Western Australian Current Regulations

NATIONAL THIRD PARTY ACCESS CODE FOR NATURAL GAS PIPELINE SYSTEMS - REG 8.34

8.34         Application of Depreciation Principles to the IRR/NPV Methodology

                If the IRR or NPV methodology is used, then the notional depreciation over the Access Arrangement Period for each asset or group of assets that form part of the Capital Base is:

            (a)         for an asset that was in existence at the commencement of the Access Arrangement Period, the difference between the value of that asset in the Capital Base at the commencement of the Access Arrangement Period and the value of that asset that is reflected in the Residual Value; and

            (b)         for a New Facility installed during the Access Arrangement Period, the difference between the actual cost or forecast cost of the Facility (whichever is relevant) and the value of that asset that is reflected in the Residual Value,

                and, to comply with section 8.33:

            (c)         the Residual Value of the Covered Pipeline should reflect notional depreciation that meets the principles of section 8.33; and

            (d)         the Reference Tariff should change over the Access Arrangement Period in a manner that is consistent with the efficient growth of the market for the Services (and which may involve a substantial portion of the depreciation taking place towards the end of the Access Arrangement Period, particularly where the calculation of the Reference Tariffs has assumed significant market growth and the Pipeline has been sized accordingly).

        [Section 8.34 amended: Gazette 2 May 2003 p. 1526 and 1527.]