Rate of Return Instrument 2022

Category: 
Rate of return
Status: 
Date initiated: 
4 November 2019
Date completed: 
24 February 2023
Effective date: 
25 February 2023
Contact: 
General enquiries - Rate of return RateOfReturn@aer.gov.au
AER reference: 
65402

Overview

The Rate of Return Instrument (the Instrument) sets out the approach by which we will estimate the rate of return, and comprises the return on debt and the return on equity, as well as the value of imputation credits. We publish a new Instrument every 4 years that will bind all regulatory determinations in the subsequent 4 years. 

Across 2020 and 2021, our pathway to the new Instrument included a series of working papers in advance of the main phase of the review, these papers are listed below.

On 24 February 2023 the AER published its final decision on its Rate of Return review. The final decision includes the Rate of Return Instrument and Explanatory Statement.  

On 2 August 2023 the AER published an amendment to the Rate of Return Instrument. This amendment was required due to the unavailability of the RBA F16 data series.


2020 working papers
Topic Draft working paper Final working paper
Energy network debt data 26 June 2020 18 November 2020
International regulatory approaches to the rate of return 27 August 2020 16 December 2020
CAPM and alternative return on equity models 27 August 2020 16 December 2020
2021 working papers
Topic Draft working paper Final working paper
Term of the rate of return 21 May 2021 22 September 2021
Rate of return and cashflows in a low interest rate environment 21 May 2021 22 September 2021
Rate of Return Omnibus Papers 15 July 2021 9 December 2021