Overview

Type
Sector
Electricity
Gas
Segment
Distribution
Transmission
Region
Queensland
New South Wales
Australian Capital Territory
Victoria
South Australia
Tasmania
Northern Territory
Status
Open
Date initiated
Effective date
Date completed
Categories
Rate of return
AER reference
65402

This is the first in a series of working papers that we will produce as part of our pathway to the 2022 rate of return instrument. The outcomes from these working papers will feed into the active phase of our 2022 rate of return instrument review. This information will assist us to develop a 2022 rate of return instrument that sets a rate of return in line with efficient financing costs, so that consumers pay no more than is necessary for the safe and reliable delivery of electricity and gas.

The draft working paper (published 26 June 2020) presented data on regulated energy network debt costs, discussed how it should be analysed, and identifies options for how it might be used when we set the 2022 instrument. This topic was selected because it flowed from analysis of debt data during the 2018 review, where Chairmont developed an initial index of industry debt costs. Since that time we have obtained updated data from energy networks and commissioned a new Chairmont report that addresses some issues outstanding from the previous review. 

There was an online forum to discuss the draft working paper on Wednesday 29 July 2020. Submissions on the draft working paper closed on 14 August 2020.

The final working paper (published 18 November 2020) considers and responds to stakeholder submissions, and sets out a preferred option for how industry debt costs will inform the regulated return on debt. There will be further consultation on how this approach might be implemented later in the 2022 rate of return instrument review.

Our annual rate of return update includes our index of actual debt costs and the average term of debt issued by energy networks. The final working paper proposed changes to how these figures were calculated.

Presentations from the forum and all stakeholder submissions are now available on the consultation page.