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 Rule 98 of the NGR provides for an Access Arrangement to include an incentive mechanism. (a) The incentive mechanism will should only apply to operating expenditure. . (b) The incentive mechanism provides Multinet a continuous incentive to find operating expenditure efficiencies through a combination of: (1) an ex ante forecast of operating expenditure in Multinet's Total Revenue (2) increments or decrements from the operation of this incentive mechanism that allow Multinet to retain efficiency gains or losses for five years. (c) The operating expenditure annual efficiency gain (or loss) for 2013 will operate be calculated as: E2013 = (F2013 – A2013) where: E2013 is the efficiency gain in 2013 F2013 is the forecast opex for 2013 A2013 is the actual opex for 2013 (d) The operating expenditure annual efficiency gain (or loss) for 2014 to 2017 will be calculated as: Ei = (Fi – Ai) – (Fi–1 – Ai–1) where: Ei is the efficiency gain in year i of the access arrangement period Fi is the forecast opex in year i of the access arrangement period Ai is the actual opex in year i of the access arrangement period Fi–1 is the forecast opex in year i–1 of the access arrangement period Ai–1 is the forecast opex in year i–1 of the access arrangement period (e) Deemed actual opex for 2017 is to be calculated using the following wayequation: i A2017* = A2016 + F2017 – F2016 where: A2017* is the mechanism carries forward AGN’s incremental actual opex deemed for 2017 F2017 is the forecast opex for 2017 F2016 is the forecast opex for 2016 A2016 is the actual opex for 2016 (f) For the avoidance of doubt, the operating expenditure annual efficiency gains gain (or lossesloss) for 2017 will be assumed to equal zero. (g) The annual efficiency gain or loss will be added to Multinet's Total Revenue for five years from after the year those gains in which the efficiency gain (or lossesloss) occur; iii the annual carryover amounts are added to AGN’s total revenue in each year of the subsequent access arrangement periodwas achieved. If necessary, the annual efficiency gain (or loss) is loss will be carried forward into the access arrangement period commencing 1 July 2028 January 2018 until it has been retained by the Service Provider Multinet for a period of five years. a The incremental efficiency gain . (lossh) 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 efficien2017 cy gains or losses made in 2027/28 are retained foropex five years, operating expenditure for the access arrangein 2018 ment period commencing 1 July 2028 should be forecast in a mdeemed actual opex anner consistent with the estimate f2017or operatinA2017*g expenditure in 2027/28clause 6.4(e), A*2027/28, in paragraph (c) above. Multinet This provides the Service Provider the same reward ha2017 d the expenditure level in 2027/28 been known. . g The incriemental 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 decrementsannual 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 subseamounts. (j) quent Access Arrangement Period. i The following costs will be excluded from the operation of the efficiency carryover mechanism: i movements: (1) costs associated with complying with 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 followretailer of last resort requirements ing this Access Arrangement Period (intended to commence 1 Janua2) amounts for approved Cost Pass Through Events (3) unaccounted for gas expenses (4) licence fees (5) ry 2023). These costs may include, debt raising c (6) movements in provisions (7) any other activity that Multinet osts, unaccounted for gas expenses and priority service program expenses and any abolishment service costs included as haulage reference service opex; iii any agree 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 apmechanism. proved expenditure for that period (reflecting the AER’s final decisk) ion 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 approcost ved forecast operating expenditure for tha, which exclude the costs listed in clause 6.4(j)(1)–(6t year (as shown in with the table below). Noting thafollowing exception: (1) costs excluded in accordance with clause 6.4(j)(7) (2) t, for the purposes of calculating the carryover amount at the next of cost-related efficiency gains revenue determination these values will be superseded by the calculated in a manner that takes account of any change operating expenditure values found in the most recent poscale of st- tax revenue model published by the Regulator (plus any otheractivities which form operating expenditure apprbasis of oved by the Regdetermination of the original benchmarks. The opex benchmarks will be adjusted consistent with the way ulator), subject to the exclusions in clauses which the benchmark was determined. 2013 2014 2015 2016 Forecast 5.1(i)(i)-(iv).. Approved forecast operating expendincentive iture 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.purposes 6 95.0million, 2012 93.2 $ Basis 20157.0 62.5 64.8 64.3 8-2022l GAAR ($2017) 2018-2022 GAAWhere Multinet changes its approach to classifying costs as either capex or opex during the access arrangement period, Multinet will adjust the forecast opex so that the forecast expenditures are consistent with the capitalisation policy changes. R ($20m17) Half-Year Extension GAAR ($2022) If there is a change in Multinet’s approach to classifying costs as either capex or opex, Multinet must provide to the AER a detailed description of the change and a calculation of its impact on forecast and actual opex.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 t: he 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 costcosts and s may include, debt raising costs, unaccounted for gas expenses and priority service program expenses and any abolishment service costs included as haulage reother activity ferenAGN and ce service opex; iii any agree 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; mechanismand h 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 decisi ion 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)

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)

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 t: he 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 (Julanuary 20283intended to commence 1 January 2023). These costcosts and s may include, debt raising costs, unaccounted for gas expenses and priority service program expenses and any abolishment service costs included as haulage reother activity ferenAGN and ce service opex; iii any agree 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; mechanismand h 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 decisi ion 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(hg)(i)–(iiit year (as shownApproved forecast operating expenditure in the table below). Noting that, fefficiency or the purposes of calculating the carryover amount at the next revenue determination thesmechanism ($ million, 2017) 2016 2017 2018 2019 2020 2021 2022 Approved forecast e 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 excl65.865.6 66.7 67.2 67.9 68.7 69.5 70.4 Note: Excludes debt raising costs. 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 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)

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 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)