Common use of Determination of Reference Tariffs Clause in Contracts

Determination of Reference Tariffs. ‌ Reference Tariffs have been determined based on a revenue requirement that uses a ‘building block’ or ‘cost of service’ approach. This approach provides for total revenue to be calculated on the basis of a rate of return on the Capital Base plus depreciation plus non-capital costs associated with operating the Network plus the cost of corporate income tax plus/minus any amounts earned through incentive arrangements. A CPI-X approach to determining Haulage Reference Xxxxxxx has been adopted, using a ‘tariff basket’ approach to price control. To ensure price stability, Reference Tariffs for the Access Arrangement Period have been set on the basis of a smoothed revenue, so that the Reference Tariffs move in a uniform and consistent manner. Reference Tariffs are designed to meet the objectives of the Rules. A key objective of the Rules is to recover the efficient costs of providing the Reference Services, with emphasis on the safety and integrity of the Network, while providing certainty to Users and signaling appropriate development of the market through extension of the Network. The Reference Tariffs are designed to be cost reflective to the extent possible, so that Reference Tariffs recover the efficient cost of providing the relevant Reference Service. The revenues associated with the Reference Tariffs also reflect efficient pricing principles, in that the revenue for each Reference Tariff has been set between incremental and stand-alone costs.

Determination of Reference Tariffs. ‌ Reference Tariffs have been determined based on a revenue requirement that uses a ‘building block’ or ‘cost of service’ approach. This approach provides for total revenue to be calculated on the basis of a rate of return on the Capital Base plus depreciation plus non-capital costs associated with operating the Network plus the cost of corporate income tax plus/minus any amounts earned through incentive arrangements. A CPI-X approach to determining Haulage Reference Xxxxxxx has been adopted, using a ‘tariff basket’ approach to price control. To ensure price stability, Reference Tariffs for the Access Arrangement Period have been set on the basis of a smoothed revenue, so that the Reference Tariffs move in a uniform and consistent manner. Reference Tariffs are designed to meet the objectives of the Rules. A key objective of the Rules is to recover the efficient costs of providing the Reference Services, with emphasis on the safety and integrity of the Network, while providing certainty to Users and signaling appropriate development of the market through extension of the Network. The Reference Tariffs are designed to be cost reflective to the extent possible, so that Reference Tariffs recover the efficient cost of providing the relevant Reference Service. The revenues associated with the Reference Tariffs also reflect efficient pricing principles, in that the revenue for each Reference Tariff has been set between incremental and stand-alone costs.