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

  • Accepting submissions
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 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

Consultation

We invite submissions from interested stakeholders by Friday 2 July 2021. In addition we will be hosting an online forum for interested participants on Tuesday 15 June 2021. Presentations from the forum and all stakeholder submissions will be published on this website.

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.