Investor and retailer reference groups established for AER’s review of the rate of return guideline

The AER has established an investor reference group and a retailer reference group for its review of the rate of return guideline.

Consulting with stakeholders is a central part of our processes in making good decisions and we highly value broader stakeholder participation and engagement. To this end, we have now established reference groups for investors (IRG) and retailers (RRG) associated with energy networks. Recently, we also set up our consumer reference group (CRG).

These reference groups will assist us in developing our next rate of return guideline that contributes to achieving the national electricity and gas objective.

The roles of the IRG and the RRG are to provide direct and ongoing feedback to the AER during the guideline development. We will hold monthly discussions between the IRG and RRG, and the AER project staff to facilitate ongoing dialogue to capture the perspectives of investors and retailers. We expect this ongoing dialogue to be also useful for these groups to better understand the issues and provide written submissions and contribute at the various engagement/feedback opportunities available during the guideline development process.

The IRG is made up of:

  • Sally McMahon, Spark Infrastructure
  • Michele Wong, Hastings Infrastructure Management
  • Kieran Zubrinich, Macquarie Infrastructure
  • Josh Crane, IFM Investors
  • Rob Koh, Morgan Stanley
  • James Byrne, Citi Group
  • Derek Chu, Australian Super
  • Stasha Prnjatovic, AMP Capital
  • Matthew Spence, UniSuper Management Pty Ltd
  • David Costello, Magellan Asset Management
  • John Ivulich, ATCO Gas
  • Mike Williamson, SP Group
  • Mark Busuttil, JP Morgan
  • John Hirjee, Deutsche Bank
  • Bruce Du, Investors Mutual

The RRG is made up of:

  • David Markham, Australian Energy Council
  • Sean Greenup, Origin Energy
  • Kerryn Graham, Energy Australia
  • Patrick Whish-Wilson, AGL


Our rate of return guideline (Guideline) sets out the approach by which we will estimate the rate of return, and comprises the return on debt and the return on equity, as well as the value of

imputation credits. Estimation of the rate of return is complex, and the rate of return is a significant driver of regulated revenue.

On 31 October 2017, we released an issues paper requesting views on whether our current approach to setting the allowed rate of return remains appropriate. This issues paper follows a consultation paper we published in July 2017, which sought views on how we could best run the Guideline review process, and a pre-issues paper public forum we held on 18 September 2017. On 28 November 2017, we released our positions paper on the process for reviewing the Guideline.

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.

Issued date: 
5 March 2018
AER reference: 
AC 27/18