AER - Pathway to 2022 Rate of Return Instrument - Position Paper - March 2021

Our pathway to 2022 includes a series of working papers in advance of the main phase of the review. These working papers explore key elements of the rate of return and lay a foundation for the development of the 2022 instrument. Each working paper has its own project page on the AER website.

The working papers we published in 2020 were:

• Energy network debt data – debt term and extension of debt index
• CAPM and alternative return on equity models
• International regulatory approaches to rate of return

In March 2021 we released a position paper which laid out the schedule of working papers throughout 2021. These are divided into two categories, in-depth and broad working papers.

In-depth working paper topics:

• Rate of return and cashflows in a low interest rate environment
• Term of rate of return

Broad working papers:

• Debt
• Equity
• Overall rate of return (including gamma and gearing)

The position paper below details consultation schedules throughout the year and how stakeholders can respond to the papers and so shape the 2022 rate of return instrument.