AER Inflation Review 2020 Public Forum AER Consumer Reference Group - - PowerPoint PPT Presentation

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AER Inflation Review 2020 Public Forum AER Consumer Reference Group - - PowerPoint PPT Presentation

AER Inflation Review 2020 Public Forum AER Consumer Reference Group Inflation and Rate of Return Craig Memery 2 nd July 2020 CRG role Current CRG established June 2020 Inflation 2020 and Rate of Return 2022 AER Reviews Statutory


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AER Inflation Review 2020 Public Forum AER Consumer Reference Group Inflation and Rate of Return

Craig Memery 2nd July 2020

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CRG role

  • Current CRG established June 2020
  • Inflation 2020 and Rate of Return 2022 AER Reviews
  • Statutory requirement
  • Act in an advisory capacity to AER
  • Help the AER implement effective consumer consultation processes
  • Help inform the AER’s decisions with regards to consumer interests,

with input and challenge which might not come through other means

  • Public comments made by CRG members not on behalf the AER

2 2 July 2020 AER CRG presentation: AER Inflation Review 2020 Public Forum

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CRG members

  • Allan Asher
  • Alex Oeser
  • Bev Hughson
  • Craig Memery
  • Helen Bartley
  • Kieran Donoghue
  • Jo De Silva
  • Ron Ben-David
  • Energy Consumers Australia

3 2 July 2020 AER CRG presentation: AER Inflation Review 2020 Public Forum

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CRG approach

  • Ensure the AER makes decisions which are best for consumers, by

finding out what consumers want from energy companies and persuading the regulator to act on their preference

  • Long term interests of consumers is paramount
  • Will recommend best options within current frameworks
  • May recommend changing frameworks
  • Will consider existing knowledge base with an open mind

4 2 July 2020 AER CRG presentation: AER Inflation Review 2020 Public Forum

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Snapshot of current CRG considerations

  • What are the consumer preferences?
  • What trade-offs are consumers prepared to make?
  • Who is best placed to manage risk?
  • What is the materiality of consumer impacts of different options?
  • Relationship between investor and consumer interests
  • Evaluation framework
  • Principles

5 2 July 2020 AER CRG presentation: AER Inflation Review 2020 Public Forum

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CRG working principles - technical

  • Efficiency
  • Robustness
  • Replicability
  • Transparency
  • Simplicity
  • Cost

6 2 July 2020 AER CRG presentation: AER Inflation Review 2020 Public Forum

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CRG working principles - under consideration

  • Congruency between predicted and actual (Inflation and RoR)
  • Acceptable price impacts on consumers
  • Acceptable service level impacts on consumers
  • Commercially sustainable
  • Socially sustainable

7 2 July 2020 AER CRG presentation: AER Inflation Review 2020 Public Forum

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Initial CRG thoughts on AER questions

  • What is the best method for estimating expected inflation?
  • Does the AER’s current approach deliver the ‘promised’ real rate of

return (other things being equal)?

  • Is the real rate of return the appropriate regulatory target? Should the

AER consider adopting a nominal rate of return or a hybrid rate of return?

8 2 July 2020 AER CRG presentation: AER Inflation Review 2020 Public Forum

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CRG next steps

  • Look out for our fact sheets*
  • Submission on Inflation Review 2020
  • Establish social media and public contacts
  • Engaging with key stakeholders
  • AER
  • Consumers and advocates
  • Energy network businesses and investors
  • Other energy stakeholders

9 2 July 2020 AER CRG presentation: AER Inflation Review 2020 Public Forum

* From draft CRG Inflation fact sheet. Presented for illustrative purposes

  • nly. Final design subject to change.