This submission responds to the Australian Energy Regulator’s (AER) Rate of Return Guideline Issues Paper. The development of the rate of return guideline is part of the AER’s Better Regulation process, which aims to implement the changes to the National Electricity and Gas Rules that were published by the Australian Energy Market Commission in November 2012. The key issue covered in this submission is the optional nature of the rate of return guideline, a status about which PIAC has significant concerns. The submission also covers topics including: the importance of the guideline to consumers, given the way the rate of return flows through to network prices; the need to refocus network regulation, the National Electricity Objective and National Gas Objective on the long-term interests of consumers; and the concept of a benchmark efficient entity when determining the weighted average cost of capital (WACC).
