Photo by: Duane Daws
The Ports Regulator of South Africa has issued a multiyear tariff methodology to govern the National Ports Authority’s (NPA’s) tariff setting process in an attempt to create more regulatory certainty.
The regulator said the tariff methodology, while retaining the fundamental elements of previous determinations, would be applicable to the 2015/16, 2016/17 and 2017/18 tariff years, as opposed to only one year, improving the level of transparency and consistency in the tariff setting process.
While a single methodology would be used for the entire period, the multiyear tariff application would have different calculations for each tariff year in the period, consisting of forecasts and calculations of each of the components of the required revenue approach, it explained.
“The guidelines within the regulatory manual for the tariff years 2015/16 to 2017/18 will assist the NPA in submitting an application that will reduce regulatory uncertainty by narrowing the difference between what is requested by the NPA and subsequently granted by the regulator,” the regulator said.
It added that it would, after assessing the NPA application and taking into account all public comments, publish a record of decision with a fixed tariff for the 2015/16 tariff year and indicative tariffs for the 2016/17 and 2017/18 tariff years.
“The regulator is of the view that this will create greater certainty from a planning and investment perspective, both for the NPA, as well as for port users over the next three years.”
The regulator would, however, allow for the yearly review and adjustment of tariffs within the three-year period, as opposed to fixing the prices for the period, as this would protect users from possible large step changes in the tariff.
“In addition, unlike other regulated industries, like electricity or oil and gas pipelines, there are large variations in the users and usage of port infrastructure and services, and an annual review allows adjustments in prices to be more efficiently and appropriately allocated/distributed to users than an adjustment after three years,” the regulator explained.