Long Term Revenue Constraint Methodology 2016-173 Nov 2017
Under Schedule 1E.1.2 of the SAU, the ACCC must publish an annual Long Term Revenue Constraint Methodology (LTRCM) determination in respect of the Annual Building Block Revenue Requirement (ABBRR), the Regulatory Asset Base (RAB) and the Initial Cost Recovery Account (ICRA) for the Initial Regulatory Period.
In making its determination, the ACCC will assess whether NBN Co has complied with the relevant criteria, including prudency criteria, set out in the SAU.
NBN Co’s regulatory information
On 31 October 2017, NBN Co lodged its submission of regulatory information for 2016-17, in accordance with Schedule 1F of NBN Co’s SAU. The regulatory information submitted by NBN Co will be used by the ACCC to inform its LTRCM determination for 2016-17 and to assess NBN Co’s compliance with the price controls set out in the SAU.
Public versions of NBN Co’s regulatory information documents
ACCC preliminary view
On 21 December 2017, the ACCC notified NBN Co of its preliminary view in relation to the capital and operating expenditure amount proposed by NBN Co in its 2016-17 LTRCM proposal under clause 1E.1.2(c)(vii) of the SAU.
The ACCC’s preliminary view is that it does not intend to determine a substitute amount of Capital Expenditure in accordance with clause 1D.3.2(d) of the SAU or a substitute amount of Operating Expenditure in accordance with clause 1E.8.2(c) of the SAU.
LTRCM Draft Decision
On 27 April 2018, the ACCC published an LTRCM Draft Determination for the 2016-17 financial year, in accordance with Schedule 1E.1.2 of the SAU.
The ACCC’s draft decision is that the regulatory information submitted by NBN Co under Schedule 1F of the SAU for the 2016-17 financial year satisfies the requirements outlined in the SAU. The ACCC proposes to accept NBN Co’s proposed values (and inputs to the values) for the Annual Building Block Revenue Requirement (ABBRR), Regulatory Asset Base and the Initial Cost Recovery Account (ICRA).
The ACCC welcomes submissions from interested parties on the LTRCM draft determination. Submissions were due by 5 pm on Friday 25 May 2018.
Submissions to the LTRCM Draft Determination
The ACCC received submissions from Telstra, NBN Co and Optus in relation to the LTRCM Draft Determination.
LTRCM Final Determination
On 29 June 2018, the ACCC published its final determination on NBN Co’s LTRCM and price compliance for the 2016-17 financial year.
The ACCC has accepted NBN Co’s proposed values (and the inputs to these values) for the Annual Building Block Revenue Requirement, Regulatory Asset Base and Initial Cost Recovery Account in accordance with clause 1E.1.2 of NBN Co’s SAU.
The ACCC is also satisfied that NBN Co’s prices for 2016-17 did not exceed the maximum regulated prices as set out in the SAU.