Common use of Incentive Mechanism Clause in Contracts

Incentive Mechanism. An efficiency carryover mechanism will apply to operating expenditure. The incentive mechanism will operate in the following way: i the mechanism carries forward AGN’s incremental efficiency gains (or losses) for five years from the year those gains (or losses) occur; iii the annual carryover amounts are added to AGN’s total revenue in each year of the subsequent access arrangement period. If necessary, the annual efficiency gain (or loss) is carried forward into the access arrangement period commencing 1 July 2028 until it has been retained by the Service Provider for a period of five years. a The incremental efficiency gain (loss) for 2023/24 will be calculated using:: I2023/24 = (F2023/24 – A2023/24) – 2 × (FHY2023 – AHY2023) + (F2021 – A2021) where I2023/24 is the incremental efficiency gain (loss) for Regulatory Year 2023–24. F2023/24 is the approved forecast operating expenditure for Regulatory Year 2023–24. A2023/24 is the actual operating expenditure for Regulatory Year 2023–24. FHY2023 is the approved forecast operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023. AHY2023 is the actual operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023. F2021 is the approved forecast operating expenditure for Regulatory Year 2021. A2021 is the actual operating expenditure for Regulatory Year 2021. b Prior to the submission date for the Access Arrangement Period commencing 1 July 2028, actual operating expenditure data will be available for the regulatory year 2022. Where the Service Provider’s actual operating expenditure differs from the operating expenditure estimate used to calculate the efficiency carryover mechanism, a true-up will be made to account for the difference. The true-up for regulatory year 2022 will be: 𝑇2022 = −0.5 × [(𝐹2022 − 𝐴2022) − (𝐹2021 − 𝐴2021)] where: 𝑇2022 is the true-up for Regulatory Year 2022 𝐹2022 is the forecast operating expenditure for Regulatory Year 2022 𝐴2022 is the actual operating expenditure for Regulatory Year 2022 𝐹2021 is the forecast operating expenditure Regulatory Year 2021 𝐴2021 is the actual operating expenditure for Regulatory Year 2021 c Prior to the submission date for the Access Arrangement Period commencing 1 July 2028, actual operating expenditure data will be available for the six-month extension period from 1 January 2023 to 30 June 2023. Where the Service Provider’s actual operating expenditure differs from the operating expenditure estimate used to calculate the efficiency carryover mechanism, a true-up will be made to account for the difference. The true-up for the six-month extension period from 1 January 2023 to 30 June 2023 will be: 𝑇𝐻𝑌2023 = (𝐹𝐻𝑌2023 − 𝐴𝐻𝑌2023) − 0.5 × (𝐹2022 − 𝐴2022) where: 𝑇𝐻𝑌2023 is the true-up for the six-month extension period from 1 January 2023 to 30 June 2023 𝐹𝐻𝑌2023 is the forecast operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023 𝐴𝐻𝑌2023 is the actual operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023 𝐹2022 is the forecast operating expenditure Regulatory Year 2022 𝐴2022 is the actual operating expenditure for Regulatory Year 2022 The 𝑇𝐻𝑌2023 true-up amount will be applied as a revenue adjustment to Regulatory Year 2028–29 of the Access Arrangement Period commencing 1 July 2028. d The incremental efficiency gain (or loss) for 2024/25 to 2027/28 (inclusive) will be calculated using: Ii = (Fi - Ai) - (Fi-1 – Ai—1) where Ii is the incremental efficiency gain in year i of the Access Arrangement Period. Fi is the approved forecast operating expenditure in year i of the Access Arrangement Period. Ai is the actual operating expenditure in year i of the Access Arrangement Period. Fi-1 is the approved forecast operating expenditure in year i - 1 of the Access Arrangement Period. Ai—1 is the actual operating expenditure in year i - 1 of the Access Arrangement Period. e Actual operating expenditure in the final year 2027/28 of the Access Arrangement Period is to be estimated using: A*2027/28 = F2027/28 - (Fb – Ab) + non-recurrent efficiency gainsb where A*2027/28 is the estimate of operating expenditure for 2027/28. F2027/28 is the forecast operating expenditure for 2027/28. Fb is the approved forecast operating expenditure for the base year used to forecast operating expenditure in the Access Arrangement Period following this Access Arrangement. Ab is the actual operating expenditure for the base year used to forecast operating expenditure in the Access Arrangement Period following this Access Arrangement. non-recurrent efficiency gainsb is the adjustment made to base year operating expenditure used to forecast operating expenditure for the Access Arrangement Period expected to commence 1 July 2028 to account for operating expenditure associated with one-off factors. f To ensure efficiency gains or losses made in 2027/28 are retained for five years, operating expenditure for the access arrangement period commencing 1 July 2028 should be forecast in a manner consistent with the estimate for operating expenditure in 2027/28, A*2027/28, in paragraph (c) above. This provides the Service Provider the same reward had the expenditure level in 2027/28 been known. g The incremental efficiency gains (or losses) are carried over from year to year in real dollars to ensure that these gains (or losses) are not eroded by inflation. The price indices used in this calculation are to be consistent with those used to forecast operating expenditure for the Access Arrangement Period. h Increments or decrements from the summation of incremental efficiency gains or losses calculated in accordance with the approved incentive mechanism in the Access Arrangement Period will give rise to an additional ‘building block’ in the calculation of the Total Revenue amounts for each year of the subsequent Access Arrangement Period. i The following costs will be excluded from the operation of the efficiency carryover mechanism: i movements in provisions related to opex; ii any cost category that is not forecast using a single year revealed cost approach in the access arrangement period following this Access Arrangement Period (intended to commence 1 January 2023). These costs may include, debt raising costs, unaccounted for gas expenses and priority service program expenses and any abolishment service costs included as haulage reference service opex; iii any cost that the Regulator determines to exclude from the operation of the efficiency carryover mechanism in the 2023-28 period, which would not promote the National Gas Objective; and iv ancillary reference services. j The approved forecast operating expenditure amount for each year of the Applicable Access Arrangement Period will be adjusted to include any Determined Pass Through Amounts or other AER approved expenditure arising from Cost Pass Through Events which apply in respect of that year. k Where the Service Provider changes its approach to classifying costs as either capital expenditure or operating expenditure during the Access Arrangement Period, the Service Provider will report the actual operating expenditure, to align the accounting treatment of expenditure within a period with that in the approved expenditure for that period (reflecting the AER’s final decision on this access arrangement). l For the avoidance of doubt, the forecast expenditure amounts that are used as the basis for measuring efficiencies are equal to the approved forecast operating expenditure for that year (as shown in the table below). Noting that, for the purposes of calculating the carryover amount at the next revenue determination these values will be superseded by the operating expenditure values found in the most recent post- tax revenue model published by the Regulator (plus any other operating expenditure approved by the Regulator), subject to the exclusions in clauses 5.1(i)(i)-(iv).. Approved forecast operating expenditure for the efficiency carryover mechanism 2021 2022 Jan-Jun 2023 2023-24 2024-25 2025- 26 2026-27 2027-28 Approved forecast operating expenditure 65.5 66.4 39.1 91.8 94.0 93.6 95.0 93.2 $ Basis 2018-2022 GAAR ($2017) 2018-2022 GAAR ($2017) Half-Year Extension GAAR ($2022) July 2023-June 2028 GAAR ($2022-23)

Incentive Mechanism. ‌ An efficiency carryover mechanism will apply to operating expenditure. The incentive mechanism will operate in the following way: i the mechanism carries forward AGN’s incremental efficiency gains (or losses) for five years from the year those gains (or losses) occur; iii the annual carryover amounts are added to AGN’s total revenue in each year of the subsequent access arrangement period. If necessary, the annual efficiency gain (or loss) is carried forward into the access arrangement period commencing 1 July 2028 until it has been retained by the Service Provider for a period of five years. a The incremental efficiency gain (loss) for 2023/24 2023-24 will be calculated using:: I2023/24 = (F2023/24 – - A2023/24) – 2 × [(FHY2023 – - AHY2023) + - (F2022 - A2022)/2] – [(F2022 - A2022) - (F2021 – - A2021) )] where I2023/24 is the incremental efficiency gain (loss) for Regulatory Year 2023–242023/24. F2023/24 is the approved forecast operating expenditure for Regulatory Year 2023–242023/24. A2023/24 is the actual operating expenditure for Regulatory Year 2023–242023/24. FHY2023 is the approved forecast operating expenditure for the six-month extension period from 1 January 2023 Jan to 30 June Jun 2023. AHY2023 is the actual operating expenditure for Jan to Jun 2023. F2022 is the six-month extension period from 1 January 2023 to 30 June 2023approved forecast operating expenditure for 2022. A2022 is the actual operating expenditure for 2022. F2021 is the approved forecast operating expenditure for Regulatory Year 2021. A2021 is the actual operating expenditure for Regulatory Year 2021. b Prior to the submission date for the Access Arrangement Period commencing 1 July 2028, actual operating expenditure data will be available for the regulatory year 2022. Where the Service Provider’s actual operating expenditure differs from the operating expenditure estimate used to calculate the efficiency carryover mechanism, a true-up will be made to account for the difference. The true-up for regulatory year 2022 will be: 𝑇2022 = −0.5 × [(𝐹2022 − 𝐴2022) − (𝐹2021 − 𝐴2021)] where: 𝑇2022 is the true-up for Regulatory Year 2022 𝐹2022 is the forecast operating expenditure for Regulatory Year 2022 𝐴2022 is the actual operating expenditure for Regulatory Year 2022 𝐹2021 is the forecast operating expenditure Regulatory Year 2021 𝐴2021 is the actual operating expenditure for Regulatory Year 2021 c Prior to the submission date for the Access Arrangement Period commencing 1 July 2028, actual operating expenditure data will be available for the six-month extension period from 1 January 2023 to 30 June 2023. Where the Service Provider’s actual operating expenditure differs from the operating expenditure estimate used to calculate the efficiency carryover mechanism, a true-up will be made to account for the difference. The true-up for the six-month extension period from 1 January 2023 to 30 June 2023 will be: 𝑇𝐻𝑌2023 = (𝐹𝐻𝑌2023 − 𝐴𝐻𝑌2023) − 0.5 × (𝐹2022 − 𝐴2022) where: 𝑇𝐻𝑌2023 is the true-up for the six-month extension period from 1 January 2023 to 30 June 2023 𝐹𝐻𝑌2023 is the forecast operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023 𝐴𝐻𝑌2023 is the actual operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023 𝐹2022 is the forecast operating expenditure Regulatory Year 2022 𝐴2022 is the actual operating expenditure for Regulatory Year 2022 The 𝑇𝐻𝑌2023 true-up amount will be applied as a revenue adjustment to Regulatory Year 2028–29 of the Access Arrangement Period commencing 1 July 2028. d The incremental efficiency gain (or loss) for 2024/25 to 2027/28 (inclusive) will be calculated using: Ii = (Fi - Ai) - (Fi-1 – Ai—1) where Ii is the incremental efficiency gain in year i of the Access Arrangement Period. Fi is the approved forecast operating expenditure in year i of the Access Arrangement Period. Ai is the actual operating expenditure in year i of the Access Arrangement Period. Fi-1 is the approved forecast operating expenditure in year i - 1 of the Access Arrangement Period. Ai—1 is the actual operating expenditure in year i - 1 oc f the Access Arrangement Period. e Actual operating expenditure in the final year 2027/28 of the Access Arrangement Period is to be estimated using: A*2027/28 = F2027/28 - (Fb – Ab) + non-recurrent efficiency gainsb where A*2027/28 is the estimate of operating expenditure for 2027/28. F2027/28 is the forecast operating expenditure for 2027/28. Fb is the approved forecast operating expenditure for the base year used to forecast operating expenditure in the Access Arrangement Period following this Access Arrangement. Ab is the actual operating expenditure for the base year used to forecast operating expenditure in the Access Arrangement Period following this Access Arrangement. non-recurrent efficiency gainsb is the adjustment made to base year operating expenditure used to forecast operating expenditure for the Access Arrangement Period expected to commence 1 July 2028 to account for operating expenditure d associated with one-off factors. f To ensure efficiency gains or losses made in 2027/28 are retained for five years, operating expenditure for the access arrangement period commencing 1 July 2028 should be forecast in a manner consistent with the estimate for operating expenditure in 2027/28, A*2027/28, in paragraph (c) above. This provides the Service Provider the same reward had the expendite ure level in 2027/28 been known. g The incremental efficiency gains (or losses) are carried over from year to year in real dollars to ensure that these gains (or losses) are not eroded by inflation. The price indices used in this calculation are to be consistent with those used to forecast operating expenditure fof r the Access Arrangement Period. h Increments or decrements from the summation of incremental efficiency gains or losses calculated in accordance with the approved incentive mechanism in the Access Arrangement Period will give rise to an additional ‘building block’ in the calculation of the Total Revenue amounts for each year of the subseg quent Access Arrangement Period. i The following costs will be excluded from the operation of the efficiency carryover mechanism: i movements in provisions related to opex; ii any cost category that is not forecast using a single year revealed cost approach in the access arrangement period following this Access Arrangement Period (intended to commence 1 January 2023). These costs may include, debt raising costs, unaccounted for gas expenses and priority service program expenses and any abolishment service costs included as haulage reference service opex; iii any cost that the Regulator determines to exclude from the operation of the efficiency carryover mechanism in the 2023-28 period, which would not promote the National Gas Objective; and iv ancillary reference services. j The approved forecast operating expenditure amount for each year of the Applicable Access Arrangement Period will be adjusted to include any Determined Pass Through Amounts or other AER approved expenditure arising from Cost Pass Through Events which apply in respect of that year. k Where the Service Provider changes its approach to classifying costs as either capital expenditure or operating expenditure during the Access Arrangement Period, the Service Provider will report the actual operating expenditure, to align the accounting treatment of expenditure within a period with that in the approved expenditure for that period (reflecting the AER’s final decision on this access arrangement). l For the avoidance of doubt, the forecast expenditure amounts that are used as the basis for measuring efficiencies are equal to the approved forecast operating expenditure for that year (as shown in the table below). Noting that, for the purposes of calculating the carryover amount at the next revenue determination these values will be superseded by the operating expenditure values found in the most recent post- tax revenue model published by the Regulator (plus any other operating expenditure approved by the Regulator), subject to the exclusions in clauses 5.1(i)(i)-(iv).. Approved forecast operating expenditure for the efficiency carryover mechanism 2021 2022 Jan-Jun 2023 2023-24 2024-25 2025- 26 2026-27 2027-28 Approved forecast operating expenditure 65.5 66.4 39.1 91.8 94.0 93.6 95.0 93.2 $ Basis 2018-2022 GAAR ($2017) 2018-2022 GAAR ($2017) Half-Year Extension GAAR ($2022) :July 2023-June 2028 GAAR ($2022-23)

Incentive Mechanism. ‌ An efficiency carryover mechanism will apply to operating expenditure. The incentive mechanism will operate in the following way: i the mechanism carries forward AGNMultinet’sAGN’s incremental efficiency gains (or losses) for five years from the year those gains (or losses) occur; iii the annual carryover amounts are added to AGNMultinet’sAGN’s total revenue in each year of the subsequent access arrangement period. If necessary, the annual efficiency gain (or loss) is carried forward into the access arrangement period commencing 1 July 2028 until it has been retained by the Service Provider for a period of five years. a The incremental efficiency gain (loss) for 2023/24 will be calculated using:: I2023/24 = (F2023/24 – A2023/24) – 2 × (FHY2023 – AHY2023) + (F2021 – A2021) where I2023/24 is the incremental efficiency gain (loss) for Regulatory Year 2023–242023-24. F2023/24 is the approved forecast operating expenditure for Regulatory Year 2023–242023-24. A2023/24 is the actual operating expenditure for Regulatory Year 2023–242023-24. FHY2023 is the approved forecast operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023. AHY2023 is the actual operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023. F2021 is the approved forecast operating expenditure for Regulatory Year 2021. A2021 is the actual operating expenditure for Regulatory Year 2021. b Prior to the submission date for the Access Arrangement Period commencing 1 July 2028, actual operating expenditure data will be available for the regulatory year 2022. Where the Service Provider’s actual operating expenditure differs from the operating expenditure estimate used to calculate the efficiency carryover mechanism, a true-up will be made to account for the difference. The true-up for regulatory year 2022 will be: 𝑇2022 = −0.5 × [(𝐹2022 − 𝐴2022) − (𝐹2021 − 𝐴2021)] where: 𝑇2022 is the true-up for Regulatory Year 2022 𝐹2022 is the forecast operating expenditure for Regulatory Year 2022 𝐴2022 is the actual operating expenditure for Regulatory Year 2022 𝐹2021 is the forecast operating expenditure Regulatory Year 2021 𝐴2021 is the actual operating expenditure for Regulatory Year 2021 c Prior to the submission date for the Access Arrangement Period commencing 1 July 2028, actual operating expenditure data will be available for the six-month extension period from 1 January 2023 to 30 June 2023. Where the Service Provider’s actual operating expenditure differs from the operating expenditure estimate used to calculate the efficiency carryover mechanism, a true-up will be made to account for the difference. The true-up for the six-month extension period from 1 January 2023 to 30 June 2023 will be: 𝑇𝐻𝑌2023 = (𝐹𝐻𝑌2023 − 𝐴𝐻𝑌2023) − 0.5 × (𝐹2022 − 𝐴2022) where: 𝑇𝐻𝑌2023 is the true-up for the six-month extension period from 1 January 2023 to 30 June 2023 𝐹𝐻𝑌2023 is the forecast operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023 𝐴𝐻𝑌2023 is the actual operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023 𝐹2022 is the forecast operating expenditure Regulatory Year 2022 𝐴2022 is the actual operating expenditure for Regulatory Year 2022 The 𝑇𝐻𝑌2023 true-up amount will be applied as a revenue adjustment to Regulatory Year 2028–29 of the Access Arrangement Period commencing 1 July 2028. d The incremental efficiency gain (or loss) for 2024/25 to 2027/28 (inclusive) will be calculated using: Ii = (Fi - Ai) - (Fi-1 – Ai—1) where Ii is the incremental efficiency gain in year i of the Access Arrangement Period. Fi is the approved forecast operating expenditure in year i of the Access Arrangement Period. Ai is the actual operating expenditure in year i of the Access Arrangement Period. Fi-1 is the approved forecast operating expenditure in year i - 1 of the Access Arrangement Period. Ai—1 is the actual operating expenditure in year i - 1 of the Access Arrangement Period. e Actual operating expenditure in the final year 2027/28 of the Access Arrangement Period is to be estimated using: A*2027/28 = F2027/28 - (Fb – Ab) + non-recurrent efficiency gainsb where A*2027/28 is the estimate of operating expenditure for 2027/28. F2027/28 is the forecast operating expenditure for 2027/28. Fb is the approved forecast operating expenditure for the base year used to forecast operating expenditure in the Access Arrangement Period following this Access Arrangement. Ab is the actual operating expenditure for the base year used to forecast operating expenditure in the Access Arrangement Period following this Access Arrangement. non-recurrent efficiency gainsb is the adjustment made to base year operating expenditure used to forecast operating expenditure for the Access Arrangement Period expected to commence 1 July 2028 to account for operating expenditure associated with one-off factors. f To ensure efficiency gains or losses made in 2027/28 are retained for five years, operating expenditure for the access arrangement period commencing 1 July 2028 should be forecast in a manner consistent with the estimate for operating expenditure in 2027/28, A*2027/28, in paragraph (c) above. This provides the Service Provider the same reward had the expenditure level in 2027/28 been known. g The incremental efficiency gains (or losses) are carried over from year to year in real dollars to ensure that these gains (or losses) are not eroded by inflation. The price indices used in this calculation are to be consistent with those used to forecast operating expenditure for the Access Arrangement Period. h Increments or decrements from the summation of incremental efficiency gains or losses calculated in accordance with the approved incentive mechanism in the Access Arrangement Period will give rise to an additional ‘building block’ in the calculation of the Total Revenue amounts for each year of the subsequent Access Arrangement Period. i The following costs will be excluded from the operation of the efficiency carryover mechanism: i movements in provisions related to opex; ii any cost category that is not forecast using a single year revealed cost approach in the access arrangement period following this Access Arrangement Period (July 2028intended to commence 1 January 2023). These costs may include, debt raising costs, unaccounted for gas expenses and priority service program expenses and any abolishment service costs includeexpensesd as haulage reference service opex; iii any cost that the Regulator determines to exclude from the operation of the efficiency 2023–28 carryover mechanism in the 2023-28 period, which would not promote the National Gas Objective; and iv ancillary reference services. j The approved forecast operating expenditure amount for each year of the Applicable Access Arrangement Period will be adjusted to include any Determined Pass Through Amounts or other AER approved expenditure arising from Cost Pass Through Events which apply in respect of that year. k Where the Service Provider changes its approach to classifying costs as either capital expenditure or operating expenditure during the Access Arrangement Period, the Service Provider will report the actual operating expenditure, to align the accounting treatment of expenditure within a period with that in the approved expenditure for that period (reflecting the AER’s final decision on this access arrangement). l For the avoidance of doubt, the forecast expenditure amounts that are used as the basis for measuring efficiencies are equal to the approved forecast operating expenditure for tha, which exclude the costs listed in clause 5.1(g)(i)–(iiit year (as shown in the table below). Noting that, for the purposes of calculating the carryover amount at the next revenue determination these values will be superseded by the operating expenditure values found in the most recent post- tax revenue model published by the Regulator (plus any other operating expenditure approved by the Regulator), subject to the exclusions in clauses 5.1(i)(i)-(iv).. Approved forecast operating expenditure for the efficiency carryover mechanism 2021 2022 2025-Jan-Jun 2023 2023-24 2024-25 2025- 26 2026-27 2027-28 Approved forecast operating expenditure 65.5 69.5177.4 0 78.5870. 43 40.3245.4 1 89.5578.24 92.2277.96 92.3777.74 94.9577.1 0 94.7678.1 8 66.4 39.1 91.2018- 8 94.0 93.6 95.0 93.2 $2018- Basis 2018-2022 GAAR ($2017) 2018-2022 GAAR ($2017) Half-Year Extension GAAR ($2022) ) Exclusions debt raising costs debt raising costs debt raising costs debt, raising costs, ARS and Priority Service ProgramJuly 2023-June 2028 GAAR ($2022-23)

Incentive Mechanism. An efficiency carryover mechanism will apply to operating expenditure. The incentive mechanism will operate in the following way: i the mechanism carries forward AGN’s incremental efficiency gains (or losses) for five years from the year those gains (or losses) occur; iii the annual carryover amounts are added to AGN’s total revenue in each year of the subsequent access arrangement period. If necessary, the annual efficiency gain (or loss) is carried forward into the access arrangement period commencing 1 July 2028 until it has been retained by the Service Provider for a period of five years. a The incremental efficiency gain (loss) for 2023/24 will be calculated using:: I2023/24 = (F2023/24 – A2023/24) – 2 × (FHY2023 – AHY2023) + (F2021 – A2021) where I2023/24 is the incremental efficiency gain (loss) for Regulatory Year 2023–24. F2023/24 is the approved forecast operating expenditure for Regulatory Year 2023–24. A2023/24 is the actual operating expenditure for Regulatory Year 2023–24. FHY2023 is the approved forecast operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023. AHY2023 is the actual operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023. F2021 is the approved forecast operating expenditure for Regulatory Year 2021. A2021 is the actual operating expenditure for Regulatory Year 2021. b Prior to the submission date for the Access Arrangement Period commencing 1 July 2028, actual operating expenditure data will be available for the regulatory year 2022. Where the Service Provider’s actual operating expenditure differs from the operating expenditure estimate used to calculate the efficiency carryover mechanism, a true-up will be made to account for the difference. The true-up for regulatory year 2022 will be: 𝑇2022 = −0.5 × [(𝐹2022 − 𝐴2022) − (𝐹2021 − 𝐴2021)] where: 𝑇2022 is the true-up for Regulatory Year 2022 𝐹2022 is the forecast operating expenditure for Regulatory Year 2022 𝐴2022 is the actual operating expenditure for Regulatory Year 2022 𝐹2021 is the forecast operating expenditure Regulatory Year 2021 𝐴2021 is the actual operating expenditure for Regulatory Year 2021 c Prior to the submission date for the Access Arrangement Period commencing 1 July 2028, actual operating expenditure data will be available for the six-month extension period from 1 January 2023 to 30 June 2023. Where the Service Provider’s actual operating expenditure differs from the operating expenditure estimate used to calculate the efficiency carryover mechanism, a true-up will be made to account for the difference. The true-up for the six-month extension period from 1 January 2023 to 30 June 2023 will be: 𝑇𝐻𝑌2023 = (𝐹𝐻𝑌2023 − 𝐴𝐻𝑌2023) − 0.5 × (𝐹2022 − 𝐴2022) where: 𝑇𝐻𝑌2023 is the true-up for the six-month extension period from 1 January 2023 to 30 June 2023 𝐹𝐻𝑌2023 is the forecast operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023 𝐴𝐻𝑌2023 is the actual operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023 𝐹2022 is the forecast operating expenditure Regulatory Year 2022 𝐴2022 is the actual operating expenditure for Regulatory Year 2022 The 𝑇𝐻𝑌2023 true-up amount will be applied as a revenue adjustment to Regulatory Year 2028–29 of the Access Arrangement Period commencing 1 July 2028. d The incremental efficiency gain (or loss) for 2024/25 to 2027/28 (inclusive) will be calculated using: Ii = (Fi - Ai) - (Fi-1 – Ai—1) where Ii is the incremental efficiency gain in year i of the Access Arrangement Period. Fi is the approved forecast operating expenditure in year i of the Access Arrangement Period. Ai is the actual operating expenditure in year i of the Access Arrangement Period. Fi-1 is the approved forecast operating expenditure in year i - 1 of the Access Arrangement Period. Ai—1 is the actual operating expenditure in year i - 1 of the Access Arrangement Period. e Actual operating expenditure in the final year 2027/28 of the Access Arrangement Period is to be estimated using: A*2027/28 = F2027/28 - (Fb – Ab) + non-recurrent efficiency gainsb where A*2027/28 is the estimate of operating expenditure for 2027/28. F2027/28 is the forecast operating expenditure for 2027/28. Fb is the approved forecast operating expenditure for the base year used to forecast operating expenditure in the Access Arrangement Period following this Access Arrangement. Ab is the actual operating expenditure for the base year used to forecast operating expenditure in the Access Arrangement Period following this Access Arrangement. non-recurrent efficiency gainsb is the adjustment made to base year operating expenditure used to forecast operating expenditure for the Access Arrangement Period expected to commence 1 July 2028 to account for operating expenditure associated with one-off factors. f To ensure efficiency gains or losses made in 2027/28 are retained for five years, operating expenditure for the access arrangement period commencing 1 July 2028 should be forecast in a manner consistent with the estimate for operating expenditure in 2027/28, A*2027/28, in paragraph (c) above. This provides the Service Provider the same reward had the expenditure level in 2027/28 been known. g The incremental efficiency gains (or losses) are carried over from year to year in real dollars to ensure that these gains (or losses) are not eroded by inflation. The price indices used in this calculation are to be consistent with those used to forecast operating expenditure for the Access Arrangement Period. h Increments or decrements from the summation of incremental efficiency gains or losses calculated in accordance with the approved incentive mechanism in the Access Arrangement Period will give rise to an additional ‘building block’ in the calculation of the Total Revenue amounts for each year of the subsequent Access Arrangement Period. i The following costs will be excluded from the operation of the efficiency carryover mechanism: i movements in provisions related to opex; ii any cost category that is not forecast using a single year revealed cost approach in the access arrangement period following this Access Arrangement Period (intended to commence 1 January 2023). These costs may include, debt raising costs, unaccounted for gas expenses and priority service program expenses and any abolishment service costs included as haulage reference service opex; iii any cost that the Regulator determines to exclude from the operation of the efficiency carryover mechanism in the 2023-28 period, which would not promote the National Gas Objective; and iv ancillary reference services. j The approved forecast operating expenditure amount for each year of the Applicable Access Arrangement Period will be adjusted to include any Determined Pass Through Amounts or other AER approved expenditure arising from Cost Pass Through Events which apply in respect of that year. k Where the Service Provider changes its approach to classifying costs as either capital expenditure or operating expenditure during the Access Arrangement Period, the Service Provider will report the actual operating expenditure, to align the accounting treatment of expenditure within a period with that in the approved expenditure for that period (reflecting the AER’s final decision on this access arrangement). l For the avoidance of doubt, the forecast expenditure amounts that are used as the basis for measuring efficiencies are equal to the approved forecast operating expenditure for that year (as shown in the table below). Noting that, for the purposes of calculating the carryover amount at the next revenue determination these values will be superseded by the operating expenditure values found in the most recent post- tax revenue model published by the Regulator (plus any other operating expenditure approved by the Regulator), subject to the 5.1(i)(i)-(iv).For the avoidance of doubt, the forecast expenditure amounts that are used as the basis for measuring efficiencies are equal to the approved forecast operating expenditure for that year as shown in the table below, which exclude the costs listed in clause 5.1(g)(i)–(iiiexcl. usions in clauses 5.1(i)(i)-(iv).. Approved forecast operating expenditure for the efficiency carryover mechanism 2021 2022 Jan-Jun 2023 2023-24 2024-25 2025- 26 2026-27 2027-28 Appro69.51 70.43 40.32 89.55 92.22 92.37 94.95 94.76 $ Basis 2018-2022 GAAR ($2017) 2018-2022 GAAR ($2017) Half-Year Extension GAAR ($2022) July 2023-June 2028 GAAR ($2022-23) Exclusions debt raising costs debt raising costs debt raising costs debt raising costs, ARS and Priority Service Program 2021 2022 Jan-Jun 2023 2023-24 2024-25 2025-26 2026-27 2027-28 Approved forecast operating expenditure 75.1 76.2 45.0 80.0 79.3 78.3 76.7 76.5 $ Basis 2018- 2022 GAAR ($2017) 2018- 2022 GAAR ($2017) Half-Year Extension GAAR ($2022) July 2023-June 2028 GAAR ($2022-23) 2021 2022 Jan-Jun 2023 2023-24 2024-25 2025- 26 2026-27 2027-28 Approved forecast ved forecast operating expenditure 65.5 operating expenditure 66.4 39.1 91.8 94.0 93.6 95.0 93.2 $ Basis 2018-2022 GAAR ($2017) 2018-2022 GAAR ($2017) Half-Year Extension GAAR ($2022) July 2023-June 2028 GAAR ($2022-23)

Incentive Mechanism. An efficiency carryover mechanism will apply to operating expenditure. The incentive mechanism will operate in the following way: i the mechanism carries forward AGN’s incremental efficiency gains (or losses) for five years from the year those gains (or losses) occur; iii the annual carryover amounts are added to AGN’s total revenue in each year of the subsequent access arrangement period. If necessary, the annual efficiency gain (or loss) is carried forward into the access arrangement period commencing 1 July 2028 Julyanuary 20283 until it has been retained by the Service Provider for a period of five years. a The incremental efficiency gain (loss) for 2023/24 2023-2418 will be estimated using calculated using:: I2023/24 I2023/2418 = (F2023/24 – A2023/24F2023/2418 - A2023/24418) – 2 × [(FHY2023 F2017HY2023 - A2017HY2023) - (F202216 - A202216)/2] – AHY2023[(F2022 - AHY20223) + - (F2021 – A2021) F20212 - A20212)] where I2023/24 I2023/2418 is the incremental efficiency gain (loss) for Regulatory Year 2023–242023/2418. F2023/24 F2023/2418 is the approved forecast operating expenditure for Regulatory Year 2023–242023/2418. A2023/24 A2023/2418 is the actual operating expenditure for Regulatory Year 2023–242023/2418. FHY2023 F2017HY2023 is the approved forecast operating expenditure for the six-month extension period from 1 January 2023 Jan to 30 June 2023Jun 20232017. AHY2023 A2017HY2023 is the actual operating expenditure for Jan to Jun 20232017. F201622 is the six-month extension period from 1 January 2023 to 30 June 2023approved forecast operating expenditure for 201622. A201622 is the actual operating expenditure for 201622. F2021 is the approved forecast operating expenditure for Regulatory Year 2021. A2021 is the actual operating expenditure for Regulatory Year 2021. b Prior to the submission date for the Access Arrangement Period commencing 1 July 2028, actual operating expenditure data will be available for the regulatory year 2022. Where the Service Provider’s actual operating expenditure differs from the operating expenditure estimate used to calculate the efficiency carryover mechanism, a true-up will be made to account for the difference. The true-up for regulatory year 2022 will be: 𝑇2022 = −0.5 × [(𝐹2022 − 𝐴2022) − (𝐹2021 − 𝐴2021)] where: 𝑇2022 is the true-up for Regulatory Year 2022 𝐹2022 is the forecast operating expenditure for Regulatory Year 2022 𝐴2022 is the actual operating expenditure for Regulatory Year 2022 𝐹2021 is the forecast operating expenditure Regulatory Year 2021 𝐴2021 is the actual operating expenditure for Regulatory Year 2021 c Prior to the submission date for the Access Arrangement Period commencing 1 July 2028, actual operating expenditure data will be available for the six-month extension period from 1 January 2023 to 30 June 2023. Where the Service Provider’s actual operating expenditure differs from the operating expenditure estimate used to calculate the efficiency carryover mechanism, a true-up will be made to account for the difference. The true-up for the six-month extension period from 1 January 2023 to 30 June 2023 will be: 𝑇𝐻𝑌2023 = (𝐹𝐻𝑌2023 − 𝐴𝐻𝑌2023) − 0.5 × (𝐹2022 − 𝐴2022) where: 𝑇𝐻𝑌2023 is the true-up for the six-month extension period from 1 January 2023 to 30 June 2023 𝐹𝐻𝑌2023 is the forecast operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023 𝐴𝐻𝑌2023 is the actual operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023 𝐹2022 is the forecast operating expenditure Regulatory Year 2022 𝐴2022 is the actual operating expenditure for Regulatory Year 2022 The 𝑇𝐻𝑌2023 true-up amount will be applied as a revenue adjustment to Regulatory Year 2028–29 of the Access Arrangement Period commencing 1 July 2028. d The incremental eff201924/25 iciency gai202227/28 n (or loss) for 2024/25 to 2027/28 (inclusive) will be calculated using: Ii = (Fi - Ai) - (Fi-1 – Ai—1) where Ii is the incremental efficiency gain in year i of the Access Arrangement Period. Fi is the approved forecast operating expenditure in year i of the Access Arrangement Period. Ai is the actual operating expenditure in year i of the Access Arrangement Period. Fi-1 is the approved forecast operating expenditure in year i - 1 of the Access Arrangement Period. Ai—1 is the actual operating expenditure in year i - 1 oc f the Access Arrangement Period. e Actual operating exp2027/282 enditure in the final year 2027/28 of the Access Arrangement Period iA*2027/282 s to be estF2027/282 imated using: A*2027/28 = F2027/28 - (Fb – Ab) + non-recurrentA*2027/282 efficiency gainsb where A*2027/28 is the estimate o2027/282f operatingF2027/282 expenditure for 2027/28. F2027/28 is the forecas2027/282t operating expenditure for 2027/28. Fb is the approved forecast operating expenditure for the base year used to forecast operating expenditure in the Access Arrangement Period following this Access Arrangement. Ab is the actual operating expenditure for the base year used to forecast operating expenditure in the Access Arrangement Period following this Access Arrangement. non-recurrent efficiency gainsb is the adjustment made to base year operating expenditure used to forecast operating expenditure for the Access Arrangement PerioJulyanuary 20283 d expected to commence 1 July 2028 to account for operating expenditure d associated with one-off factors. f To ensure efficien2027/282 cy gains or losses made in 2027/28 are retained for five years, operating expenditure for the access arrange2028anuary 2023 ment period commencing 1 July 2028 should be forecast in a manner consistent with the estimate f2027/282or operatinA*2027/282g expenditure in 2027/28, A*2027/28, in paragraph (c) above. This provides the Service Provider the same reward ha2027/282 d the expendite ure level in 2027/28 been known. g The incremental efficiency gains (or losses) are carried over from year to year in real dollars to ensure that these gains (or losses) are not eroded by inflation. The price indices used in this calculation are to be consistent with those used to forecast operating expenditure fof r the Access Arrangement Period. h Increments or decrements from the summation of incremental efficiency gains or losses calculated in accordance with the approved incentive mechanism in the Access Arrangement Period will give rise to an additional ‘building block’ in the calculation of the Total Revenue amounts for each year of the subseg quent Access Arrangement Period. i The following costs will be excluded from the operation of the efficiency carryover mechanism: i movements in provisions related to opex; ii any cost category that is not forecast using a single year revealed cost approach in the access arrangement period following this Access Arrangement Period (intended to commence 1 January 2023). These costs may include, debt raising costs, unaccounted for gas expenses and priority service program expenses and any abolishment service costs included as haulage reference service opex; iii any cost that the Regulator determines to exclude from the operation of the efficiency carryover mechanism in the 2023-28 period, which would not promote the National Gas Objective; and iv ancillary reference services. j The approved forecast operating expenditure amount for each year of the Applicable Access Arrangement Period will be adjusted to include any Determined Pass Through Amounts or other AER approved expenditure arising from Cost Pass Through Events which apply in respect of that year. k Where the Service Provider changes its approach to classifying costs as either capital expenditure or operating expenditure during the Access Arrangement Period, the Service Provider will report the actual operating expenditure, to align the accounting treatment of expenditure within a period with that in the approved expenditure for that period (reflecting the AER’s final decision on this access arrangement). l For the avoidance of doubt, the forecast expenditure amounts that are used as the basis for measuring efficiencies are equal to the approved forecast operating expenditure for that year (as shown in the table below). Noting that, for the purposes of calculating the carryover amount at the next revenue determination these values will be superseded by the operating expenditure values found in the most recent post- tax revenue model published by the Regulator (plus any other operating expenditure approved by the Regulator), subject to the exclusions in clauses 5.1(i)(i)-(iv).. Approved forecast operating expenditure for the efficiency carryover mechanism 2021 2022 Jan-Jun 2023 2023-24 2024-25 2025- 26 2026-27 2027-28 Approved forecast operating expenditure 65.5 66.4 39.1 91.8 94.0 93.6 95.0 93.2 $ Basis 2018-2022 GAAR ($2017) 2018-2022 GAAR ($2017) Half-Year Extension GAAR ($2022) :July 2023-June 2028 GAAR ($2022-23)

Incentive Mechanism. ‌ An efficiency carryover mechanism will apply to operating expenditure. The incentive mechanism will operate in the following way: i the mechanism carries forward AGN’s incremental efficiency gains (or losses) for five years from the year those gains (or losses) occur; iii the annual carryover amounts are added to AGN’s total revenue in each year of the subsequent access arrangement period. If necessary, the annual efficiency gain (or loss) is carried forward into the access arrangement period commencing 1 July 2028 until it has been retained by the Service Provider for a period of five years. a The incremental efficiency gain (loss) for 2023/24 will be calculated using:: I2023/24 = (F2023/24 – A2023/24) – 2 × (FHY2023 – AHY2023) + (F2021 – A2021) where I2023/24 is the incremental efficiency gain (loss) for Regulatory Year 2023–24. F2023/24 is the approved forecast operating expenditure for Regulatory Year 2023–24. A2023/24 is the actual operating expenditure for Regulatory Year 2023–24. FHY2023 is the approved forecast operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023. AHY2023 is the actual operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023. F2021 is the approved forecast operating expenditure for Regulatory Year 2021. A2021 is the actual operating expenditure for Regulatory Year 2021. b Prior to the submission date for the Access Arrangement Period commencing 1 July 2028, actual operating expenditure data will be available for the regulatory year 2022. Where the Service Provider’s actual operating expenditure differs from the operating expenditure estimate used to calculate the efficiency carryover mechanism, a true-up will be made to account for the difference. The true-up for regulatory year 2022 will be: 𝑇2022 = −0.5 × [(𝐹2022 − 𝐴2022) − (𝐹2021 − 𝐴2021)] where: 𝑇2022 is the true-up for Regulatory Year 2022 𝐹2022 is the forecast operating expenditure for Regulatory Year 2022 𝐴2022 is the actual operating expenditure for Regulatory Year 2022 𝐹2021 is the forecast operating expenditure Regulatory Year 2021 𝐴2021 is the actual operating expenditure for Regulatory Year 2021 c Prior to the submission date for the Access Arrangement Period commencing 1 July 2028, actual operating expenditure data will be available for the six-month extension period from 1 January 2023 to 30 June 2023. Where the Service Provider’s actual operating expenditure differs from the operating expenditure estimate used to calculate the efficiency carryover mechanism, a true-up will be made to account for the difference. The true-up for the six-month extension period from 1 January 2023 to 30 June 2023 will be: 𝑇𝐻𝑌2023 = (𝐹𝐻𝑌2023 − 𝐴𝐻𝑌2023) − 0.5 × (𝐹2022 − 𝐴2022) where: 𝑇𝐻𝑌2023 is the true-up for the six-month extension period from 1 January 2023 to 30 June 2023 𝐹𝐻𝑌2023 is the forecast operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023 𝐴𝐻𝑌2023 is the actual operating expenditure for the six-month extension period from 1 January 2023 to 30 June 2023 𝐹2022 is the forecast operating expenditure Regulatory Year 2022 𝐴2022 is the actual operating expenditure for Regulatory Year 2022 The 𝑇𝐻𝑌2023 true-up amount will be applied as a revenue adjustment to Regulatory Year 2028–29 of the Access Arrangement Period commencing 1 July 2028. d The incremental efficiency gain (or loss) for 2024/25 to 2027/28 (inclusive) will be calculated using: Ii = (Fi - Ai) - (Fi-1 – Ai—1) where Ii is the incremental efficiency gain in year i of the Access Arrangement Period. Fi is the approved forecast operating expenditure in year i of the Access Arrangement Period. Ai is the actual operating expenditure in year i of the Access Arrangement Period. Fi-1 is the approved forecast operating expenditure in year i - 1 of the Access Arrangement Period. Ai—1 is the actual operating expenditure in year i - 1 of the Access Arrangement Period. e Actual operating expenditure in the final year 2027/28 of the Access Arrangement Period is to be estimated using: A*2027/28 = F2027/28 - (Fb – Ab) + non-recurrent efficiency gainsb where A*2027/28 is the estimate of operating expenditure for 2027/28. F2027/28 is the forecast operating expenditure for 2027/28. Fb is the approved forecast operating expenditure for the base year used to forecast operating expenditure in the Access Arrangement Period following this Access Arrangement. Ab is the actual operating expenditure for the base year used to forecast operating expenditure in the Access Arrangement Period following this Access Arrangement. non-recurrent efficiency gainsb is the adjustment made to base year operating expenditure used to forecast operating expenditure for the Access Arrangement Period expected to commence 1 July 2028 to account for operating expenditure associated with one-off factors. f To ensure efficiency gains or losses made in 2027/28 are retained for five years, operating expenditure for the access arrangement period commencing 1 July 2028 should be forecast in a manner consistent with the estimate for operating expenditure in 2027/28, A*2027/28, in paragraph (c) above. This provides the Service Provider the same reward had the expenditure level in 2027/28 been known. g The incremental efficiency gains (or losses) are carried over from year to year in real dollars to ensure that these gains (or losses) are not eroded by inflation. The price indices used in this calculation are to be consistent with those used to forecast operating expenditure for the Access Arrangement Period. h Increments or decrements from the summation of incremental efficiency gains or losses calculated in accordance with the approved incentive mechanism in the Access Arrangement Period will give rise to an additional ‘building block’ in the calculation of the Total Revenue amounts for each year of the subsequent Access Arrangement Period. i The following costs will be excluded from the operation of the efficiency carryover mechanism: i movements in provisions related to opex; ii any cost category that is not forecast using a single year revealed cost approach in the access arrangement period following this Access Arrangement Period (intended to commence 1 January 2023). These costs may include, debt raising costs, unaccounted for gas expenses and priority service program expenses and any abolishment service costs includeexpensesd as haulage reference service opex; iii any cost that the Regulator determines to exclude from the operation of the efficiency carryover mechanism in the 2023-28 period, which would not promote the National Gas Objective; and iv ancillary reference services. j The approved forecast operating expenditure amount for each year of the Applicable Access Arrangement Period will be adjusted to include any Determined Pass Through Amounts or other AER approved expenditure arising from Cost Pass Through Events which apply in respect of that year. k Where the Service Provider changes its approach to classifying costs as either capital expenditure or operating expenditure during the Access Arrangement Period, the Service Provider will report the actual operating expenditure, to align the accounting treatment of expenditure within a period with that in the approved expenditure for that period (reflecting the AER’s final decision on this access arrangement). l For the avoidance of doubt, the forecast expenditure amounts that are used as the basis for measuring efficiencies are equal to the approved forecast operating expenditure for tha, which exclude the costs listed in clause 5.1(g)(i)–(iiit year (as shown in the table below). Noting that, for the purposes of calculating the carryover amount at the next revenue determination these values will be superseded by the operating expenditure values found in the most recent post- tax revenue model published by the Regulator (plus any other operating expenditure approved by the Regulator), subject to the exclusions in clauses 5.1(i)(i)-(iv).. Approved forecast operating expenditure for the efficiency carryover mechanism 2021 2022 Jan-Jun 2023 2023-24 2024-25 2025- 26 2026-27 2027-28 Approved forecast operating expenditure 65.5 69.51 70.43 40.32 89.55 92.22 92.37 94.95 94.76 66.4 39.1 91.8 94.0 93.6 95.0 93.2 $ Basis 2018-2022 GAAR ($2017) 2018-2022 GAAR ($2017) Half-Year Extension GAAR ($2022) ) Exclusions debt raising costs debt raising costs debt raising costs debt raising costs, ARS and Priority Service ProgramJuly 2023-June 2028 GAAR ($2022-23)