Guide for Users: Western Transmission System - Victoria
Transmission Pipelines Australia Pty Ltd

and
Transmission Pipelines Australia (Assets) Pty Ltd

VICTORIA

Transmission Pipelines Australia Pty Ltd
Transmission Pipelines Australia (Assets) Pty Ltd 
1 January 1999 
This document is intended as a Guide in relation to the tariffs, terms and conditions for third parties to access the Western Transmission System. Its creation has been required by the Australian Competition and Consumer Commission (ACCC) as part of its decision on Access Arrangements applying to the Western Transmission System under the Victorian Third Party Access Code for Natural Gas Pipelines (the Code). Its purpose is to clarify, not to substitute for, the tariffs, terms and conditions specified in those Access Arrangements.  It is emphasised that the actual tariffs, terms and conditions for access to the Western Transmission System are those specified in the relevant Access Arrangements established under the Code, and in the event of conflict between those Access Arrangements and this Guide, the Access Arrangements take precedence.
In this Guide, key terms defined in the Code are italicised and terms which are further defined or explained in the Guide are highlighted in bold print.
1.	Introduction
Transmission Pipelines Australia (Assets) Pty Ltd as owner of the Western Transmission System leases the Western Transmission System under a short term operating lease to Transmission Pipelines Australia Pty Ltd.  The companies together are referred to as TPA.
The Western Transmission System comprises the following transmission pipelines constructed and operated under the licences issued under Part IV of the Pipelines Act 1967 (including extensions and expansions of those pipelines in accordance with the Extensions/Expansions Policy) -
Pipeline Licence	Location/Route	
Vic: 145	Paaratte - Allansford	
Vic: 155	Allansford - Portland	
Vic: 168	Curdievale - Cobden	
Vic: 171	Codringham - Hamilton	
2.	Reference Services
TPA’s Reference Service is the provision of the Western Transmission System for the purposes of injection, conveyance and withdrawal of gas in accordance with its Access Arrangement for the Western Transmission System (the TPA WTS Access Arrangement). 
Users in this context of this Guide are retailers and other similar persons (for example, traders who sell, and arrange delivery of, gas to end users).
3.	Access Arrangement Terms and Conditions
TPA’s tariffs, terms and conditions in relation to its Reference Service are contained in the TPA WTS Access Arrangement which incorporates -
•	the terms and conditions;
•	the Reference Tariffs and Reference Tariff Policy;
•	the Capacity Management Policy;
•	the Trading Policy;
•	the Queuing Policy;
•	the Extensions/Expansions Policy;
•	a description of the Western Transmission System; and
•	a pro-forma Western Transmission System Agreement to be entered into between TPA and Users which defines TPA’s service obligations to Users.
4.	Reference Tariffs
In accordance with clause 5.3.1 of the TPA WTS Access Arrangement, the Reference Tariffs are -
•	the initial tariffs for Tariffed Transmission Services set out in schedule 1, paragraph 2, which apply at the start the initial 4 year price control period (the initial Access Arrangement Period); and
•	the tariffs noted above as varied during the initial Access Arrangement Period according to a CPI - X price path formula under TPA’s Reference Tariff Policy.
5.	Reference Tariff Policy
In accordance with clauses 5.3.2 to 5.3.8 of the TPA WTS Access Arrangement, the Reference Tariff Policy comprises -
•	the CPI - X price path approach set out in -
•	the administrative procedure for tariff changes in schedule 2 of the TPA WTS Access Arrangement; and
•	the CPI - X price path formula in schedule 3 of the TPA WTS Access Arrangement; 
•	the operation of a Speculative Investment Fund provided for in clause 5.3.4 of the TPA WTS Access Arrangement, which provides that -
•	New Facilities Investment that does not satisfy the economic feasibility test in section 8.16 of the Code (and as a result, is excluded from the Capital Base for the determination of Reference Tariffs);
•	may, in future, be included in the Capital Base (at a value adjusted for a rate of return) if the New Facility concerned commences to be used in providing Reference Services;
•	a policy on Redundant Capital set out in clause 5.3.5 and schedule 4, clause (3) of the TPA WTS Access Arrangement, whereby the Capital Base at the commencement of the next Access Arrangement Period may be reduced to take account of wholly or partially redundant assets;
•	principles of tariff methodology (Fixed Principles) set out in schedule 4 of the TPA WTS Access Arrangement, which are to apply to any review of the Access Arrangement and which cannot be changed without the agreement of the Service Provider.  The Fixed Principles include that -
•	the subsequent Access Arrangement Period is to apply for a period of 5 calendar years commencing from 1 January 2003;
•	the Reference Tariffs are to be designed on the basis of CPI-X a price path approach;
•	only one X factor is to apply over the subsequent Access Arrangement Period;
•	the Capital Base at the start of the subsequent Access Arrangement Period is to be determined on a basis consistent with the Code, in that it shall be the Capital Base at the start of the initial Access Arrangement Period varied by -
•	inflation;
•	New Facilities Investment;
•	Depreciation;
•	disposals; and
•	Redundant Capital,
over the course of the initial Access Arrangement Period; and
•	the sharing of the benefits of efficiency gains with users;
•	an Incentive Mechanism that permits TPA to retain a share of any returns that exceed the level of returns expected at the beginning of the initial Access Arrangement Period set out in the TPA WTS Access Arrangement in -
•	the administrative process in schedule 2 and the CPI - X price path formula in schedule 3 which provide that the price path for Reference Tariffs is determined at the beginning of the initial Access Arrangement Period based on forecasts of all relevant variables and not adjusted to account for subsequent events until the commencement of the subsequent Access Arrangement Period; 
•	schedule 4, clause (4), which provides for a sharing of the benefits of efficiency gains between TPA and users if, in the initial Access Arrangement Period, TPA has achieved efficiencies greater than the values implied by the value of X in the CPI-X formula; and
•	schedule 4, clause (6), which provides that the benefits of efficiency gains may be shared in the subsequent Access Arrangement Period and in Access Arrangement Periods after the subsequent Access Arrangement Period;
•	the change in tax pass-through provisions set out in schedule 5 of the TPA WTS Access Arrangement which provide that the Reference Tariffs may be varied in conformity a change in certain taxes, including the effect of the introduction of a Goods and Services Tax (GST) or any such like tax within Australia. 
6.	Capacity Management Policy
A Capacity Management Policy as required by section 3.10 the Code is provided in clause 5.5 of the TPA WTS Access Arrangement in the form of a statement that the Western Transmission System is a Contract Carriage Pipeline.
The Code definition of Contract Carriage is as follows -
“Contract Carriage is a system of managing third party access whereby: 
(a)	the Service Provider normally manages its ability to provide Services primarily by requiring Users to use no more than the quantity of Service specified in a contract;
(b)	Users normally are required to enter into a contract that specifies a quantity of Service;
(c)	charges for use of a Service normally are based at least in part upon the quantity of Service specified in a contract; and
(d)	a User normally has the right to trade its right to obtain a Service to another User.”
7.	Trading Policy 
A Trading Policy (in relation to a Contract Carriage Pipeline) as required by section 3.11 the Code is provided in clause 5.6 of the TPA WTS Access Arrangement.
Under the Trading Policy a User may transfer or assign its Contracted Capacity in the Western Transmission System -
•	without TPA’s consent (known as a Bare Transfer), in which case -
•	the User’s obligations under its contract with TPA remain in full force and effect; and
•	prior to utilising the Contracted Capacity the transferee or assignee must notify TPA of the Bare Transfer and inform TPA of the nature of the Contracted Capacity; 
or
•	with TPA’s prior written consent, on terms commercially and technically reasonable, in which case -
•	the transfer or assignment is conditional upon and is not binding until TPA has been furnished with an executed copy of a deed of novation in a form acceptable to TPA; and
•	under the deed of novation -
•	the transferee and TPA are deemed to enter into a new contract on the same terms as contained in the User’s existing contract with TPA; and
•	the User is relieved of its liability to perform the obligations attaching to the rights which are assigned by the User (save for accrued rights which remain unsatisfied).
8.	Queuing Policy
In accordance with the Queuing Policy in clause 5.7 of the TPA WTS Access Arrangement, Prospective Users requesting new contracts and Users requesting additional receipt and delivery entitlements under existing contracts are to be placed in a queue to obtain access to the Developable Capacity of the Western Transmission System.
The Queuing Policy is to operate only in regard to applications for new contracts, and enhancements to existing contracts, commencing within the same, or next, calendar year in relation to the date on which the application is lodged.
Under the Queuing Policy, TPA is to -
•	evaluate each application on a “first-come, first-served” basis; 
•	determine -
•	whether enhancements to the Western Transmission System are required in order to satisfy the application; and if so
•	the nature and extent of New Facilities required and an estimate of the New Facilities Investment; and
•	subject to the applicant entering into an Enhanced Facilities Agreement, make a final assessment of -
•	the New Facilities Investment; and 
•	applicable charges, if any, in accordance with the Extensions/Expansions Policy in clause 5.8 of the TPA WTS Access Arrangement. 
Standard dispute resolution procedures apply in accordance with the Access Code if the applicant wishes to dispute the terms of TPA’s offer. 
9.	Extensions/Expansions Policy
The Extensions/Expansions Policy is set out in clause 5.8 of the TPA WTS Access Arrangement.
TPA’s extensions or expansions to the Western Transmission System are Covered by the TPA WTS Access Arrangement.  TPA may give written notice to the ACCC that a significant extension not be Covered, except that -
•	a party may successfully seek Coverage of the extension under section 1 of the Code; or
•	an extension expected at the beginning of the initial Access Arrangement Period and included in the initial Capital Base of the Reference Tariffs is automatically covered.
A significant extension is defined in clause 5.8.1(e) of the TPA WTS Access Arrangement as an extension - 
•	involving capital investment greater than $5 million; or
•	exceeding 10 kilometres in length.
New Facilities Investment that satisfies the economic feasibility test in section 8.16(b) of the Code, subject to section 8.16(a), is able to included in the Capital Base of the Reference Tariffs and is consequently charged at the prevailing Reference Tariffs;
New Facilities Investment that does not satisfy the economic feasibility test in section 8.16 of the Code may be -
•	included in a Speculative Investment Fund in accordance with clause 5.3.4 of the TPA WTS Access Arrangement;
•	recovered by a Capital Contribution; or
otherwise
•	TPA may make a submission to the ACCC to effect that the New Facilities Investment is to be included in the Capital Base on grounds that it -
•	has system-wide benefits; or
•	is necessary to maintain the safety, integrity or contracted capacity of the Reference Services,
such that higher Reference Tariffs for all Users are justified.
10.	Description of the Western Transmission System 
A description of the Western Transmission System is provided as Appendix 1 to the TPA WTS Access Arrangement.
11.	Western Transmission System Agreement
A pro-forma Western Transmission System Agreement is provided as Appendix 2 to the TPA WTS Access Arrangement which is entered into between TPA and Users and secures payment from Users in respect of TPA’s Reference Service.
12.	Revisions to Access Arrangement
Consistent with the requirements of section 3.19 of the Code, the TPA WTS Access Arrangement specifies -
•	a date on which it is to submit revisions to the TPA WTS Access Arrangement - being 31 March 2002; and
•	a date up which the revisions to the TPA WTS Access Arrangement are intended to commence - being 1 January 2003.
The Revisions Commencement Date of 1 January 2003 is consistent with -
•	the CPI - X price path approach set out in schedules 2 and 3 of the TPA WTS Access Arrangement, which applies for the duration on the initial Access Arrangement Period (being a period which expires on 31 December 2002); and
•	that in accordance with schedule 4, clause (2), and the definition in clause 2, of the TPA WTS Access Arrangement, the subsequent Access Arrangement Period is to commence from 1 January 2003 and apply for a period of 5 calendar years. 
13.	Access Arrangement Information
Access Arrangement Information in respect of the Western Transmission System has been submitted to the ACCC by TPA in accordance with section 2.2 of the Code. 
14.	Further Information
If you want further information on these matters, please contact the following:
General Counsel and Regulatory Manager
Transmission Pipelines Australia Pty Ltd
180 Greens Road
Dandenong 
VICTORIA 3175

Tel:   (03) 9797 5222
Fax:  (03) 9797 5189

Pursuant to section 5.1 of the Code, TPA is required to make available to Prospective Users an Information Package which includes the Access Arrangement and Access Arrangement Information for the WTS. 

This will include Access Arrangement Information submitted to the ACCC on 3 November 1997, Supplementary Access Arrangement Information submitted on 13 and 16 March 1998 and Final Access Arrangement Information submitted on 30 November 1998.

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