On 21 May 2021 the AER published a working paper on Term of the rate of return. 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 and National Electricity Objective.
The draft working paper seeks to:
- Identify a suitable term for setting an efficient rate of return that contributes to achieving the NGO and NEO.
- Examine if the terms for the return on equity, return on debt and expected inflation should align.
- Ascertain the effect of a trailing average return on debt on the choice of term
We also invited interested parties to make submissions on our draft working paper on the Term of the rate of return. 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 term of the rate of return. It may also identify areas of future work.