Draft Decision - TAHE's compliance for Hunter Valley Coal Network 2020-21 - February 2022

We found that for the Hunter Valley coal network, TAHE under-recovered its costs of servicing the combined coal and freight group rail users of the network by $2.2 million in 2020-21, after reducing charges for coal customers by 20% in 2020-21. Railcorp (TAHE’s predecessor organisation) had previously over-recovered $11 million from these access seekers. TAHE’s under-recovery in 2020-21 has reduced this cumulative over-recovery balance to $8.8 million as at June 2021.

Our draft decisions are that:

• TAHE has complied with the ceiling test for the Hunter Valley Coal network, as it received less revenue than the economic costs of providing the infrastructure for each group of access seekers.
• TAHE has complied with the asset valuation roll forward principles in the NSW Rail Access Undertaking in 2020-21 for the Hunter Valley coal network. These are used to calculate TAHE’s economic costs.

We made draft recommendations that:

• TAHE makes a plan to return the unders and overs account to zero within 12 months and maintain a balance within 5% of forecast revenue (while attempting to return the balance to $0 each year), consistent with clause 4(e) of Schedule 3 of the Undertaking.
• TAHE establishes an unders and overs account policy in consultation with access seekers and submits it to IPART for approval as required under clause 4(f) of Schedule 3 of the Undertaking within 12 months.