APA Group
On 2 July 2007, APA Asset Management was appointed the major subcontractor to Envestra. It operates, maintains and extends the gas distribution networks.
Envestra Limited
Envestra is paid by the retailers to transport gas through its networks to the retailers' customers. The tariffs are determined under the Access Arrangement for each of the Company's distribution networks. The terms of the service provided by Envestra to each retailer are set out in a Haulage Agreement. In addition, separate Haulage Agreements have been entered into with several large volume consumers.
Retailers
The retailers purchase gas from the Gas Producers and pay a fee to the Transmission Pipeline Operators to bring the gas to the various cities in which they operate. Envestra is paid a haulage fee (or tariff) to transport the gas through its distribution networks to the retailers' customers.
Operating and Management Agreements
Operating and Management Agreements have been entered into between Envestra and APA Asset Management. These agreements set out the terms and conditions on which APA will operate and manage Envestra's networks.
APA were appointed on 2 July 2007 to operate and manage the networks in accordance with legal and prudential standards, and to provide the services and functions described below and any other services agreed between the parties.
APA's obligations to Envestra include:
- Managing the haulage of gas through each network.
- Operating and maintaining each network.
- Planning, designing and constructing network extensions.
- Assisting Envestra with submissions to the national regulator.
- Assisting Envestra in promoting the use of natural gas.
- Preparing and settling with Envestra the budget for each financial year.
- Providing Envestra with regular information on financial and other management issues.
- Reading meters and billing retailers.
The relationship of APA to Envestra is that of independent contractor. Under the terms of the agreement Envestra pays to APA:
- All costs and disbursements reasonably incurred or outlaid by APA in the performance of its obligations under the agreement.
- A management fee of 3.0 per cent of total network revenue.
- Incentive bonuses in respect of a completed financial year for real reductions in:
- the average capital cost of connecting new consumer sites to the networks; and
- controllable costs per gigajoule of gas.
- The bonus is equal to one third of the reduction in costs from the immediately preceding financial year, after these costs have been adjusted for inflation.
- Costs and expenses incurred by APA consequent upon employees being made redundant.
APA must develop procedures, for approval by Envestra, in relation to billing, System Use Gas, fair market rental or value for APA's assets used for the services provided, key design parameters for any network and public relations activities. These procedures are in place.
Envestra must provide APA with access to pipelines and networks and relevant information needed for APA's reporting purposes.
Envestra has certain veto rights in respect of the engagement of APA's General Manager.
Envestra negotiates third party Access Arrangements with the assistance of APA.
There is provision for benchmarking of APA's costs where they exceed those allowed by the Regulator under third party Access Arrangements.
Haulage Agreements
Envestra has entered Haulage Agreements with retailers and certain large volume consumers operating in each of the Company's jurisdictions. The Haulage Agreements set out the terms and conditions under which Envestra provides its services to these entities.
Industry Support
Envestra has a direct interest in ensuring the growth of the natural gas market and in particular, purchases of gas appliances for domestic use.
APA manages various programs for Envestra aimed at increasing gas consumption.
For further information click here to go to Envestra's Sustainability Report.
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Earnings Revision – Year ended 30 June, 2010
