NECAP expenditure: WQIP Phase 2

Past review
Final report

On 16 February 2016, having received no submissions on either the NECAP application or the report provided by Flagstaff Consulting, we approved DBCT Management’s WQIP Phase 2 NECAP application, increasing the annual revenue requirement (ARR) to $260.0 million and terminal infrastructure charge (TIC) of $3.1021 per tonne, effective from 1 July 2015.

Our final decision is outlined in the letter we provided DCBT Management, located below.

On 16 November 2015, we received an application from DBCT Management for non-expansion capital expenditure (NECAP) for Phase 2 of the DBCT water quality improvement project (WQIP).

DBCT Management sought our approval to include $14.6 million into its regulated asset base (RAB).  DBCT Management provided modelling, calculating that the effect of the application would be to increase the annual revenue requirement (ARR) and terminal infrastructure charge (TIC) by $1.4 million and $0.0168 respectively, effective 1 July 2015.

As this expenditure means that total NECAP for 2014–15 would exceed the annual limit of $20 million that can be approved under the streamlined process, we assessed DBCT Management’s proposal for prudency in accordance with the (non-streamlined) requirements in cl. 12.10(c) of the 2010 DBCT access undertaking.

In accordance with cl. 12.10(c)(10) of the access undertaking, Flagstaff Consulting was engaged to provide independent advice as to the prudency of the WQIP Phase 2 project.