline
Amadeus Gas Pipeline • Initially, gas in flowed north, from the Amadeus Basin to Darwin. • Gas from the Blacktip Field, in Joseph Bonaparte Gulf, began flowing into the Amadeus Gas Pipeline, via the Bonaparte Gas Pipeline, in 2009. • Amadeus has been interconnected with the Northern Gas Pipeline, at
Slide 17: Where does gas transported in Amadeus go?
Where does gas transported in Amadeus go? • About half of the gas now flowing in the Amadeus Gas Pipeline is delivered into the Northern Gas Pipeline, at Warrego. • Some of the gas flowing north flows into the Darwin distribution network for supply to a small number of industrial and commercial cons
Slide 18: Regulatory landscape for Amadeus Access Arrangement revision
Regulatory landscape for Amadeus Access Arrangement revision John Williams, Manager Regulatory
Slide 19: Economic regulation
Economic regulation • Most Australian gas transmission pipelines are overseen by the state. • State oversight is exercised in a number of ways; these include: • Through legislation which sets the technical rules for the operation and maintenance of pipelines, including rules for their safe operation
Slide 20: National Gas Law and National Gas Rules
National Gas Law and National Gas Rules • The Commonwealth, and the States and Territories, have agreed to implement a single scheme of economic regulation for gas pipelines, which applies throughout Australia. • This scheme is implemented by the National Gas Law and the National Gas Rules. • The Na
Slide 21: Amadeus a full regulation pipeline
Amadeus a full regulation pipeline • The National Gas Law designates certain pipelines as covered pipelines. • A few covered pipelines provide light regulation services; all other covered pipelines are full regulation pipelines. • A full regulation pipeline must have an access arrangement which sets
Slide 22: What must be in an access arrangement?
What must be in an access arrangement? • Identification of the pipeline and reference to website at which a description of the pipeline is available. • Descriptions of the pipeline services that can reasonably be provided. • Specification of the reference services. • For each reference service, spec
Slide 23: Amadeus service provider
Amadeus service provider • The service provider is a key feature in the economic regulatory landscape. • A service provider is a person who owns, controls or operates a pipeline. • Amadeus is owned, controlled and operated by APT Pipelines (NT) Pty Limited. • APT Pipelines (NT) Pty Limited – APTNT –
Slide 24: Amadeus Access Arrangement revision
Amadeus Access Arrangement revision • An access arrangement for a full regulation pipeline must be periodically revised. • Proposed revisions to the access arrangement must be submitted, by the covered pipeline service provider, to the Australian Energy Regulator, for approval, under the National Ga
Slide 25: What is required?
What is required? • An access arrangement revision proposal must: • Set out the amendments to the access arrangement that the service provider proposes for the access arrangement period • Incorporate the text of the access arrangement in the revised form. • The proposal must also included the access
Slide 26: Revision of the Amadeus Access Arrangement
Revision of the Amadeus Access Arrangement 1 • We are revising the existing access arrangement; the current Amadeus Access Arrangement can be found on our website: https://www.apa.com.au/our-services/gas-transmission/central-region- pipelines/amadeus-gas-pipeline/ • We are not starting from scratch
Slide 27: Revision of the Amadeus Access Arrangement
Revision of the Amadeus Access Arrangement 2 • For each reference service, we will need to set terms and conditions on which the service is to be provided. • For each reference service, we will need to set a reference tariff. • In setting reference tariffs, we shall apply the building blocks method
Slide 28: Revision of the Amadeus Access Arrangement
Revision of the Amadeus Access Arrangement 3 • Our process has been planned around the obligation we have to submit an access arrangement revisions proposal for Amadeus, to the Australian Energy Regulator, by 1 July 2020. • After we submit the revisions proposal, the Australian Energy Regulator comm
Slide 29: Key milestones and dates for the approval process
Key milestones and dates for the approval process Milestone Indicative date AER publishes reference service proposal August 2019 Submissions on the reference service proposal close 6 September 2019 AER publishes reference service proposal decision December 2019 APTNT submits access arrangement revis
Slide 30: Regulatory building blocks
Regulatory building blocks John Williams, Manager Regulatory
Slide 31: Regulatory building blocks
Regulatory building blocks • Rule 76 of the National Gas Rules defines the building block approach. • Rule 76 is in that part of the Rules for price and revenue regulation. • In this presentation, we shall talk about the way in which the building block approach is applied to determine the prices – t
Slide 32: Building block approach
Building block approach • Reference tariffs for an access arrangement Return on are to be calculated from the total of the capital costs expected to be incurred by an efficient Regulatory service provider. depreciation • This total of the costs expected to be incurred Operating is called the buildin
Slide 33: Total revenue
Total revenue Return on • Return on capital. Return on the amount the capital service provider has invested in pipeline and Regulatory other assets (the capital base). depreciation • Regulatory depreciation. Return of the service provider’s investment (return of the Operating capital base). expendit
Slide 34: Capital base and capital expenditure
Capital base and capital expenditure • The capital base is rolled forward from one year to the next. • Efficient new capital expenditure is added; depreciation is deducted. • Capital expenditure can only be added to the capital base, for recovery via reference tariffs, if: • It is expenditure that w
Slide 35: Return on capital
Return on capital • Return on capital is calculated by multiplying the capital base, at the start of each year, by the rate of return allowed by the AER. • The capital base is assumed to be financed by equity and debt; the proportion of debt in the total financing (equity + debt) of the service prov
Slide 36: Depreciation
Depreciation • For Amadeus, we use the indexed straight line method, which the AER requires for the calculation of regulatory depreciation. • If there is: • No inflation, the indexed straight line method produces simple straight line depreciation. • High inflation, the method defers the return of ca
Slide 37: Forecast operating expenditure
Forecast operating expenditure • Forecast operating expenditure for the access arrangement period (2021-2026) is an important input into reference tariff determination. • Again, the AER will carefully scrutinise our forecast for Amadeus, to ensure that it meets the test of the National Gas Rules: •
Slide 38: Incentive mechanism
Incentive mechanism • The AER has previously approved an incentive mechanism to encourage our seeking efficiencies in the operation of the Amadeus Gas Pipeline. • This incentive mechanism is the Efficiency Carryover Mechanism in section 8 of the current Amadeus Access Arrangement. • We shall explain
Slide 39: Estimated cost of corporate income tax
Estimated cost of corporate income tax • At the request of the Minister for Energy, the AER undertook, during 2018, a review of its regulatory tax approach. • Recommendations from this review were implemented, as changes to the AER’s Post-Tax Revenue Model, early in 2019. • For Amadeus, we intend to
Slide 40: Total revenue and cost allocation
Total revenue and cost allocation • We must use the AER’s Post-tax Revenue Model to determine the total revenue for Amadeus for the period 2021 to 2026. • Once the total revenue has been determined, it may need to be allocated to reference services before we can calculate the reference tariffs for t
Slide 41: Reference tariffs
Reference tariffs • Once the total revenue has been allocated to reference services, we can determine the tariffs for those services. • The tariff for a service is usually calculated as: • The total revenue (total cost) allocated to that service, divided by… • The volume of service expected to be pr
Slide 42: Tariff variation mechanism
Tariff variation mechanism • Our access arrangement must specify the way in which reference tariffs are to vary during the access arrangement period. • Section 4.7 of the current Amadeus Access Arrangement sets out such a method – the tariff variation mechanism variation – which allows tariffs to be
Slide 43: Terms and conditions
Terms and conditions • The current Amadeus Access Arrangement sets out terms and conditions on which we will provide a single firm service reference service. • The Access Arrangement also advises that we offer interruptible service and negotiated services. • We shall need to review our services, and
Slide 44: Queuing, capacity trading and extension/expansion
Queuing, capacity trading and extension/expansion • An access arrangement must set out: • Queuing requirements. • Capacity trading requirements. • Extension and expansion requirements. • These requirements are set out in the current Amadeus Access Arrangement. • But, at minimum, they require: • Amen
Slide 45: Summary of consultation and indicative timing
Summary of consultation and indicative timing Topic Roundtable Timing Asset management plan and capital expenditure 2 Mid-February 2020 Return on capital 2 Mid-February 2020 Depreciation 3 Mid-March 2020 Forecast operating expenditure 2 Mid-February 2020 Incentive mechanism 2 Mid-February 2020 Estim
Slide 46: Amadeus engagement plan — help us shape engagement
Amadeus engagement plan — help us shape engagement Nives Matosin, Manager Regulatory
Slide 47: Consumer engagement for Amadeus Gas Pipeline 2021-2026 access arrangement
Consumer engagement for Amadeus Gas Pipeline 2021-2026 access arrangement • Engagement means early involvement with We are consumers, customers and stakeholders to adopting a new approach to develop, review and challenge regulatory consumer proposals. engagement • We are seeking your help to: • Shap
Slide 48: Amadeus engagement plan: Why are we doing this?
Amadeus engagement plan Why are we doing this? • Engaging with customers is a key part of what we do already, and we do it well. • But, engagement expectations from consumers and regulators have broadened from customers (direct relationships) to consumers (indirect relationships). • So we have consi
Slide 49: Amadeus engagement plan: outcomes from consumer engagement
Amadeus engagement plan What are the We hope to: outcomes we want • Enhance trust and our reputation with consumers and from consumer AER. engagement? • Get better acceptance and understanding by consumers of our business and regulatory positions. • Achieve greater acceptance by the AER for our regu
Slide 50: Amadeus engagement plan: engagement completed so far
Amadeus engagement plan Consultation on Engagement completed so far… reference service • In July, APA held a workshop in Darwin with invited showed there was stakeholders to discuss APA’s proposed reference a lot of interest in services. what APA is doing. • In addition to the workshop, we met face-
Slide 51: Amadeus engagement plan: new ways of engaging
Amadeus engagement plan New ways of engaging Your input will help to shape our thinking for Amadeus Gas Pipeline • We have broadened the engagement plan for Amadeus to help develop APA’s proposed access arrangement for the 2021-26 period. • The main purpose of engaging with you is to receive insight
Slide 52: Amadeus engagement plan: proposed principles
Amadeus engagement plan Things we want you We wish to apply best practice principles to consider. when engaging on AGP… Proposed principles include: Proposed principles • No surprises. of engaging with you. • Clear, accurate and timely communication. We’d like to hear • Easy to understand. what you
Slide 53: Amadeus engagement plan: key topics for engagement
Amadeus engagement plan Key topics for engagement: We are at the early stages of preparing • Characteristics of the Amadeus Gas Pipeline. parts of our • Reference services. proposal. • Demand forecasts and utilisation. Here we set out the • Capital plans and capital expenditure. topics we propose •
Slide 54: Amadeus engagement plan: ways we will engage
Amadeus engagement plan Ways we will engage… Amadeus consumer Engagement plan Series of roundtables reference group Amadeus webpage and One-on-one meetings Amadeus email address
Slide 55: Amadeus engagement plan: indicative timetable of roundtables
Amadeus engagement plan Roundtables Timing Proposed topics 1.Setting the scene December Introduction to APA Indicative 2019 About Amadeus Gas Pipeline timetable for Regulatory landscape engaging with you Proposed engagement plan on the AGP. 2.Getting to the Mid- Asset management plan detail February
Slide 56: Providing us your views and feedback
Providing us your views and feedback
Slide 57: Amadeus engagement plan: your views
Amadeus engagement plan Your views… Please provide feedback on the following questions: Tell us what other 1. Is there other information you want us to provide about Amadeus Gas Pipeline? information you 2. Do you have any questions about the current arrangements for the AGP? would like us to 3. Are
Slide 58: Amadeus engagement plan: we want your feedback
Amadeus engagement plan We want your Extremely Somewhat Neither Somewhat Extremely feedback. good good good nor bad bad bad Information Please respond either was clear, in hard copy or by the accurate o o o o o online survey. and timely Information was easy to understand o o o o o Transparent o o o
Slide 59: Amadeus engagement plan: next steps
Amadeus engagement plan Next steps • Provide us with your feedback. • We will finalise the engagement plan and publish it. • We will hold the second roundtable – Getting to the detail – in February. • We’ll be in touch again.
Slide 60: Wrapping up
Wrapping up Nicole Conroy - GHD
Slide 61: Wrap up
Wrap up • Summary of key outcomes from today. • Suggestions on other attendees/organisations to be involved. Thank you for participating
Slide 62: For further information contact
For further information contact: Or visit the APA website: John Williams apa.com.au Manager Regulatory +61 8 61894594 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 0693 0081