On 31 October 2017, we released our issues paper for our review of the rate of return guideline.
This issues paper requests views on the extent to which our current approach to setting the allowed rate of return remains appropriate. It follows a consultation paper we published in July 2017, which sought views on how we could best run the rate of return guideline (Guideline) review process, and a pre-issues paper public forum we held on 18 September 2017.
We will follow this paper with a separate document to be released in November 2017. This paper will finalise aspects of the process for reviewing the rate of return. It will build on our consultation paper, released on 31 July 2017, and submissions from stakeholders received in response to that consultation paper.
Background
The AER determines the amount of revenue that electricity and gas network businesses can recover from customers for the use of their networks. A key component of this allowed revenue is the ‘rate of return’. This is a forecast of the cost of funds a network business requires to attract investment in its network.
It enables network businesses to obtain necessary funds from capital markets to fund capital investments and service the debt they incur in borrowing the funds. The rate of return makes up approximately 50 per cent of a network business’ allowed revenue. It therefore is a key driver of the amount of network charges that consumers pay.
Invitation for submissions
We invite interested parties to make submissions on the issues paper by close of business 12 December 2017.
Submissions should be emailed to rateofreturn
aer [dot] gov [dot] au (rateofreturn[at]aer[dot]gov[dot]au) or alternatively submissions can be posted to:
Mr Warwick Anderson
General Manager, Network Finance and Reporting
Australian Energy Regulator
GPO Box 3131
Canberra ACT 2601
The AER prefers that all submissions be sent in an electronic format (Microsoft Word) and are publicly available, to facilitate an informed, transparent and robust consultation process. Accordingly, submissions will be treated as public documents and posted on the AER's website, unless prior arrangements are made with the AER 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