The AER is undertaking a review into improving the annual pricing process for electricity distribution network service providers (distributors). The aim of this review is to develop a process to facilitate more timely and accurate annual pricing approvals as well as improve the presentation of pricing outcomes for stakeholders.
The initial phase of this review will be undertaken in two stages:
- Firstly, the AER will consult with distributors to develop a better process for the AER's assessment of pricing proposals, including a formal pre-lodgement engagement process and a standardised pricing model. This stage is expected to be completed in December 2021 to be implemented for the 2022/23 pricing process.
- Secondly, the AER will consult more broadly to further develop the standardised pricing model to improve the transparency and accessibility of the pricing proposals and relevant outcomes. This second stage will also consider the development of standardised templates to be used for the pricing proposal documents. This stage is expected to be completed in December 2022 to be implemented for the 2023/24 pricing process.
The development of these aspects for the annual pricing approval process follows our commitment in the AER Strategic Plan 2020–25 to design our systems to work in ways that deliver efficient regulation of monopoly infrastructure.
Final position - first stage
On 20 December 2021, we released a final position paper on stage 1 of our annual pricing process review. This paper sets out the outcome of the first stage of our review.
This final position paper is accompanied by a document outlining the formal pre-lodgement engagement process, pricing model and price-capped ACS pricing model templates, and a handbook to accompany the models. These documents and models will be used by the AER and electricity distributors in the upcoming 2022/23 annual pricing process.
Preliminary position - second stage
On 2 August 2022, the AER released a position paper to initiate the second stage of the annual pricing process review. This paper sets out our position on proposed revisions to our standardised pricing models, the presentation of pricing proposal documents, the annual pricing timelines in the first year of a regulatory period, and the application of the side constraint mechanism.
Stakeholders were invited to make submissions on the position paper by 2 September 2022. These submissions are available on our website.
We held two stakeholder workshops in September 2022. Slidepacks from these workshops are available on our website.
Final position - second stage
On 17 November 2022, we released a final position paper on the side constraint mechanism. This paper sets out our final position on the side constraint mechanism for use by distributors in their upcoming regulatory proposals.
On 16 December 2022, we released a final position paper on stage 1 of our annual pricing process review. This paper sets out the outcome of the first stage of our review.
This final position paper is accompanied by a document outlining the formal pre-lodgement engagement process, revised pricing model and price-capped ACS pricing model templates, and a handbook to accompany the models. These documents and models will be used by the AER and electricity distributors in the upcoming 2022/23 annual pricing process.