Freight Rail

ARTC, ACCC reach middle ground on Hunter rates

The competition watchdog has consented to the ARTC’s updated Hunter Valley Access Undertaking figures, after it rejected the network operator’s original proposal.

After taking issue with the calculations for rate of return (RoR) and weighted average mine life (WAML) figures in the ARTC’s originally-proposed amendment to the 2011 HVAU, the ACCC accepted adjusted figures at the eleventh hour, late last week.

However, the ACCC said the rushed terms – which replace terms due to expire on June 30, 2017, are not ideal, and it expects the ARTC to continue working towards an updated variation application with its stakeholders.

The HVAU regulates the ARTC’s operation of the rail network that connects coal mines in the Hunter Valley to the Port of Newcastle.

In this round of variations, the ARTC initially proposed an RoR of 6.51% (real pre-tax) and 7.86% (nominal pre-tax), with a WAML of 16.5 years.

The ACCC countered with suggestions of an RoR of 4.60% (real pre-tax) and 7.11% (nominal pre-tax), with a WAML between 20 and 32 years.

The result is accepted terms of an RoR of 5.38% (real pre-tax) and 7.91% (nominal pre-tax), and a WAML of 23 years.

“This variation to the Hunter Valley Access Undertaking provides regulatory certainty for ARTC and its users, including coal producers as well as passenger trains and non-coal freight,” ACCC commissioner Cristina Cifuentes said.

“Stakeholders were disappointed by the short timeframe and that the application did not address all the issues that had been identified as part of ARTC’s earlier application,” she continued.

“However, given the expiry date of the current undertaking, stakeholders supported the variation as the best way to ensure stability in the regulatory framework.

“The ACCC acknowledges and shares stakeholders concerns that this process illustrates significant issues with the current regulatory framework as it applies to the Hunter Valley rail network.”