The Australian Energy Regulator (AER) today released its draft rate of return guideline for consultation. This guideline will set out the approach we intend to take to determine the allowed rate of return for both electricity and gas service providers. Accompanying this draft guideline we have also published an explanatory statement and factsheet.
This is the final draft guideline we are publishing as part of our Better Regulation program. The draft rate of return guideline builds on the other Better Regulation draft guidelines we have published on:
- expenditure forecast assessment
- expenditure incentives
- confidentiality
- consumer engagement
- shared assets
We are developing an integrated package of measures to help promote the outcome that consumers pay no more than necessary for a safe and reliable supply of electricity. As part of this integrated package, the draft rate of return guideline sets out how we intend to apply the new rules framework to set rates of return for network business that meet the long term interests of consumers.
Invitation for submissions
Interested parties are invited to make written submissions to the AER regarding the draft rate of return guideline by the close of business, 11 October 2013. Submissions should be sent electronically to: rateofreturn
aer [dot] gov [dot] au (rateofreturn[at]aer[dot]gov[dot]au). Alternatively, submissions can be sent to:
Mr. Warwick Anderson
General Manager—Network Regulation Branch
Australian Energy Regulator
GPO Box 3131
Canberra ACT 2601
We prefer that all submissions be sent in an electronic format in Microsoft Word (or another text readable document form) and publicly available, to facilitate an informed, transparent and robust consultation process. Accordingly, submissions will be treated as public documents and posted on our website, unless prior arrangements are made with us to treat the submission, or portions of it, as confidential. Those wishing to submit confidential information are requested to:
- clearly identify the information that is the subject of the confidentiality claim; and
- provide a non-confidential version of the submission
On the equity beta, which is a component of the return on equity, we will consult with stakeholders under a different timeframe to the draft rate of return guideline. We have commissioned a report which provides up-to-date empirical estimates of the equity betas of Australian energy networks. We expect to release this report in September with an accompanying note setting out further considerations and a proposed equity beta value. We will invite interested parties to make submissions or comments on that material which we will take into account in the final rate of return guideline. Submissions on this will also close on 11 October 2013.