New Zealand Gazette – 2007 – No. 68

Page 1718

✨ Maui Pipeline Pricing Methodology



REGULATION 20: PRICING METHODOLOGY

5.1 Tariff methodology

The following methodology for setting tariffs is set out in Schedule 10 of the Maui Pipeline Operating Code (MPOC):

Maui Development Limited (MDL) will set the Transmission Charges in accordance with the standard practice adopted by utilities businesses in New Zealand.

Accordingly, MDL will recover the cost and return of capital as follows. MDL will

a) calculate the Maui Pipeline’s Optimised Deprival Value or Optimised Depreciated Replacement Cost and multiply this value by a nominal WACC, and then subtract any revaluation gains/losses on the asset ("Required Return");

b) calculate the return of capital based on the useful life of the asset ("Depreciation");

c) aggregate the Required Return and Depreciation to derive the "Required Revenue";

d) derive a GJ.km tariff ("Tariff 1"); and

e) apply Tariff 1 across the Maui Pipeline Shippers on the basis of quantity of Gigajoules of Gas transported multiplied by the distance of Gigajoules of Gas transported.

In any given year, in the event that MDL’s total revenues are more or less that its required revenue, then Tariff 1 may be adjusted for the following years in a manner that endeavours to reduce pricing volatility for Shippers.

The approach adopted by MDL to recover operating expenditure is to:

a) aggregate the Maui Pipeline’s operating costs ("Operational Expenditure");

b) allocate Operational Expenditure across every Gigajoule of Gas delivered from the Maui Pipeline.

In any given year, in the event that MDL’s total Operational Expenditure recovery is more or less that its required recovery, then Tariff 2 may be adjusted for the following years in a manner that endeavours to reduce pricing volatility for Shippers.

5.2 Tariffs

Tariff rates are posted on the OATIS website at https://www.oatis.co.nz/ in the Public Domain Information Exchange portion of the site. The tariffs set at the commencement of the open access regime on 1 October 2005 remained unchanged during 2006. They were:

| Tariff 1 (c/GJ.km) | 0.114900 |
| Tariff 2 (c/GJ) | 9.600000 |



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Online Sources for this page:

VUW Te Waharoa — PDF NZ Gazette 2007, No 68


Gazette.govt.nz — PDF NZ Gazette 2007, No 68




✨ LLM interpretation of page content

🌾 Financial and Efficiency Performance of Maui Pipeline (continued from previous page)

🌾 Primary Industries & Resources
Maui Pipeline, Pricing Methodology, Tariff Calculation, Transmission Charges, Capital Recovery, Operating Expenditure, Revenue Adjustment, Gigajoules of Gas, Distance-Based Tariff, Volatility Reduction