Below Rail Infrastructure, Environment and Sustainability, Freight Rail, Passenger Rail

Watchdog rejects ARTC’s Hunter access rates

Rod Sims, ACCC chairman. Photo: ACCC

The Australian Competition and Consumer Commission says the Australian Rail Track Corporation is not being realistic with its latest access terms for the Hunter Valley network.

After six years operating the network under the 2011 Hunter Valley Access Undertaking (HVAU), the ARTC is scheduled to replace that scheme with the 2017 HVAU by June 30.

But the ACCC has rejected the ARTC’s proposed 2017 HVAU, saying it disagrees with key figures calculated in the document.

The ACCC issued a draft decision on April 20, and called for public comment by May 12.

Chairman Rod Sims said the watchdog was trying to act in the best interest of all parties involved.

“In making its decision the ACCC has recognised the need to balance the economically efficient operation of, use of, and investment in the Hunter Valley rail network with the legitimate business interests of ARTC and the interests of all access seekers, including passenger trains, coal and non-coal freight,” he said.

Two key issues raised by the ACCC are with the ARTC’s calculations of rate of return (RoR) and weighted average mine life (WAML) figures within the terms of the access deal.

Both sets of figures will be crucial for determining the prices the ARTC can justifiably charge users for access to the network.

The ARTC is proposing a new RoR of 6.51% (real pre-tax) and 7.86% (nominal pre-tax) – a pair of figures the ACCC calls “not appropriate”.

Instead, the ACCC is proposing an RoR in the new deal of 4.60% (real pre-tax) and 7.11% (nominal pre-tax).

As for WAML, the ARTC is calculating 16.5 years – but the ACCC says a WAML between 20 and 32 years would be more accurate, saying the ARTC’s figure is “inappropriately conservative”.

Sims insisted the watchdog was not ignoring the “extensive” work done by the ARTC in determining the proposed figures.

“The ACCC has provided detailed feedback that the ARTC can use to revise the 2017 HVAU,” he said.

More information on the undertaking is available on the ACCC website.