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2022 Gas Rate of Return Instrument Review

For Western Australia’s regulated gas pipelines, the ERA determines an allowed rate of return on service providers’ projected capital bases as part of setting regulated revenues for an access arrangement.

The National Gas Law requires the ERA to produce a gas rate of return instrument setting out how the ERA and regulated entities will calculate the rate of return for the duration of the instrument.

The ERA published a gas rate of return instrument on 18 December 2018 that set out the ERA’s position at that time on determining the allowed rate of return on capital.

The ERA is required to review the current gas instrument and replace it by the fourth anniversary of when the current instrument was published, which will be December 2022. The 2022 gas instrument will then be used to determine the rate of return for gas service providers’ future access arrangements.

The ERA must fulfil certain consultation requirements to develop the 2022 gas instrument. These include considering the advice, recommendations and/or submissions given by a Consumer Reference Group and Independent Panel.

2022 Draft Gas Rate of Return Instrument and Explanatory Statement

The ERA has published the 2022 Draft Gas Rate of Return Instrument and accompanying Explanatory Statement for the 2022 Draft Gas Rate of Return Instrument. The draft gas instrument sets out the ERA’s current position on determining the allowed rate of return on capital for regulated gas network service providers in Western Australia. The explanatory statement provides the ERA’s reasoning supporting the positions set out in the draft gas instrument.

The 2022 draft gas instrument and accompanying explanatory statement will be subject to a review by the Independent Panel. The Independent Panel’s report is expected to be published in August 2022.

The ERA invites interested parties to make submissions on the 2022 draft gas instrument and explanatory statement and the upcoming report of the Independent Panel. Submission close (WST) Friday, 2 September 2022.

Date  Documents File type
17-Jun-22 2022 Draft Gas Rate of Return Instrument
Adobe PDF 347 kB
17-Jun-22 Explanatory Statement for the 2022 Draft Gas Rate of Return Instrument
Adobe PDF 1.9 MB

Report on the term for the cost of equity

The ERA has published a report by Dr Martin Lally on the term for the cost of equity. The report details the term for the allowed cost of equity and reviews submissions that the ERA has received on this matter.

Date  Documents File type
09-May-22 Dr Martin Lally - The term for the cost of equity
Adobe PDF 388 kB

Focused consultation

The ERA conducted a focused consultation for the 2022 gas instrument review in April and May 2022. The focused consultation addressed specific questions regarding equity beta and the market risk premium. The ERA published a discussion paper outlining these questions and relevant background to these questions on 4 April 2022. The ERA also conducted an online session with interested stakeholders on 27 April 2022, where the ERA presented its underlying analysis and asked questions. The ERA invited stakeholders to make written submissions for the focused consultation. Submissions closed 9 May 2022, at which time the focused consultation concluded.

Date  Documents File type
24-May-22 CRG paper reviewing submissions on ERA focused consultation
Adobe PDF 388 kB
12-May-22 AGIG submission to focused consultation
Adobe PDF 460 kB
12-May-22
ATCO submission to focused consultation
Adobe PDF 524 kB
12-May-22
CRG paper on ERA focussed consultation
Adobe PDF 729 kB
12-May-22
GGT submission to focused consultation
Adobe PDF 755 kB
29-Apr-22 AGIG Focused Consultation Presentation - Equity Beta
Adobe PDF 221 kB
29-Apr-22
Consumer Reference Group Focused Consultation Presentation - Equity Beta
Adobe PDF 405 kB
29-Apr-22
Consumer Reference Group Focused Consultation Presentation - Market Risk Premium
Adobe PDF 332 kB
29-Apr-22
ERA Focused Consultation Presentation - Equity Beta and Market Risk Premium
Adobe PDF 750 kB
29-Apr-22
Frontier Economics Focused Consultation Presentation - Market Risk Premium
Adobe PDF 662 kB
04-Apr-22 Discussion Paper on Focused Consultation
Adobe PDF 759 kB

Report on debt-raising and debt-hedging costs

The ERA has published a report by Chairmont Consulting (Chairmont) on debt-raising and debt-hedging costs, which are the administrative costs and other charges incurred by businesses when obtaining and hedging debt finance. The ERA invited interested parties to provide submissions on the Chairmont report.

Date  Documents File type
02-May-22 AGIG submission to Chairmont report
Adobe PDF 203 kB
15-Mar-22 Chairmont Consulting report
Adobe PDF 759 kB
26-Apr-22 ATCO submission to Chairmont report
Adobe PDF 1.2 MB
26-Apr-22 GGT submission to Chairmont report
Adobe PDF 203 kB

Public submissions received in response to Discussion paper

Date  Documents File type
23-Feb-22 AGIG - Discussion paper public submission
Adobe PDF 675 kB
23-Feb-22
ATCO - Discussion paper public submission
Adobe PDF 1.6 MB
23-Feb-22
CRG - Discussion paper public submission
Adobe PDF 885 kB
23-Feb-22
ENA - Discussion paper public submission
Adobe PDF 1 MB
23-Feb-22
GGT - Discussion paper public submission
Adobe PDF 1 MB
23-Feb-22
South32 - Discussion paper public submission
Adobe PDF 167 kB

Discussion paper

On 8 December 2021, the ERA published a discussion paper outlining its working views on the method for calculating the allowed rate of return on capital for service providers for the 2022 gas instrument.

Date  Documents File type
08-Dec-21 Discussion Paper
Adobe PDF 1.1 MB

Engagement process position paper

On 20 July 2021, the ERA published an engagement process position paper detailing its planned approach to fulfilling the consultation requirements for producing the 2022 gas instrument and inviting stakeholder submissions on this process.

Date  Documents File type
20-Jul-21 Engagement process position paper for the 2022 gas rate of return instrument
Adobe PDF 211 kB
Page last updated: 17 Jun 2022