The AER has published updates to its Better Resets Handbook which guides network service providers (NSPs) in the regulatory revenue determination process, often referred to as a ‘reset’.
The updates are limited in scope and clarify the AER’s existing expectations of NSPs without introducing any new obligations or principles.
The targeted update addresses three areas:
- Consumer engagement: the update clarifies the AER’s view that consumer preferences are important and that consumer engagement is a key input to the AER’s assessment, but does not alone establish that a proposal is prudent, efficient or meets the Rules criteria.
- Early signal pathway: the pathway may not suit every reset, particularly where material expenditure increases prevent a network from meeting entry requirements, but remains available where circumstances support its use.
- Revised proposals: NSPs should respond to the AER’s draft decision and avoid introducing new elements unless driven by a genuine change in circumstances beyond the network’s control.
The Better Resets Handbook continues to apply a principles-based approach to consumer engagement and recognises that it is for each NSP to determine the consumer engagement methods best suited to its circumstances. The update does not require NSPs to change their consumer engagement practices.
Given the Australian Energy Market Commission’s (AEMC) ongoing Electricity Network Regulation Review, the AER does not consider a wider review of the Better Resets Handbook appropriate at this time. Any broader review of the Handbook should be informed by the outcomes of the AEMC’s work.
Background
On 9 December 2021, the AER published its Better Resets Handbook. It aims to incentivise network service providers to develop high-quality proposals driven by genuine engagement with consumers.
Revenue determinations, often referred to as ‘resets’, involve an extensive regulatory process in which the AER determines how much a network business can recover from its customers over a five-year period.
With the overarching aim of creating a more efficient process that is better for consumers now and in the long term, the Better Resets Handbook outlines the AER’s expectations in the key areas of high-quality consumer engagement, forecast expenditure, depreciation and tariffs.