Multinet Gas

 

www.multinetgas.com.au


Multinet Gas (MG) distributes gas safely and efficiently to its 692,000 customers via a regulated network covering 1,860km² across Melbourne’s inner and outer east, the Yarra Ranges and South Gippsland.

MG’s network includes 9,866km of distribution mains and 164km of high pressure transmission pipelines.

Snapshot
Ownership interest 100%
Revenue ($ million) 202
EBITDA ($ million) 131
Regulatory reset date January 2018

Multinet Gas's latest results are contained in the latest Management Information Report.

Revenue streams

Approximately 90% of Multinet Gas’ total revenue comes from regulated distribution tariffs, charged to customers for connection to, and use of its distribution system. Growth in distribution revenue is driven by regulated tariff charges and volume growth.

Multinet Gas’ top 250 gas users collectively account for around only 1% of total distribution revenue. Therefore, there is minimal risk of a material negative impact on revenue from the loss of a major user. 

The regulatory price determinations, which regulate the majority of these revenues, are undertaken by the Australian Energy Regulator (AER) and apply for periods of five years.

Operating Initiatives

Pipeworks Replacement Program

Mulitnet Gas' Pipeworks Replacement Program is its largest running capex program. This 30 year initiative will replace older, low-pressure cast iron gas pipes with high pressure systems by 2033.

During the current 2013-2017 regulatory period, MG accelerated its rate of replacement to return the program to schedule. In April 2015, the program achieved a key milestone target of kilometres replaced, which resulted in it receiving AER approval for an intraregulatory period cost pass-through for the increased pipe replacement program. This resulted in a further approximate 1% increase in Multinet’s tariffs in each of calendar years 2016 and 2017.

Higgett

Multinet Gas is undertaking a $15 million reconfiguration of its network in the Highett area. The assets that will be relocated include transmission pressure pipeline and pressure regulation facilities supplying up to 100,000 customers.

Highett is a customer-initiated project for the Victorian Department of Treasury and Finance. The project is expected to be completed in late 2017.

Warburton Reticulation

Multinet Gas is extending its gas network to Warburton in the Yarra Ranges, as part of the Victorian Government’s ‘Energy for the Regions’ program.

The Victorian Government-subsidised Warburton extension project, valued at approximately $12 million, will involve extending the network to Warburton and reticulating the majority of the town of Warburton. Construction works began in early 2015 and are due to conclude by 2017.

The Warburton project follows the roll out of natural gas to other towns in the Yarra Ranges in 2005, which has seen more than 4,300 customers connected to natural gas in the region.

Railway Level Crossing Removal Alterations

The Victorian Government is undertaking a project to remove 50 railway level crossings to enhance overall safety at road/rail crossings. There are 26 railway level crossings located within Multinet Gas’ network. Multinet Gas currently has gas pipework infrastructure that utilises the rail crossing easements that will now need to be relocated as part of this government-funded capital works programs. To date Multinet Gas has been formally approached regarding 15 of these projects. The full program of works is expected to be completed by 2022.

Melbourne Metro Rail Tunnel

The construction of the Melbourne Metro Rail Tunnel will impact MG’s network in a number of locations. The business is currently in high level discussions with the Victorian government regarding design aspects for the relocation of Multinet Gas gas infrastructure and for its compensation for undertaking the work involved.

Regulation

MG’s current regulatory period covers the 2013–2017 period. The business is currently preparing its submission for the 2018 regulatory reset, which is expected to be lodged in December 2016. Similar to United Energy, Multinet Gas will propose a move from a price cap to revenue cap basis, thereby reducing the potential financial impact from changes in throughput.

The AER’s most recent benchmarking ranks MG in the top quartile of its peers in terms of operating efficiency. Given Multinet Gas and United Energy have a shared management team, the business transformation project that United Energy is currently undertaking is expected to also result in operational efficiencies for Multinet Gas.

Operational overview

 
Year to 30 June 2016 Year to 30 June 2015
Network connections
Tariff V residential 675,735 672,633
Tariff V business 15,737 16,114
Tariff D 270 266
Total 691,742 689,013
 
Usage - (TJ)
Residential
38,839 38,820
Commercial 5,220 5,364
Industrial 11,668 11,774
Total 55,727 55,958
 
Occupational health and safety
Lost time injuries 1.3 0.0
Total recordable injuries 8.7 3.3
Environmental
Scope 1 CO2-e emissions n/a 273,964 t

Financial summary

$ million 
Year to 30 June 2016 Year to 30 June 2015
Distribution revenue 183 175
Total revenue 203 184
EBITDA 131 122
Regulated Asset Base* 1,158 1,141
*As at 30 June    

Credit ratings

Rating levels as at 1 September 2016:

S&P BBB- (stable)
Moody’s Baa3 (stable)