Regulator provides feedback on port pricing methods

Victoria's independent economic regulator has provided informal feedback on how the Port of Melbourne set its regulated prices for the 2022–23 financial year.

In its interim commentary on the port’s price setting methodology, the Essential Services Commission’s feedback focused on the port’s approach to estimating its weighted average cost of capital, forecasting expenditure, depreciation methodology and stakeholder engagement.

The commission noted general improvement in these areas since last year’s inquiry into the port’s compliance with the price-setting rules, which found ‘significant and sustained’ non-compliance in a number of respects.

The commission is responsible for administering regulations that govern how the port recovers its costs from port users. Each year the port is required to submit a statement on how its tariffs comply with the regulations.

We are not required to comment on the port’s annual tariff compliance statement, but we provide informal feedback to the port and other interested stakeholders.

Interim commentaries form part of an ongoing discussion with the port and stakeholders on how we view the regulations affecting the port’s price setting process.

The port then has the opportunity to clarify and provide further justifications for some of its price setting methods in future tariff compliance statements.

The commission has also published its latest statement of regulatory approach which provides the port with guidance on how to meet its legal obligations under the price-setting regulations contained in the pricing order.