The ERA has reviewed the rate of return guidelines that apply to regulated gas networks and transmission pipelines in Western Australia.
The rate of return guidelines detail the methods the ERA intends to use to estimate the allowed rate of return for gas transmission and distribution pipelines. The purpose of the rate of return guidelines is to establish a consistent and transparent approach for the ERA’s gas access decisions.
On 29 June 2018, the ERA published its draft rate of return guidelines. At the ERA’s public forum and in submissions on the draft guidelines, stakeholders requested that the ERA provide a detailed technical process to implement the guidelines’ debt risk premium method.
The ERA prepared technical debt risk premium process documents and accompanying tools, consistent with the debt risk premium method detailed in the draft guidelines:
- debt risk premium process for updating in R
- debt risk premium process for updating in Excel
- debt risk premium update Excel template
- debt risk premium update R code package
These documents and tools provide the technical steps and detail needed for stakeholders to estimate the debt risk premium.
Interested parties were invited to make submissions on these process documents.
The ERA commissioned an Independent Panel to prepare a report on its first rate of return instrument. The panel members have diverse backgrounds and areas of expertise including regulatory, economic, finance and consumer perspectives.
The ERA sought nominations from a range of stakeholders and assessed potential panel members through a selection process.
The Independent Panel reviewed the ERA’s Draft Rate of Return Guidelines and reported on whether they were supported by sound reasoning and capable of achieving the National Gas Objective.
The Independent Panel process gave the ERA the benefit of an independent review, and provided stakeholders with further confidence that our findings were robust.
The independent panel was comprised of John Fallon (Chair), Raymond da Silva Rosa and Julie Barrow;