AER – Response to SA Power Networks re Regulatory treatment of inflation – 7 November 2019

On 5 September 2019 we held a working group on ‘expected inflation and low CGS yields’. This was a staff-level meeting attended by a cross-section of stakeholder representatives (networks, consumers, investors and retailers).

On 20 September 2019, SA Power Networks wrote to us requesting that we open a new review into our method for estimating expected inflation. We have published that letter and our response below. Relatedly, Jemena Gas Networks also wrote to us requesting that the gas financial model development include consultation on how the expected inflation assumption is applied. The Jemena letter and our response are published on the model review page.

On 28 November 2019 we held a second working group meeting with a range of stakeholder representatives. We discussed the AER’s response to the September inflation material. There was also initial discussion of further Energy Networks Australia (ENA) material from early November. Following the meeting, Queensland Treasury Corporation (QTC) submitted a further note on a number of matters it raised during the meeting. The ENA material, AER presentation and QTC note are available below, together with a high-level summary minute prepared by the AER.