THE Victorian government has accepted the Port of Melbourne’s undertaking in response to the Essential Services Commission’s review of the port’s compliance with its pricing order.

In February, the ESC found the Port of Melbourne had not been compliant with the state government’s requirements for how the port sets its prices for services.

The ESC made the finding in its first scheduled five-yearly examination of the port’s compliance with the pricing order.

It reported “significant and sustained” non-compliance by the port in three areas assessed as part of the inquiry, which covered the period of 1 July 2016 to 30 June 2021. However, the ESC found the port was compliant in some areas.

At the time, Port of Melbourne in a statement said: “there has been and will be no meaningful impact on prices paid by port users as a result of the matters raised by the ESC”.

PoM announced on Friday that its undertaking had been accepted by the ESC minister and is legally binding until 30 June 2027, in line with the ESC’s next review.

According to PoM, the undertaking “commits to the approaches that will be applied by PoM to calculate the Weighted Average Cost of Capital (WACC), which addresses the ESC’s findings on Return on Capital and Aggregate Revenue Requirement”.

Also, PoM said the undertaking “outlines PoM’s commitment to develop and publish a Pricing Order Engagement Protocol which will, among other internal process initiatives, improve PoM’s engagement practices under the Pricing Order”.

A statement from the Victorian government said: “the Port of Melbourne’s commitments can be expected to place a downward pressure on future tariffs and provide clearer processes for the port to engage with businesses, ensuring that the port continues to operate to the benefit of all Victorians”.

State minister for ports and freight Melissa Horne said: “We welcome the Port of Melbourne’s response which provides port users greater certainty while also ensuring fair outcomes for Victorian consumers.”

The port said there were no price impacts on port users during the review period as a result of the findings of non-compliance.

PoM CEO Saul Cannon said PoM respects the regulatory framework the government put in place at the time of the port lease in 2016.

“We strongly believe it is working as intended,” he said.

“The intent of the framework was to provide price certainty for users of the port while also creating certainty and facilitating investment that is critical to the Victorian economy. This is being achieved,” Mr Cannon said.

“Over the five-year review period the Port has reduced controllable operating costs by more than 40% from pre-lease levels and resolved issues on WACC through considering and responding to feedback provided by the ESC in its interim commentaries.”