Review of mechanism to identify and assign Capacity losses

Under Section 5.8 of the 2012 HVAU, ARTC undertook a review of the policy and processes for identifying and allocating losses of Capacity caused by Access Holders and their Operators and potential incentive mechanisms to minimise such losses where they have a material impact on Capacity or Coal Chain Capacity or the Capacity entitlements of Access Holders, including those processes outlined in clause 11.6 of the Indicative Access Holder Agreement. ARTC carried out this review in consultation with the Hunter Valley Coal Chain Coordinator.

After confirming that the HVCCC had not agreed to conduct the industry wide review as contemplated at Section 5.8 of the HVAU, ARTC invited, on 15 October 2012, the HVCCC, Access Holders and other Hunter Valley Coal Chain service providers to:

  • provide their views of whether particular actions or omissions of Access Holders or their Operators (such as cancellation of scheduled Services) have a material impact on Capacity, Coal Chain Capacity or the Capacity entitlement of Access Holders; and
  • submit proposals for a suitable framework to address any adverse impact on Capacity caused by such actions or omissions including any rules for the allocation of losses of Capacity to the responsible Access Holder.

As part of that invitation, ARTC provided a consultation document (below) for the consideration of stakeholders in preparing submissions. Submissions were sought from stakeholders by 7 December 2012.

Number Title Effective Posted
Capacity Loss Review Discussion Paper 21 Feb 2013 21 Feb 2013

Submissions arising from ARTC’s consultation are provided below, to the extent that publishing has been permitted by the respective stakeholder.

Number Title Effective Posted
Asciano 21 Feb 2013 21 Feb 2013
Aurizon 21 Feb 2013 21 Feb 2013
Centennial Coal 21 Feb 2013 21 Feb 2013
Coal & Allied 21 Feb 2013 21 Feb 2013
Peabody 21 Feb 2013 21 Feb 2013
PWCS 21 Feb 2013 21 Feb 2013
Vale 21 Feb 2013 21 Feb 2013
Xstrata 21 Feb 2013 21 Feb 2013

In accordance with Section 5.8(c) of the HVAU, ARTC has in good faith considered any proposals arising from the submissions and proposals provided to ARTC. ARTC has reasonably determined that:

  • no proposal received (including a proposal which has been amended following consultation with ARTC and the HVCCC), meets all of the following criteria:
    • the proposal, if adopted, would be likely to have demonstrably positive benefits in increasing the Available Capacity and allocating the impact of an event causing a Capacity shortfall to the Access Holder causing the incident or event leading to the Capacity shortfall;
    • the anticipated benefits of the proposal outweigh the potential detriments of the proposal including the costs associated with implementation and monitoring of the proposal and an increase in the likelihood of disputes in assigning Capacity losses among Hunter Valley Coal Chain participants; and
    • the proposal has the support of the HVCCC and the broad support of Hunter Valley Coal Chain participants including Access Holders and the Hunter Valley Coal Chain service providers.

As such, ARTC considers that it is not required under Section 5.8(d) of the HVAU to submit a proposal, including supporting documentation to the ACCC and seek the approval of the ACCC to vary the HVAU to provide for the adoption of a proposal.

Number Title Effective Posted
Capacity Loss Review Report 27 Jun 2013 27 Jun 2013

Notwithstanding that no stakeholder proposal meets the requirements of Section 5.8(c) of the HVAU, ARTC recognises that:

  • the current mechanism contemplated under Clause 11.6 of the Indicative Access Holder Agreement (IAHA) is not an effective mechanism to provide an incentive to utilise capacity efficiently; and
  • significant increases in the efficient use of capacity could be achieved if an effective incentive mechanism covering both Access Holders and Train Operators was in place.

Therefore, subsequent to the receipt of stakeholder submissions, ARTC has been developing an alternative mechanism to that prescribed in Clause 11.6 of the IAHA, in consultation with the HVCCC. The alternative mechanism is based on concepts that were raised in the above Discussion Paper and builds on elements that received a degree of stakeholder support. It is ARTC’s intention to further develop and finalise the new alternative mechanism.

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