Port of Melbourne compliance with pricing regulations

Tariff compliance statement 2019-20

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 2019. 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 are preparing our interim commentary, based on both public information (published here) and confidential information provided with the Port of Melbourne's submission, which we intend to publish in the last quarter of 2019.

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 important issues 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.

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

In October 2018, we published our interim commentary on the Port of Melbourne's tariff compliance statement for prices that apply from 1 July 2018.

Following our consideration of the port's tariff compliance statement, we have the following main observations:

• the port's rate of return on capital appears high and requires further justification
• the port needs to clarify whether it is including depreciation and contract revenues in its aggregate revenue requirement
• the port should provide further justification for some detailed elements of its tariff calculations
• the port's modelling of asset values is complex and should be more transparent
• some areas of the port's statement require more detailed supporting information.

Read more about our role in administering the Port of Melbourne pricing order.