Regulatory treatment of inflation review

PIAC responded to the Australian Energy Regulator’s review of its treatment of inflation.

PIAC is not convinced of the need to change the current regulatory treatment of inflation, as the AER notes in its discussion paper.

We stress any change to the regulatory framework that materially shifts the risk between consumers, businesses and investors must be backed by thorough modelling showing how this is in consumers’ interests.

PIAC notes the treatment of inflation is just one part of a larger framework for regulating the revenues and prices of network businesses. Any change to the treatment of inflation must also consider how it affects other aspects of this framework, due to the change in risk profile that an efficient network business would bear.