Tarcoola to Darwin rail infrastructure: Review of asset valuation methodologies for periodic revenue reviews
- Project Released: 7 Nov 2022
- Project Closes: Jun 2024
- Contact: Mark Caputo
The Commission is reviewing the asset valuation methodologies that could be adopted for the purposes of periodic reviews of revenues. Clause 50 of the AustralAsia Railway (Third Party Access) Code (Code) requires that the Commission review, in five-year intervals, below-rail freight revenues where no sustainable competitive prices exist. A key component of those periodic reviews of revenues is the value attributed to the rail infrastructure.
This review of asset valuation methodologies is intended to allow all stakeholders the opportunity to submit evidence and views on the topic of asset valuation methodologies and their application in future reviews of revenues. The timing of any potential change to asset valuation methodology will be considered..
Current status is Draft
The Commission’s draft finding is that a Depreciated Optimised Replacement Cost (DORC) asset valuation methodology will be applied for the purposes of subsequent Clause 50 periodic reviews of revenues until there are compelling reasons for the Commission to consider that a DORC methodology is no longer appropriate to determine efficient costs. A DORC asset valuation methodology is considered to be efficient, consistent with arbitration processes in the Code and regulatory practice in Australia, and practicable for the purposes of undertaking the maximum revenue assessment.
Alongside the application of a DORC value for subsequent Clause 50 periodic review of revenues, the Commission’s draft finding is that it intends to present sensitivity analysis of the maximum revenue assessment had alternative valuation approaches been applied (insofar as alternative valuations are available and can be estimated). Further, the Commission will continue to closely assess cost allocations across access holders and rail line segments.
The Commission welcomes stakeholder submissions on the draft report by 27 October 2023.