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
Each year, the Port of Melbourne must submit a tariff compliance statement to us. The port’s statements outline how it has demonstrated compliance with a pricing order (legislation that regulates how the port 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 port's compliance statements in order to provide guidance to the port, as well as identify issues of importance to other stakeholders. Our commentaries are not an assessment of the port’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 2020-21
The Port of Melbourne operator has provided a submission for us to prepare our interim commentary on their tariff compliance statement for prices that apply from 1 July 2020. The port's tariff compliance statement submission also included a number of appendices with supporting information, such as its regulatory model and consultant report on the rate of return.
We have prepared our interim commentary, based on both public information (published here) and confidential information provided with the Port of Melbourne's submission.
Our commentary on the Port of Melbourne's tariff compliance statement
In December 2020, we published our interim commentary on the Port of Melbourne's tariff compliance statement for prices that apply from 1 July 2020.
Following our consideration of the port's tariff compliance statement, our main observations are:
- The port’s weighted average cost of capital (WACC) has reduced over the last four years but remains relatively high compared to regulated businesses in the same sector. We estimate a lower WACC range than the ports estimate of 8.93 per cent.
- The port should provide more clarity on how it will unwind deferred depreciation and manage tariff shock on port users post tariff adjustment limit (TAL) period.
- The port should consider a longer regulatory period to increase certainty on pricing outcomes.
- The port’s engagement program with port users and other stakeholders needs further work.
Read more about our role in administering the Port of Melbourne pricing order.