Read the resources we produce on the Port of Melbourne's compliance with pricing regulations.
Port of Melbourne compliance with pricing regulations
Overview
Our role
The Port of Melbourne must submit a tariff compliance statement to us annually outlining how it has demonstrated compliance with a pricing order (legislation that regulates how the Port of Melbourne sets its prices). Every five years we are required to assess whether there has been any significant and sustained non-compliance with the pricing order.
Between five-yearly reviews, we provide interim commentaries on the tariff compliance statements to guide the Port of Melbourne and identify important issues impacting port users and other stakeholders.
Our commentaries are not an assessment of the Port of Melbourne’s compliance with the pricing order, nor do they provide findings on whether any non-compliance was significant and sustained.
Read more about our role in administering the Port of Melbourne pricing order.
Inquiry into compliance with the pricing order
We have conducted the first of our five-yearly reviews into the Port of Melbourne's compliance with the pricing order.
Tariff compliance statement 2023-24
The Port of Melbourne has provided its tariff compliance statement for prices that apply for prescribed services from 1 July 2023 to 30 June 2024. Public and confidential appendices and supporting information was submitted, such as its regulatory model and consultant reports.
We have reviewed this information to prepare our interim commentary. See the Resources tab for more.
Our commentary on the Port of Melbourne's tariff compliance statement
In December 2023, we published our interim commentary on the Port of Melbourne's tariff compliance statement (the statement) for prices that it will charge for prescribed services.
Our preliminary views on the statement are:
- The Port's five-year regulatory period, spanning 2023–24 to 2027–28, would better serve the long term interests of port users.
- The Port has detailed improvements to estimating operating expenditure, its capital planning, project management and governance practices.
- Improved engagement processes are consistent with effective consultation practices, and the Port appears to have considered port users comments in decision making.
- The pricing order may not permit use of deferred depreciation as a balancing item via the proposed uncertain and unforeseen event mechanisms, to recover expenditure amounts assessed to be prudent and efficient on an ex-post basis.
- The Port's proposed uncertainty mechanisms for recalculating its aggregate revenue requirement at the end of the five-year period may not be permitted by the pricing order. The exception being applying a trailing average cost of debt approach.
- The Port needs to clarify its gearing assumptions when estimating the cost of capital.
Our interim commentary outlines the information the Port should supply in future tariff compliance statements to facilitate our next five-yearly compliance review. An errata was issued in respect of the CEPA report provided to the commission in November 2023 to correct for minor typos and an error in a table.