Overview

Consultation paper

On 15 July the AER published three draft working papers on Overall rate of return, Equity and Debt. Our three working papers focus on key technical aspects of the rate of return and provide the AER’s preliminary positions and issues for further consideration, in particular:

  • Overall rate of return draft working paper provides an overview of our rate of return framework, our decision-making process and our positions to date. It also explores a number of discrete topics that relate to the overall rate of return.
  • Equity draft working paper explores a number of technical aspects of estimating the expected return on equity. In particular, we want to check that the approach we employ is robust in a range of market conditions.
  • Debt draft working paper discusses the data that is available to allow us to set a return on debt that aligns with the debt costs that network businesses experience.

Stakeholder forum

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The AER hosted three online forums for stakeholders to ask questions of the AER and interact directly to hear each other’s perspective on the working papers. The forums were held on:

  • 4 August 2021 – Overall rate of return draft working paper
  • 9 August 2021 – Debt draft working paper
  • 11 August 2021 – Equity draft working paper

The AER would like to thank those who presented at the forum, as well as those who were able to attend on the day to listen to the views of other stakeholders.

APGA - Overall Rate of Return Forum presentation - 4 August 2021

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Australian Pipelines and Gas Association (APGA)

CRG - Overall Rate of Return Forum presentation - 4 August 2021

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Consumer Reference Group (CRG)

ENA - Overall Rate of Return Forum presentation - 4 August 2021

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Energy Networks Australia (ENA)

NICE - Overall Rate of Return Forum presentation - 4 August 2021

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Network of Illawarra Consumers of Energy (NICE)

CRG - Debt Omnibus Forum presentation - 9 August 2021

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Consumer Reference Group (CRG)

ENA - Debt Omnibus Forum presentation - 9 August 2021

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Energy Networks Australia (ENA)

NICE - Debt Omnibus Forum presentation - 9 August 2021

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Network of Illawarra Consumers of Energy (NICE)

NSG - Debt Omnibus Forum presentation - 9 August 2021

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Network Shareholder Group (NSG)

APGA - Equity Omnibus Forum presentation - 11 August 2021

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Australian Pipelines and Gas Association (APGA)

CRG - Equity Omnibus Forum presentation - 11 August 2021

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Consumer Reference Group (CRG)

ENA - Equity Omnibus Forum presentation - 11 August 2021

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Energy Networks Australia (ENA)

MEU - Equity Omnibus Forum presentation - 11 August 2021

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Major Energy Users Inc (MEU)

NSG - Equity Omnibus Forum presentation - 11 August 2021

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Network Shareholder Group (NSG)

Submissions

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We invited interested parties to make submissions on our three draft working papers on Overall rate of return, Equity and Debt. Submissions closed on 3 September 2021.

APGA - Submission - Overall rate of return, Equity and Debt - 3 September 2021

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Australian Pipelines and Gas Association (APGA)

ENA - Submission - Debt - 3 September 2021

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Energy Networks Australia (ENA)

ENA - Submission - Equity - 3 September 2021

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Energy Networks Australia (ENA)

ENA - Submission - Overall rate of return - 3 September 2021

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Energy Networks Australia (ENA)

The CFO Group - Submission - Debt - 3 September 2021

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AusNet Services
Victoria Power Networks (VPN)
ElectraNet
Jemena and SA Power Networks

SACOSS - Submission - Overall rate of return and Equity - 3 September 2021

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South Australian Council of Social Service (SACOSS)

GIIA - Submission - Equity - 3 September 2021

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Global Infrastructure Investor Association (GIIA)

QTC - Submission - Debt - 3 September 2021

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Queensland Treasury Corporation (QTC)

QTC - Submission - Equity - 3 September 2021

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Queensland Treasury Corporation (QTC)

AGIG - Submission - Overall rate of return, Equity and Debt - 3 September 2021

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Australian Gas Infrastructure Group (AGIG)

Supporting information

Energy Networks Australia’s (ENA) submission to our three draft working papers on Overall rate of return, Equity and Debt included a discussion on the use of scenario testing as one of the cross checks of the overall rate of return and also proposed a calibrated Dividend Growth Model (DGM) as a method to address the concerns about DGMs expressed in the 2018 Rate of return instrument. The ENA has provided information on its scenario testing and the outputs from its calibrated DGM. We have published the ENA’s scenario testing model below which also contains outputs from its calibrated Dividend Growth Model.

ENA models user guide

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Energy Networks Australia (ENA)

ENA models – 2022 RORI scenario testing and calibrated DGM

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Energy Networks Australia (ENA)