Western Australian Current Regulations

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8.10         Initial Capital Base - Existing Pipelines

                When a Reference Tariff is first proposed for a Reference Service provided by a Covered Pipeline that was in existence at the commencement of the Code, the following factors should be considered in establishing the initial Capital Base for that Pipeline:

            (a)         the value that would result from taking the actual capital cost of the Covered Pipeline and subtracting the accumulated depreciation for those assets charged to Users (or thought to have been charged to Users) prior to the commencement of the Code;

            (b)         the value that would result from applying the “depreciated optimised replacement cost” methodology in valuing the Covered Pipeline;

            (c)         the value that would result from applying other well recognised asset valuation methodologies in valuing the Covered Pipeline;

            (d)         the advantages and disadvantages of each valuation methodology applied under paragraphs (a), (b) and (c);

            (e)         international best practice of Pipelines in comparable situations and the impact on the international competitiveness of energy consuming industries;

            (f)         the basis on which Tariffs have been (or appear to have been) set in the past, the economic depreciation of the Covered Pipeline, and the historical returns to the Service Provider from the Covered Pipeline;

            (g)         the reasonable expectations of persons under the regulatory regime that applied to the Pipeline prior to the commencement of the Code;

            (h)         the impact on the economically efficient utilisation of gas resources;

                  (i)         the comparability with the cost structure of new Pipelines that may compete with the Pipeline in question (for example, a Pipeline that may by-pass some or all of the Pipeline in question);

            (j)         the price paid for any asset recently purchased by the Service Provider and the circumstances of that purchase; and

            (k)         any other factors the Relevant Regulator considers relevant.

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