ActewAGL - Cost pass through - vegetation clearance - November 2013

Commencement date: 
1 November 2013
Effective date: 
1 July 2015
AER reference: 


On 1 November 2013, ActewAGL Distribution submitted an application under clause 6.6.1(c) of the NER for a positive cost pass through arising from a material increase in vegetation management costs in 2012-13. ActewAGL sought to recover vegetation management costs of $1.9 million (plus $0.3 million for the time cost of money). The AER was required to make a decision by 30 January 2014 and as it did not do so, the AER is deemed to have accepted ActewAGL's cost pass through application. The AER's final decision is therefore void and of no effect.

Under the current Chapter 6 (cl. 6.6.1(k1)) the AER must make a cost pass through determination within 40 business days of receiving an application, but the AER can extend this period by a further 60 business if the determination involves issues of difficulty or complexity. In relation to ActewAGL’s cost pass through application, both the AER and ActewAGL acted on the assumption that the pass through deadlines in the current Chapter 6 of the NER applied to ActewAGL’s application. Consequently, in this case, the AER extended the time for consideration of ActewAGL’s cost pass through application in order to obtain additional information and to consult with stakeholders.

On 10 June 2014, the AER released its draft decision to reject ActewAGL's vegetation clearance cost pass through application. Submissions on the AER's draft decision closed on Friday 20 June 2014. The AER made its final decision on 4 July 2014.

Following ActewAGL’s application for leave to seek merits review by the Australian Competition Tribunal of the AER’s final decision, it was identified that the transitional Chapter 6 of the NER, not the current Chapter 6, applied to ActewAGL’s pass through application. Relevantly, the transitional Chapter 6 of the NER does not contain the same provisions allowing the AER to extend the 60 business day period in which it is to make a cost pass through determination. The transitional Chapter 6 provides that if the AER has not made a decision within this period, it is deemed to have accepted the application.

As ActewAGL submitted its pass through application on 1 November 2013, the AER was required to make its determination by no later than 30 January 2014. As the AER did not do so, clause 6.6.1(e) of the transitional Chapter 6 operates to deem the acceptance of the pass through, and the decision made by the AER on 4 July 2014 is of no effect.