VICTORIAN WHOLESALE GAS AND VICTORIAN FULL RETAIL CONTESTABILITY GAS FINAL BUDGET AND FEES 2011/12

Transcription

1 VICTORIAN WHOLESALE GAS AND VICTORIAN FULL RETAIL CONTESTABILITY GAS FINAL BUDGET AND FEES Au1hol,an Enargy Marla! ap.rotr:w lkl A~N o, NEW SOUTH WAlES QUEENSIANO SOU1H AUSTRAUA VICTORIA AUSTRALIAN CAPl1Al IU RITORY TASMANIA

2 Contents 1 Introduction Victorian Wholesale Gas Victorian FRC Gas...10 List of Figures Figure 1: Victorian Wholesale Gas Fee Nominal vs. Real... 5 Figure 2: Energy Demand Victorian Wholesale Gas... 6 Figure 3: Budget Victorian Wholesale Gas Expenditure by Category... 7 Figure 4: Victorian FRC Gas Fee Nominal vs. Real...10 Figure 5: Budget Victorian FRC Gas Expenditure by Category...11 List of Tables Table 1. Summary of Victorian Wholesale Gas Fees... 5 Table 2. Comparison of Items of Victorian Wholesale Gas Revenue and Expense 8 Table 3. Summary of Victorian FRC Gas Fees...10 Table 4. Comparison of Items of Victorian FRC Gas Revenue and Expense...12 BUDGET May 2011 Page 2 of 13

3 List of Symbols and Abbreviations Term B2B CAP FRC GJ GSOO NA PCF TBC Definition business-to-business Consumer Advocacy Panel Full Retail Contestability gigajoule Gas Statement of Opportunities not applicable Participant Compensation Fund to be confirmed Note all amounts quoted in this document are nominal dollars unless otherwise stated and all amounts are exclusive of GST. BUDGET May 2011 Page 3 of 13

4 1 Introduction The Australian Energy Market Operator (AEMO) is responsible for the operation of the Victorian Wholesale and Full Retail Contestability (FRC) gas markets. Following the release of the draft budget and fees in March 2011, this document outlines the final fee schedule for the Victorian Wholesale and Full Retail Contestability (FRC) gas markets. AEMO Contacts regarding this report Ms Karen Olesnicky Executive General Manager, Financial and Business Services Australian Energy Market Operator Level 22, 530 Collins St Melbourne VIC 3000 Phone: or Mr Jack Fitcher Senior Manager, Corporate Finance Australian Energy Market Operator Level 22, 530 Collins St Melbourne VIC 3000 Phone: BUDGET May 2011 Page 4 of 13

5 $/GJ VICTORIAN WHOLESALE GAS AND VICTORIAN FRC GAS FINAL BUDGET AND FEES 2 Victorian Wholesale Gas Table 1. Summary of Victorian Wholesale Gas Fees Fee Actual Actual Budget Estimate Estimate Estimate Estimate Tariff D ($/GJ) +7% +5% +5% +5% +5% +4% Tariff V ($/GJ) +7% 5% +5% +5% +5% +4% Distribution Meter ($/day per meter) Transmission Meter ($/day per meter) Registration Fee ($/day) Figure 1: Victorian Wholesale Gas Fee Nominal vs. Real 0.12 Real Nominal Real 0.02 Nominal Wholesale GasTariff D Real * Wholesale Gas Tariff V Real * Wholesale GasTariff D Nominal Wholesale Gas Tariff V Nominal * Real values are the nominal amounts adjusted for inflation. Prices have been calculated relative to the prices. BUDGET May 2011 Page 5 of 13

6 Figure 2: Energy Demand Victorian Wholesale Gas The energy demand estimates used in the calculation of the Victorian wholesale gas fees are shown below. 300, , ,000 GJ 150, ,000 50,000 Budget Budget Estimate Estimate Estimate Estimate Tariff D Industry & Commercial Tariff D Gas Power Generation Tariff V Domestic BUDGET May 2011 Page 6 of 13

7 Figure 3: Budget Victorian Wholesale Gas Expenditure by Category Occupancy $0.5m 3% Depreciation & Amortisation $1.0m 6% Other Expenses $1.6m 10% Consulting $1.2m 7% Fees - Agency, Licence & Audit $1.2m 7% Labour $9.0m 52% IT & Telecommunication $2.6m 15% TOTAL: $17.2m BUDGET May 2011 Page 7 of 13

8 Table 2. Comparison of Items of Victorian Wholesale Gas Revenue and Expense VIC Wholesale Gas Actual 2009/10 Budget 2010/11 Forecast 2010/11 Budget $'000 $'000 $'000 $'000 Revenue 15,963 15,699 16,177 16,546 Labour 9,600 9,063 8,527 9,028 Contractors Consulting ,151 Fees - Agency, Licence & Audit 1,982 1,127 1,184 1,204 IT & Telecommunication 1,187 1,751 1,598 2,646 Occupancy Other Expenses 1,031 1,305 1,243 1,170 Depreciation & Amortisation 1,234 1,246 1,284 1,045 Financing Costs AEMO(T) Allocation Total Expenditure 17,258 16,725 16,202 17,230 Surplus/(Deficit) (1,295) (1,026) (25) (683) Transfer (to)/from Reserve (57) - Brought Forward Surplus/(Deficit) (1,374) (2,254) (2,466) (2,548) Accumulated Surplus/(Deficit) (2,422) (3,280) (2,548) (3,231) BUDGET May 2011 Page 8 of 13

9 Key Points The Victorian wholesale gas market fees are calculated on a rolling 5 year break-even basis. Stakeholders have been advised over the previous two years of expected fee increases as fees had been lowered in previous years to return a large accumulated surplus. As part of last year s budget process stakeholders were advised that commodity tariff fees were expected to increase by 7% per annum from 2010/11 to 2012/13 and by 6% per annum in 2013/14 and 2014/15. Commodity tariff fees are now expected to increase by 5% per annum during the years through to 2014/11 and by 4% in the year 2015/16. Total expenditure in is budgeted to be $0.5M higher than the 2010/11 budgeted expenditure. The key reasons for this increase are: Consulting costs are above the 2010/11 budget by $0.2M that relate to reviews from HV Zones, PAC and pipeline capacity options. IT & telecommunications costs have increased by $0.9M which mainly relates to an increase in SCADA support agreements ($0.1M) and $0.8M of server costs that are now classified as operating expenditure rather capital expenditure as a result of a change to the AEMO capitalisation policy. Depreciation is $0.2M below the 2010/11 budget as the market enhancements implemented as part of the wholesale gas market project in 2006 have now been fully depreciated. The budget includes an allocation of costs incurred prior to 1 July 2009 to establish AEMO. These costs relate to AEMO (Transitional) costs totalling $4.0M that are allocated to all of the electricity and gas functions of AEMO and are being recovered over 3 years commencing 1 July The Victorian Wholesale Gas function has been allocated $0.157M of these costs for. BUDGET May 2011 Page 9 of 13

10 3 Victorian FRC Gas Table 3. Summary of Victorian FRC Gas Fees Fee Actual Actual Budget Estimate Estimate Estimate Estimate FRC Gas Tariff ($ per customer supply point +3% +8% +8% +8% +8% +8% per month) Service Fee ($ per participant per month) Initial Registration Fee 5,760 5,760 5,760 5,760 5,760 5,760 5,760 ($ per participant) Gas Statement of Opportunities NA ($ per customer supply point -12% +18% -23% +1% +1% per month) Gas Advocacy Panel passthrough NA TBC TBC TBC TBC ($ per customer supply point per month) Figure 4: Victorian FRC Gas Fee Nominal vs. Real $ per customer supply point per month Vic FRC Gas Budget Nominal Vic FRC Gas Budget Real * * Real values are the nominal amounts adjusted for inflation. Prices have been calculated relative to the price. BUDGET May 2011 Page 10 of 13

11 Figure 5: Budget Victorian FRC Gas Expenditure by Category Consulting $0.1m 3% Occupancy $0.1m 3% Other Expenses $0.4m 11% Depreciation & Amortisation $0.3m 9% Labour $1.4m 39% Gas B2B Recoveries $0.6m 16% IT & Telecommunication $0.7m 19% TOTAL: $3.7m BUDGET May 2011 Page 11 of 13

12 Table 4. Comparison of Items of Victorian FRC Gas Revenue and Expense Vic FRC Gas Actual 2009/10 Budget 2010/11 Forecast 2010/11 Budget $'000 $'000 $'000 $'000 Fees and tariffs 2,590 2,722 2,722 2,969 Other Revenue Total Revenue 2,614 2,722 2,722 3,029 Labour 2,208 1,358 1,333 1,442 Contractors Consulting Fees - Agency, Licence & Audit IT & Telecommunication Occupancy Other Expenses Depreciation & Amortisation Gas B2B Recoveries AEMO(T) Allocation Total Expenditure 3,972 3,376 3,248 3,665 Surplus/(Deficit) (1,358) (654) (526) (636) Brought Forward Surplus/(Deficit) 3,501 2,828 2,290 1,764 Accumulated Surplus/(Deficit) 2,172 2,174 1,764 1,128 BUDGET May 2011 Page 12 of 13

13 Key Points The Victorian FRC gas market fees are calculated on a rolling 5 year break-even basis. Stakeholders were advised as part of last year s budget process that estimated fee increases would be 3% in years and and 2% in years and Fees are now expected to increase by 8% annually from to primarily due to a lower brought forward surplus. Total expenditure in is budgeted to be $0.3M higher than the 2010/11 budgeted expenditure. The key reason for this increase are: IT and Telecommunications costs have increased by $0.3M due to a change of asset capitalisation policy that has resulted in $0.2M being treated as operating expenditure rather than capital expenditure and a provision for potential system changes ($0.1M). The budget includes an allocation of costs incurred prior to 1 July 2009 to establish AEMO. The Victorian Gas FRC function has been allocated $0.032M of these costs for. The budget includes an allocation of costs associated with the development of the Gas Statement of Opportunities (Gas SOO). The costs of the Gas SOO are recovered via a tariff levied on gas retailers in the Victorian, Queensland, South Australian and New South Wales markets. The tariff will be based on a set rate of $ per meter per month across each of these markets. AEMO commenced recovery of Gas SOO costs on 1 July Costs incurred prior to 1 July 2010 will be recovered over 3 years along with the annual costs of producing the document. AEMO is required to collect the costs of the gas Consumer Advocacy Panel (CAP) and pass these funds on to the AEMC. AEMO commenced the collection of the gas CAP costs from 1 July In 2009/10 the gas CAP costs were paid by the different jurisdictions. It is now been decided by the Ministerial Council on Energy (MCE) that AEMO should have collected the 2009/10 costs from retail participants. To reduce the impact on participants the recovery of the 2009/10 costs will be staggered over 3 years from through to 2013/14. The costs of the gas CAP are recovered via a tariff levied on retailers in the Victorian, Queensland, South Australian and New South Wales gas retail markets. The tariff will be based on a set rate of $ per meter per month across each of these markets. BUDGET May 2011 Page 13 of 13