Rate of return and cashflows in a low interest rate environment - Pathway to Rate of Return 2022

Status: 
Category: 
Rate of return
Date initiated: 
21 May 2021
Contact: 
General enquiries - Rate of return RateOfReturn@aer.gov.au
AER reference: 
65402

Overview

On 21 May 2021 the AER published a working paper on Rate of return and cashflows in a low interest rate environment. This is the fifth topic 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 in to the active phase of our 2022 rate of return instrument review. This information will assist us to set a rate of return that contributes to the achievement of the National Gas Objective and National Electricity Objective.

The draft working paper begins our considerations on:

  1. Whether we are in a low interest rate environment;
  2. If we are, what are the consequences of lower interest rates; and finally,
  3. Does this suggest that there is something that needs to be addressed?

Consultation

We hosted an online forum for interested participants on Wednesday 23 June 2021. Presentations from the forum and all stakeholder submissions are available here.

We also invited interested parties to make submissions on our draft working paper on the Rate of return and cashflows in a low interest rate environment. Submissions closed on Friday 2 July 2021.The final working paper will consider and respond to stakeholder submissions, and set out our preferred options for the rate of return in a low interest rate environment. It may also identify areas of future work.