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NATIONAL THIRD PARTY ACCESS CODE FOR NATURAL GAS PIPELINE SYSTEMS - REG 8.27

NATIONAL THIRD PARTY ACCESS CODE FOR NATURAL GAS PIPELINE SYSTEMS - REG 8.27

8.27         Capital Redundancy

                A Reference Tariff Policy may include (and the Relevant Regulator may require that it include) a mechanism that will, with effect from the commencement of the next Access Arrangement Period, remove an amount from the Capital Base (Redundant Capital) for a Covered Pipeline so as to:

            (a)         ensure that assets which cease to contribute in anyway to the delivery of Services are not reflected in the Capital Base; and

            (b)         share costs associated with a decline in the volume of sales of Services between the Service Provider and Users.

                Before approving a Reference Tariff which includes such a mechanism, the Relevant Regulator must take into account the uncertainty such a mechanism would cause and the effect that uncertainty would have on the Service Provider, Users and Prospective Users. If a Reference Tariff does include such a mechanism, the determination of the Rate of Return (under sections 8.30 and 8.31) and the economic life of the assets (under section 8.33) should take account of the resulting risk (and cost) to the Service Provider of a fall in the revenue received from sales of Services or part of the Covered Pipeline.

        [Section 8.27 amended: Gazette 2 May 2003 p. 1526.]