Profitability measures for electricity and gas network businesses

Status: 
Date initiated: 
8 November 2017
Effective date: 
31 August 2018
Contact: 
AER General inquiries AERInquiry@aer.gov.au
AER reference: 
61378

Overview

We are currently undertaking a review into measures of profitability that could be applied to the electricity and gas businesses that we regulate.

The aim of this review is to identify suitable profitability measures that would allow us to report and compare the returns of the service providers that we regulate. The primary purpose in reporting on profitability of the service providers is to provide transparency. Information on profits will assist stakeholders when engaging with businesses and making submissions to our regulatory determinations and other regulatory reviews. 

In 2017 McGrathNicol was engaged to carry out a Scoping Study to identify relevant measures of profitability and the data requirements underpinning them. On 8 November 2017 the AER published a Discussion Paper and the McGrathNicol Scoping Study. The Discussion Paper summarised the findings of McGrathNicol’s Scoping Study, outlined the profitability measures they had identified and set out the data requirements to calculate those measures. The discussion paper also raised a number of questions regarding the profitability measures and the data required to support them.

Invitation for submissions

On 27 April 2018, we published a draft Position Paper responding to issues raised in submissions on our November 2017 Discussion Paper, providing our views on a number of profitability measures and indicating the measures we intend to report.

Stakeholders are invited to make submissions on the Draft Position Paper by 30 May 2018.

Public forum

We held a public forum on the draft Position Paper in Sydney on 16 May 2018. The forum provided an opportunity for stakeholders to share their views on the draft Position Paper.

We intend to publish our final position on profitability measures and data requirements in August 2018.