Term of the Rate of Return - Pathway to Rate of Return 2022

Rate of return
Date completed: 
22 September 2021
Date initiated: 
21 May 2021
Effective date: 
22 September 2021
General enquiries - Rate of return RateOfReturn@aer.gov.au
AER reference: 


This is the fourth 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 (NGO) and National Electricity Objective (NEO).

The draft working paper (published 21 May 2021) identified a suitable term for setting an efficient rate of return that contributes to achieving the NGO and NEO. It examined if the terms for the return on equity, return on debt and expected inflation should align. It ascertained the effect of a trailing average return on debt on the choice of term.

There was an online forum to discuss the draft working paper on Tuesday 15 June 2021. The submission period closed on Friday 2 July 2021. Presentations from the forum and all stakeholder submissions are available on the consultation page.

The final working paper (published 22 September 2021) considers and responds to stakeholder submissions, and sets out our preferred positions on a suitable term for the rate of return that contributes to the achievement of the NGO and NEO. It also sets out areas that warrant further consideration and consultation.