NATIONAL THIRD PARTY ACCESS CODE FOR NATURAL GAS PIPELINE SYSTEMS - REG 8.4
NATIONAL THIRD PARTY ACCESS CODE FOR NATURAL GAS PIPELINE SYSTEMS - REG 8.4
8.4 Total Revenue
The Total Revenue (a
portion of which will be recovered from sales of Reference Services) should be
calculated according to one of the following methodologies:
Cost of Service : The
Total Revenue is equal to the cost of providing all Services (some of which
may be the forecast of such costs), and with this cost to be calculated on the
basis of:
(a) a
return ( Rate of Return ) on the value of the capital assets that form the
Covered Pipeline or are otherwise used to provide Services ( Capital Base );
(b)
depreciation of the Capital Base ( Depreciation ); and
(c) the
operating, maintenance and other non-capital costs incurred in providing all
Services ( Non-Capital Costs ).
IRR : The Total
Revenue will provide a forecast Internal Rate of Return (IRR) for the Covered
Pipeline that is consistent with the principles in sections 8.30 and 8.31. The
IRR should be calculated on the basis of a forecast of all costs to be
incurred in providing such Services (including capital costs) during the
Access Arrangement Period.
The initial value of
the Covered Pipeline in the IRR calculation is to be given by the Capital Base
at the commencement of the Access Arrangement Period and the assumed residual
value of the Covered Pipeline at the end of the Access Arrangement Period
(Residual Value) should be calculated consistently with the principles in this
section 8.
NPV : The Total
Revenue will provide a forecast Net Present Value (NPV) for the Covered
Pipeline equal to zero. The NPV should be calculated on the basis of a
forecast of all costs to be incurred in providing such Services (including
capital costs) during the Access Arrangement Period, and using a discount rate
that would provide the Service Provider with a return consistent with the
principles in sections 8.30 and 8.31.
The initial value of
the Covered Pipeline in the NPV calculation is to be given by the Capital Base
at the commencement of the Access Arrangement Period and the assumed Residual
Value at the end of the Access Arrangement Period should be calculated
consistently with the principles in this section 8.
The methodology used
to calculate the Cost of Service, an IRR or NPV should be in accordance with
generally accepted industry practice.
However, the
methodology used to calculate the Cost of Service, an IRR or NPV may also
allow the Service Provider to retain some or all of the benefits arising from
efficiency gains under an Incentive Mechanism. The amount of the benefit will
be determined by the Relevant Regulator in the range of between 100% and 0% of
the total efficiency gains achieved.
[Section 8.4 amended: Gazette 23 January 2002 p.
439; 2 May 2003 p. 1524 and 1527.]