Australia: Recent Tribunal Decisions on Review of Australian Energy Regulator's Price Review

Last Updated: 19 December 2010
Article by Fleur Gibbons, Geoff Taperell and Simon Uthmeyer

On 13 October 2010 the Australian Competition Tribunal (Tribunal) published reasons for the decisions it made on 30 September 2010 in review proceedings by ETSA Utilities (ETSA) and Ergon Energy Corporation Limited (Ergon Energy) of electricity distribution price review determinations by the Australian Energy Regulator (AER). The ETSA decision concerned the AER's rejection of ETSA's claim for an addition to be made to its opening regulatory asset base in respect of easements. The Ergon Energy decision dealt with the AER's decision to remove the 'other one-off' costs component from the control mechanism formula Ergon Energy proposed for calculating its price for quoted services.

The decisions are interim decisions in the sense that the Tribunal has decided that the AER has fallen into error in particular aspects of the relevant price review determinations but is seeking further information to assist it in making its determination, in which it will make orders to address those AER errors.

Who is affected and how are these decisions relevant?

These decisions are particularly relevant to regulated network service providers in the electricity industry and pipeline service providers in the gas industry. Regulated network service providers in the electricity industry can seek leave of the Tribunal to apply for review of a network revenue or pricing determination made by the AER on the grounds contained in the National Electricity Law. Pipeline service providers can seek leave of the Tribunal to apply for review of an applicable access arrangement decision made by the AER on the grounds contained in the National Gas Law. The regulatory framework governing merits review by the Tribunal of an applicable access arrangement decision by the AER established by the National Gas Law, including in particular the grounds for review, is substantively similar to that governing merits review by the Tribunal of a network revenue or pricing determination under the National Electricity Law.

These decisions are examples of the Tribunal:

  • utilising the exception to the limitation on the material it can consider in a review of an AER determination or decision established by both the National Electricity Law and the National Gas Law;
  • finding that the AER had incorrectly exercised its discretion by not considering material submitted by an electricity distributor in sufficient detail having regard to the circumstances; and
  • finding that the AER had made an error of fact by not making further enquiries where an electricity distributor had provided sufficient information that would have necessitated further enquiry.

In addition, in the Ergon Energy decision, the Tribunal commented on the critical role service providers play in providing information to the AER to assist it to make a network revenue or pricing determination (or, by analogy, an applicable access arrangement decision) that reflects the national electricity objective and the revenue and pricing principles established by the National Electricity Law (or, by analogy, the national gas objective and the revenue and pricing principles established by the National Gas Law).

Material before the Tribunal on review

In a review under the National Electricity Law or the National Gas Law, the Tribunal faces a limitation on the material that it can consider. The information the Tribunal can consider can be broadly described as information before the AER in making its regulatory decision (including, for example, submissions to the AER and reports/materials relied on by the AER in making the decision), the AER's reasons for the decision, the application to the Tribunal for review and submissions in support of that application.

There is, however, an exception to this limitation - where the Tribunal considers a ground of review has been established, the Tribunal can allow new information or material to be submitted if it would assist it on any aspect of the determination to be made, and was not unreasonably withheld from the AER when it was making the regulatory decision under review.

ETSA Decision

ETSA provides electricity distribution network services in South Australia. The Tribunal decided that a ground of review had been established in relation to the AER's rejection of ETSA's claim for an addition to be made to its opening regulatory asset base (RAB) in respect of easements extant as at 1 July 1999.

ETSA claimed that the AER had:

  • exercised its discretion incorrectly and made an unreasonable decision on the value of easements in the opening RAB; and
  • made errors of fact in respect of the value of easements in the opening RAB that were material to its decision.

ETSA sought an adjustment to the opening RAB as at 1 July 2005 of $116,161,569.

There was a threshold issue before the Tribunal of whether the AER had the power to make an adjustment to ETSA's opening RAB. The Tribunal decided this issue in the affirmative.

The Tribunal then turned to consider the substantive question. The Tribunal found that the AER did not consider the valuation submitted to it in detail. Rather, the Tribunal adopted the valuation of $6 million by the Essential Services Commission of South Australia (ESCOSA) in its 2005-2010 price determination (prior to the AER, ESCOSA was responsible for determining ETSA's revenue).

The Tribunal decided that the AER's failure to consider the valuation in detail was an incorrect exercise of discretion because:

  • the valuation figure was only a partial value of the relevant easements; and
  • ESCOSA's analysis was largely in response to the deprival valuation methodology advanced by ETSA at that time and ETSA was now advancing a different methodology for valuing easements being an index historical cost methodology.

The Tribunal directed the AER to file and serve any report addressing the easement estimates relied on by ETSA by 5 November 2010 and gave ETSA the ability to respond to that report by 17 November 2010. On 22 November 2010, the Tribunal ordered that the AER's final determination be varied so that:

  • the opening RAB at 1 July 2005 (including alternative control metering services) to apply to ETSA is $2,614,997,066; and
  • the opening RAB at 1 July 2010 for standard control services to apply to ETSA is $2,899,972,375 (including the original allowance by the AER of $6 million indexed).

Ergon Energy Decision

Ergon Energy provides electricity distribution network services in Queensland. The Tribunal decided that a ground of review had been established in relation to the AER's removal of the 'other one-off' costs component from the control mechanism formula Ergon Energy proposed to calculate its price for quoted services during the 2010-2015 regulatory period.

The AER's decision had the result that Ergon Energy could not include in a price for a quoted service costs such as the hire or supply of any additional equipment, assets or labour that may be required to deliver the service. Those costs could add up to more than $60 million over the five year regulatory period.

The Tribunal found that:

  • the AER made an error of fact in finding that Ergon Energy's costs would not be efficiently incurred in delivering quoted services. This was a material fact and, but for that error, the AER's decision on 'other costs' might have been different; and
  • the AER made an error of fact in finding that Ergon Energy did not provide any information that supported its contention that 'other costs' include the hire or supply of equipment, assets or labour and not just contingency costs. The Tribunal found that Ergon Energy provided sufficient information which should have led the AER to make further enquiries as to 'other costs'. The Tribunal noted that Ergon Energy had invited the AER to ask it any questions it might have about the information it had provided.

The Tribunal did, however, note that Ergon Energy had a 'critical role' in providing information to the AER to assist in making a distribution determination. Since Ergon Energy had failed to do this in respect of 'other costs', the Tribunal could not characterise the AER's decision as unreasonable. Even so, the AER should have made further enquiries of Ergon Energy.

The Tribunal has ordered that the AER file and serve by 8 December 2010 a report addressing the manner in which 'other costs' incurred in providing Ergon Energy's quoted services can be subjected to a price cap form of control, and the inclusion of other costs that are subject to a price cap form of control in the formula for calculating Ergon Energy's price for quoted services. The AER should prepare the report after Ergon Energy has made submissions to the AER in respect of the 'other costs' price cap mechanism and the AER has consulted with Ergon Energy on that mechanism.

The Tribunal gave Ergon Energy on opportunity to respond to the AER's report by 15 December 2010 and adjourned the application to a date to be fixed. It seems likely there will be a further hearing before the Tribunal makes its decision.


The decisions considered above are examples of the Tribunal taking a proactive role in its review of decisions by regulators. The Tribunal's use of the exception to the limitation on the material it can consider in a review of a determination (in these cases by requesting the AER to provide reports on particular matters) shows that it views its role as to make a final binding decision on review, which if required varies the regulator's final determination. The alternate, less active, course would be for the Tribunal, if it found error with the regulator's decision, to remit the matter to the regulator for it to vary its decision having regard to any direction or recommendation of the Tribunal. However, it is clear that the Tribunal considers itself equipped to make decisions on how the regulator's decision should be varied, rather than to remit matters to the regulator. By taking the more proactive role on review the Tribunal is truly stepping into the shoes of the regulator.

© DLA Phillips Fox

DLA Phillips Fox is one of the largest legal firms in Australasia and a member of DLA Piper Group, an alliance of independent legal practices. It is a separate and distinct legal entity. For more information visit

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.