The Rate of Return Instrument (the Instrument) sets out the approach by which we will estimate the rate of return, and comprises the return on debt and the return on equity, as well as the value of imputation credits. We publish a new Instrument every 4 years that will bind all regulatory determinations in the subsequent 4 years.
Across 2020 and 2021, our pathway to the new Instrument included a series of working papers in advance of the main phase of the review, these papers are listed below.
On 24 February 2023 the AER published its final decision on its Rate of Return review. The final decision includes the Rate of Return Instrument and Explanatory Statement.
On 2 August 2023 the AER published an amendment to the Rate of Return Instrument. This amendment was required due to the unavailability of the RBA F16 data series.
On 28 March 2024 the Rate of Return Instrument - version 1.1 was superseded by version 1.2. The AER amended the Rate of Return Instrument as version 1.1 of the 2022 Instrument cannot be applied to the Victorian electricity and gas distribution businesses.
| Topic | Draft working paper | Final working paper |
|---|---|---|
| Energy network debt data | 26 June 2020 | 18 November 2020 |
| International regulatory approaches to the rate of return | 27 August 2020 | 16 December 2020 |
| CAPM and alternative return on equity models | 27 August 2020 | 16 December 2020 |
| Topic | Draft working paper | Final working paper |
|---|---|---|
| Term of the rate of return | 21 May 2021 | 22 September 2021 |
| Rate of return and cashflows in a low interest rate environment | 21 May 2021 | 22 September 2021 |
| Rate of Return Omnibus Papers | 15 July 2021 | 9 December 2021 |