Subdiv 1Preliminary

Subdivision 1—Preliminary 18F—Definitions consumer reference group, for making a rate of return instrument, see section 18M(1)(a); explanatory information, for a rate of return instrument, means information about the content of the instrument, including (but not limited to) information explaining— (a) the reasons for the rate of return on capital or the value of imputation credits under the instrument; and (b) how the stated value, or the way to calculate the rate or value, was decided; and (c) if the instrument replaces another instrument— (i) the differences (if any) between the instrument and the replaced instrument; and (ii) the reasons for any differences; and (d) why the AER is satisfied the instrument will, or is most likely to, contribute to the achievement of the national electricity objective to the greatest degree; and (e) how the AER had regard to the following in making the instrument: (i) the revenue and pricing principles; (ii) the matters mentioned in section 18L; (iii) estimation methods, financial models, market data and other evidence relevant to making the instrument; (iv) prevailing conditions in the market for equity funds; (v) the interrelationships between financial parameters used, or to be used, in relation to deciding the rate or value. 18G—Rate of return instrument has force of law (1) A rate of return instrument has the force of law in this jurisdiction. (2) An Act of this jurisdiction regulating the making of subordinate legislation does not apply to a rate of return instrument. 18H—Rate of return instrument is binding on AER and network service providers A rate of return instrument is binding on— (a) the AER in relation to the performance or exercise of an AER economic regulatory function or power; and (b) each network service provider in relation to a matter relevant to the performance or exercise of an AER economic regulatory function or power. Subdivision 2—Requirement to make rate of return instrument 18I—AER to make rate of return instrument (1) This section applies if a rate of return on capital or the value of imputation credits is required for performing or exercising an AER economic regulatory function or power. (2) The AER must make an instrument (a rate of return instrument) stating— (a) for a rate of return on capital—the way to calculate the rate; and (b) for the value of imputation credits—the value or the way to calculate the value. (3) The AER may make an instrument only if satisfied the instrument will, or is most likely to, contribute to the achievement of the national electricity objective to the greatest degree. (4) Subject to subsection (3), the way to calculate a rate of return on capital must include a weighted average of an allowed return on equity and an allowed return on debt. (5) In making an instrument, the AER must have regard to— (a) the revenue and pricing principles; and (b) other information the AER considers appropriate. 18J—Content of rate of return instrument (1) If a rate of return instrument states the value of imputation credits, the instrument must state a single value to apply in relation to all regulated network service providers. (2) If a rate of return instrument states a way to calculate the rate of return on capital or the value of imputation credits, the instrument must— (a) provide for the same methodology to apply in relation to all regulated network service providers in calculating the rate or value; and (b) provide for the methodology to apply automatically without the exercise of any discretion by the AER. Example for paragraph (b)— The instrument can not include different methodologies or a band of values from which the AER could choose in applying the instrument. (3) Subject to subsections (1) and (2), the instrument may include other matters the AER considers appropriate. Matters to help a regulated network service provider calculate a rate of return or the value of imputation credits. Subdivision 3—Consultation requirements 18K—Process for making rate of return instrument Subject to this Division, the AER may make a rate of return instrument in the way it considers appropriate. 18L—Other matters AER must have regard to in making instrument In making a rate of return instrument, the AER must also have regard to the following: (a) advice, recommendations or submissions given by a consumer reference group; (b) submissions made, and the report published, under section 18M; (c) submissions made under section 18O; (d) the report given by the independent panel under section 18P. 18M—Requirements before publishing draft instrument (1) Before publishing a draft rate of return instrument under this Subdivision, the AER must— (a) establish a reference group to help the AER implement an effective consumer consultation process for making the proposed instrument (a consumer reference group); and (b) publish a notice on its website— (i) inviting persons to make a written submission to the AER about the proposed instrument; and (ii) stating the period, not less than 28 days, within which a submission must be made; and (c) seek concurrent expert opinions or evidence about the proposed instrument. (2) A person may make a submission after the stated period only with the written approval of the AER. (3) Subject to subsections (4) and (5), the AER may seek the expert opinions or evidence in the way it considers appropriate. The AER might convene a conference of experts to identify key issues, and areas of dispute and agreement among the experts, about the content of the proposed instrument. (4) The AER must call for nominations of eligible experts but may seek the expert opinions or evidence from any eligible expert. (5) If practicable, the AER must seek the expert opinions or evidence from at least 3 eligible experts. (6) The AER must publish on its website— (a) submissions made under this section; and (b) a report on the outcomes of seeking the expert opinions or evidence. eligible expert means a person with qualifications or experience in a field the AER considers relevant to making a rate of return instrument. Examples of relevant fields— Finance, economics, law, consumer affairs, institutional investment. 18N—Consumer reference group (1) A consumer reference group for making a rate of return instrument— (a) is to consist of the members appointed by the AER; and (b) may carry out its activities, including giving advice or recommendations to the AER about the instrument, in the way it considers appropriate. (2) Without limiting subsection (1)(b), the consumer reference group may— (a) consult with consumers of electricity; and (b) facilitate consumer engagement in the process for making the instrument; and (c) make written submissions to the AER about the content of the instrument and the process for making it. (3) The AER must publish on its website any written advice, recommendations or submissions given to it by the consumer reference group. 18O—Publication of draft instrument and other information (1) The AER must, at least 6 months before making a rate of return instrument, publish on its website— (a) a draft of the proposed instrument and the explanatory information for the instrument; and (b) a notice— (i) inviting persons to make a written submission to the AER about the proposed instrument; and (ii) stating the period, not less than 28 days, within which a submission must be made. (2) A person may make a submission after the stated period only with the written approval of the AER. (3) The AER must publish submissions made under this section on its website. 18P—Report about draft instrument by independent panel (1) The AER must, as soon as practicable after publishing the draft instrument, establish an independent panel to give the AER a written report about the instrument. (2) The panel— (a) may carry out its activities, including giving the report, in the way it considers appropriate; but (b) must seek to give the report by consensus. (3) The panel must— (a) consist of at least 3 members, appointed by the AER, who have qualifications or experience in a field the AER considers relevant to making a rate of return instrument; and Examples of relevant fields— Finance, economics, law, consumer affairs, institutional investment. (b) give the report to the AER before the AER makes the instrument. (4) The AER must take reasonable steps to minimise and manage any conflicts of interest a panel member may have in relation to making the instrument. (5) The report must— (a) include the panel's assessment of the evidence and reasons supporting the rate of return on capital or the value of imputation credits under the instrument; and (b) state whether the report is given by consensus. (6) The AER must publish the report on its website. 18Q—Publication of explanatory information The AER must publish explanatory information for a rate of return instrument on its website when the instrument is published under section 18S. 18R—Failure to comply does not affect validity Failure to comply with this Subdivision does not invalidate or otherwise affect a rate of return instrument. Subdivision 4—Publication, review and other matters 18S—Publication of rate of return instrument After making a rate of return instrument, the AER must publish the instrument on its website. See section 18Q for the requirement to publish explanatory information for the instrument. 18T—Commencement and duration of instrument A rate of return instrument— (a) commences on the day after it is published on the AER's website; and (b) remains in force until the end of the day it is replaced under section 18U. 18U—Review and replacement of instrument (1) The AER must— (a) review each rate of return instrument; and (b) make a new rate of return instrument under this Division to replace the reviewed instrument. (2) The AER must replace the reviewed instrument by publishing the new instrument on its website on the day that is— (a) the fourth anniversary of the day the reviewed instrument was published; or (b) if the day mentioned in paragraph (a) is not a business day—the first business day after that day. 18V—Application of instrument (1) A rate of return instrument— (a) applies for the purposes of an AER economic regulatory decision made after the commencement of the instrument; and (b) does not affect an AER economic regulatory decision made before the commencement of the instrument. (2) To remove any doubt, it is declared that the application of the instrument under this Law, including, for example, in making a distribution determination or transmission determination, is an AER economic regulatory function or power. 18W—Rate of return instrument may apply for this Law and the National Gas Law (1) The AER may make 1 rate of return instrument for the purposes of this Law and the National Gas Law. (2) If the AER acts under subsection (1)— (a) the process for making the instrument under Chapter 2 Part 1 Division 1A of the National Gas Law is taken to have been complied with for the instrument; and (b) the instrument is taken to be the rate of return instrument for the purposes of the National Gas Law. See also section 30R of the National Gas Law. (3) To remove any doubt, it is declared that the instrument may include different ways to calculate the rate of return on capital and the value of imputation credits for the purposes of this Law and the National Gas Law.