Port of Melbourne compliance with pricing regulations

Our role

Each year, the Port of Melbourne must submit a tariff compliance statement to us. These statements outline how the Port of Melbourne 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.

Outside of these five-yearly reviews, we provide interim commentaries on the tariff compliance statements in order to provide guidance to the Port of Melbourne, as well as identify issues of importance to 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. 

Tariff compliance statement 2022-23

The Port of Melbourne has provided its tariff compliance statement for prices that apply from 1 July 2022. The Port of Melbourne's submission included both public and confidential information across a number of appendices with supporting information, such as its regulatory model and consultant reports.

We have prepared our interim commentary on the Port of Melbourne's 2022-23 tariff compliance statement based on both public and confidential information provided in its submission. You can read the Port of Melbourne's public submissions and our interim commentary under the Resources tab.

Our commentary on the Port of Melbourne's tariff compliance statement

In December 2022, we published our interim commentary on the Port of Melbourne's tariff compliance statement for prices that apply from 1 July 2022.

Our preliminary views on the Port of Melbourne's compliance with the pricing order in setting its tariffs for 2022-23 are:

• the approach to calculating the weighted average cost of capital appears to generally reflect well-accepted approaches. The port has not used country filters to estimate its beta for 2022-23 which would have reduced the weighted average cost of capital estimate from 8.99 per cent to 8.82 per cent. 
• the port's capital planning processes appear to be appropriate for its proposed capital works. However, its operating expenditure forecasts are based on an actual expenditure benchmark that has not yet been established as prudent and efficient.
• the port's proposed tilted annuity depreciation methodology post tariffs adjustments limit period may minimise future price volatility.  
• the engagement program and processes appear to be consistent with generally accepted practices for effective consultation. 
• the port's proposal to adopt a multi-year regulatory period from 2023-24 would promote better pricing outcomes for port users.