AER to develop gas financial models and amend electricity roll forward models

The AER has today announced that it will develop template financial models that regulated gas network service providers must use as part of their access arrangement proposals under the National Gas Rules (NGR). The financial models will comprise of template capital base roll forward models (RFMs) and revenue models. The AER will also amend the current electricity RFMs in line with the amendments it recently made to the electricity post-tax revenue models (PTRMs) impacting the roll-forward of assets for tax purposes.

The amendments to the RFMs (distribution and transmission) will give effect to changes set out in the AER’s final report on the review of regulatory tax approach relevant to rolling forward the tax asset base. The AER will also develop a default approach to implement year-by-year depreciation tracking of the regulatory and tax asset bases.

The gas final model templates will be developed in accordance with the recent changes to the NGR regarding the regulation of covered pipelines. This rule change allows the regulator to prepare and publish consistent financial models that service providers must use as part of the access arrangement review process to construct the capital base, and the total revenue calculated using the building block approach.

The current electricity models are intended to be used as the base template from which any gas specific amendments will be made. The consultation process for amendments to the electricity RFMs will be made in tandem with the development of the gas financial models to ensure efficient stakeholder engagement. It is expected that any amendments required for the electricity RFMs will also be reflected in the new gas models.

The indicative timeline for the development and amendment of the regulatory models is shown below.