The Australian Energy Regulator (AER) has today published Return on Assets ratios for the electricity network businesses it regulates. The Return on Asset ratios are being published as part of our ongoing review of Profitability measures for electricity and gas network businesses. The publication of this information responds to calls from stakeholders for greater transparency around the actual returns achieved by the businesses. Information on actual returns will assist stakeholders when engaging with network businesses and making submissions to our regulatory determinations and other regulatory processes.
Our draft position paper on profitability measures was published in April this year and we intend to publish our final position on profitability measures by the end of 2018. The measures contained in our final position paper will be reported in our annual performance reports.
Background
The AER's review of Profitability measures for electricity and gas network businesses aims to identify suitable profitability measures, and the associated data requirements, to allow us to report and compare the returns of electricity and gas service providers we regulate. In particular, we are seeking to identify measures that will permit comparison of:
- allowed returns of a service provider relative to its actual returns;
- returns between service providers in the same sector; and
- returns between the service providers and other regulated/unregulated industries.
Other measures we are considering for publication in the final position paper include return on equity; earnings per customer; and RAB multiples.