On Wednesday 22 September 2021 the AER published a final working paper on the Term of the rate of return & Rate of return and cashflows in a low interest rate environment.

The final working paper sets out our positions and views on topics in the draft Term of the rate of return and Rate of return and cashflows in a low interest rate environment working papers after considering stakeholder submissions. We consider a single final working paper will reduce the duplication from having two final papers.

The final paper identifies two areas that warrant further consideration and consultation: the return on equity approach and measures of financeability.

We also set out our preferred positions related to Rate of return and cashflows in a low interest rate environment:

• We are currently in a low interest environment.
• Our current approach to estimating the return on debt remains appropriate in a low interest rate environment.
• The yield on Commonwealth Government Securities (CGS) remains an appropriate proxy for the risk-free rate, and that we should not adjust for convenience yield estimate.

This final paper marks the end of the working paper process for both topics and there will not be an immediate round of stakeholder submissions. However, there will be further consultation on these issues at later stages of the 2022 review.