Every four years, the AER consults with consumers, energy businesses, investors and other stakeholders on how it should:
decide the expected cost of investment funds for energy network businesses.
assess efficient levels of energy consumption.
The AER has outlined the steps it will take to deliver its next decision on this in 2022. The decision will be known as the 2022 Rate of Return Instrument.
What does this mean for consumers?
The decision on the Rate of Return can have a major impact on energy prices. It can also have an impact on whether prices remain stable or volatile.
Want to learn more?
The Australian Energy Regulator’s (AER) Consumer Reference Group (CRG) is holding a Masterclass to provide consumer advocates with a high-level overview of the Rate of Return. The aim of this session is to empower participants to fully participate in Rate of Return discussions.
The CRG is also working with the AER to hold a second Masterclass. In this Masterclass, the AER will dive more deeply into the Rate of Return concepts.
Both sessions will allow plenty of time for questions and discussion.
Please send an email to msjoannedesilva@gmail.com to register for these sessions. Please provide details of which session/s you will attend.
If you would like more information, please contact Ms Jo De Silva 0406 950 726 or send an email to msjoannedesilva@gmail.com. Please feel free to forward this invitation to anyone who may be interested in participating.
Hi @allan.asher51, it might be worth indicating where and how the Masterclasses will be held. Are they in person at particular venues (AER offices or in a capital city near you) or an online forum (say due to Covid)?
I’ve been able to participate in both masterclasses. I’d like to thank the CRG and @allan.asher51 for bringing the opportunity to the Choice Community.
Both workshops were well presented and supported by members of the CRG and AER respectively. They were a great introduction to the RORI. There is a significant degree of complexity in the financial modelling attached to assessment of the RORI, (Rate of Return Instrument) used by the AER and used to determine the allowed costs recoverable by network owners. The open-ness and preparedness of the presenters to explain or interpret the content was appreciated. It’s left some homework for those so inclined. It was very broad in it’s scope and outlook.
There are competing interests each with potential to impact the future cost to the consumer of the regulated energy networks (electricity and gas). The Federal Government created the Energy Security Board (ESB) to look at future energy supply needs. This includes the AEMC, AEMO and AER. How effectively the AER can manage the outcomes for all faces some additional challenges.
There are follow on opportunities for consumer input to the AER on the 2022 RORI decision. This can be through the CRG of more directly. As an approximation in the instance of electricity supply the network costs make up 50% of the final consumer bill. Irrespective of any ongoing or future changes in generation or supply of energy, the network related costs will be of the greatest concern to all connected consumers.
Note:
The RORI is only one part of the regulatory framework, and in itself does not direct how the funds employed by the network owners are used. It’s sensitive to the cost of capital (finance), future requirements that require additional network investment, and changes in demand (consumption). The gas and electricity networks currently use the same same ROR determined by the AER.
