APA Group · ASX:APA
APA — Corporate Update (April 2020)
30 slides from APA's corporate update, Apr 20, 2020
Slide 1: Amadeus Consumer Reference Group 2021-26 access arrangement revision
Amadeus Consumer Reference Group 2021- 26 access arrangement revision Roundtable 3a. Demand forecasts, interruptible service and total revenue 20 April 2020 via webex
Slide 2: Agenda for today
Agenda for today Welcome 1 Introductions 2 Recap of second roundtable meeting - key messages 3 Demand forecasts used to prepare prices for reference services (reference tariffs) 4 Draft access arrangement and new provisions for interruptible service 5 Asset base roll-forward model and total revenue
Slide 3: Welcome & house rules
Welcome & house rules • Introductions • House rules • The online format has been introduced due to COVID-19 • This is intended be an open discussion between the reference group and APA • We welcome any issue or question about the access arrangement and its context • The main rule we propose is that
Slide 4: What are we hoping to achieve?
What are we hoping to achieve? 4
Slide 5: Getting into the details
Getting into the details • In this roundtable meeting, we continue to present to you our initial thinking of key issues for the Amadeus Access Arrangement revision proposal: • Demand forecasts that will underpin the proposed reference service tariffs • Draft revised access arrangement incorporating
Slide 6: Key take-outs from roundtable 2
Key take-outs from roundtable 2 6
Slide 7: Brief recap
Brief recap • At the second roundtable meeting in February, we presented information on: • Demand forecasts – but not the forecasts themselves • Asset management plan and proposed capital expenditure • Operating cost forecast methodology and preliminary operating cost forecasts • Efficiency carry-ov
Slide 8: What we heard from you
What we heard from you • Price of gas. End price for gas is a major concern of consumers and businesses. • Capacity. The lack of access to firm pipeline capacity is a key issue / source of frustration for some large businesses. • Interruptible service. Current APA terms and conditions are a good sta
Slide 9: Our consideration of what we heard
Our consideration of what we heard • Price of gas. We acknowledge that cost of energy is a key concern for the community and businesses. COVID-19 has added pressure to these concerns: Amadeus reference tariffs are expected to fall. • Capacity. Amendments to pre-existing agreements, which should secu
Slide 10: Our consideration of what we heard
Our consideration of what we heard • What’s in it for the community? Amadeus is an important part of the energy supply for Northern Territory. We operate Amadeus in a safe, reliable and cost efficient way. Our aim is to continue doing this. Discussion Do you have any comments? We appreciate you have
Slide 11: Draft access arrangement and new provisions for interruptible service
Draft access arrangement and new provisions for interruptible service
Slide 12: Interruptible service as a reference service
Interruptible service as a reference service • The AER’s December 2019 reference service proposal decision for the Amadeus Gas Pipeline required that we make interruptible service a reference service. • We have drafted the proposed revised access arrangement to incorporate the terms and conditions f
Slide 13: Interruptible service as a reference service
Interruptible service as a reference service • Interruptible service is provided from the un-nominated capacity contracted under pre-existing agreements; it is available to prospective users only if capacity for firm service is not available. • To use the interruptible service reference service, a u
Slide 14: Demand forecasts to be used to determine prices for reference services
Demand forecasts to be used to determine prices for reference services 14
Slide 15: Demand forecasts
Demand forecasts Recap of what we presented previously • Significant change in utilisation of Amadeus with commercial operation of the Northern Gas Pipeline (NGP) in January 2019 • Gas delivered from Amadeus into the NGP transported to Queensland, and via other pipelines, into the East Coast gas mar
Slide 16: Capacity
Capacity Darwin 53.6 TJ/d Bonaparte Gas Pipeline Ban Ban Springs 50.4 TJ/d Pipeline segment TJ/d Warrego Northern Gas Pipeline Ban Ban Springs - Darwin 53.6 Ban Ban Springs - Warrego 50.4 Mereenie, Palm Valley - Warrego 61.0 61.0 TJ/d Nameplate rating 165.0 Tyler’s Pass Mereenie Palm Valley 16
Slide 17: Interruptible service
Interruptible service Pipeline segment 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Ban Ban Springs - Darwin TJ/d 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Ban Ban Springs - Warrego TJ/d 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Mereenie, Palm Valley - Warrego Capacity: Tyler’s Pass - Warrego TJ/d 61.0 61.0 61.0 61.
Slide 18: Asset base roll-forward and total revenue
Asset base roll-forward and total revenue
Slide 19: Total revenue
Total revenue • Reference tariffs for an access arrangement are calculated from the total of the costs expected to be incurred by an efficient service provider. • This total of the costs expected to be incurred is called the building block total revenue. • The building blocks of total revenue are: •
Slide 20: Total revenue
Total revenue • We have used the AER’s Post-tax Revenue Model (the gas transmission version released earlier this month) to calculate total revenue. • The key inputs to the Post-tax Revenue Model are: • Capital base at the beginning of the access arrangement period (1 July 2021) • Forecast CAPEX • F
Slide 21: Roll forward model
Roll forward model • The Roll Forward Model takes, as its starting point, the opening capital base – as approved by the AER in its last Amadeus decision – at the start of the current access arrangement period. • CAPEX for the current period is added to the capital base. • Regulatory depreciation, ca
Slide 22: Opening capital base July 2021 ($ million, nominal)
Opening capital base 1 July 2021 ($ million, nominal) 2016-17 2017-18 2018-19 2019-20 2020-21 Opening capital base 111.0 115.1 116.6 120.1 123.9 Actual/estimated CAPEX 5.4 2.8 5.6 5.8 4.5 Regulatory depreciation -1.3 -1.3 -2.1 -2.0 -2.2 Adjustments 0.0 0.0 0.0 0.0 0.0 End of year asset value 115.1 1
Slide 23: Applying the Post-tax Revenue Model
Applying the Post-tax Revenue Model • The Roll Forward Model provides the opening capital base. • Our forecast CAPEX for the access arrangement period is added to the opening capital base. • Regulatory depreciation, calculated by the Post-tax Revenue Model using the indexed straight line method, is
Slide 24: Capital base and return 2021-26 ($ million, nominal)
Capital base and return 2021 – 26 ($ million, nominal) 2021-22 2022-23 2023-24 2024-25 2025-26 Opening capital base 126.2 127.1 127.1 127.3 127.8 Forecast CAPEX 2.8 2.0 2.5 2.8 2.7 Regulatory depreciation -1.8 -2.1 -2.3 -2.3 -1.2 Adjustments 0.0 0.0 0.0 0.0 0.0 End of year asset value 127.1 127.1 12
Slide 25: Total revenue 2021-26 ($million, nominal)
Total revenue 2021- 26 ($million, nominal) 2021-22 2022-23 2023-24 2024-25 2025-26 Return on capital base 6.1 6.1 6.1 6.1 6.1 Regulatory depreciation 1.8 2.1 2.3 2.3 1.2 Cost of corporate income tax 0.0 0.0 0.0 0.0 0.0 Efficiency gain or loss 2.7 1.8 -1.0 -0.2 0.0 Forecast OPEX 12.7 10.6 11.0 11.3 1
Slide 26: Total revenue is declining
Total revenue is declining Total revenue 2016-17 to 2020-21 and 2021-22 to 2025-26 $ million, June 2021 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 Return on Depreciation Cost of tax Efficiency Forecast Total capital base gain or loss OPEX revenue 2016-16 to 2020-21 2021-22 to 2025-26 26
Slide 27: Wrapping up and next steps
Wrapping up and next steps 27
Slide 28: Next steps
Next steps • We need to reschedule the second part of Roundtable 3 to date to be advised. • At Roundtable 3b we will talk about • Demand forecasts • Drafting of revised Access Arrangement • Reference tariffs • Queuing policy, capacity trading, extensions and expansions. • We are aiming to hold one m
Slide 29: Wrap up
Wrap up • Summary of the discussion today • Invite comments from participants Thank you for participating… especially in light of the current difficult circumstances 29
Slide 30: For further information contact
For further information contact: Or visit the APA website: John Williams apa.com.au Manager Regulatory +61 8 6189 4594 [email protected] Or Amadeus engagement webpage: apa.com.au/about-apa/our- Nives Matosin projects/amadeus-gas-pipeline- Manager Regulatory access-arrangement/. +61 2 9693 008