AER to review its approach to forecasting opex productivity growth for electricity distribution

The Australian Energy Regulator (AER) will shortly commence a review of its approach to forecasting productivity growth as part of its operating expenditure forecasting approach for electricity distributors.

Productivity growth is one element in the trend component of our operating expenditure forecasting approach. Our forecast of productivity growth is intended to capture the efficiency improvements distributors can make in providing distribution services. More details on how we use our forecast of the opex trend to assess distributors’ opex proposals are outlined in our Expenditure forecast assessment guideline.

We have applied the same approach to forecasting productivity growth since we published the Expenditure forecast assessment guideline in 2013. We have now applied this approach to all of the electricity distributors in the NEM. We think it is now an appropriate time to review this approach.

This review is part of our continuous improvement of our regulatory toolkit and will help to ensure that energy consumers pay no more than necessary for the safe and reliable distribution of electricity.

We intend to publish a consultation paper in October 2018. We will provide details on the process and how stakeholders can engage in this review when we release the consultation paper. This will include an opportunity for stakeholders to provide written submissions and to participate in a workshop.

We will publish a final position paper once we have considered all stakeholder feedback.

Issued date: 
12 September 2018
AER reference: 
AC 119/18
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