Consumer, small business, and social sector groups say energy networks are profiting unreasonably from a complex regulatory process known as the Rate of Return Instrument (RORI) at the expense of households and small businesses.
The RORI is a binding regulatory rule made every four years by the Australian Energy Regulator (AER). It sets the mathematical formulas and parameters used to calculate the allowed rate of return—essentially the profit and interest rate—that regulated electricity and gas network businesses can recover from consumers for their capital investments.
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In a joint letter and submissions to the Australian Energy Regulator (AER), the groups argue that while investment in energy networks is crucial for reliable and accessible power, costs must be recovered at the lowest level necessary, and that the current proposal doesn’t achieve this.
“We have long believed the Rate of Return Instrument has been set too high and that consumers pay an unnecessary premium. While the Australian Energy Regulator’s draft goes some of the way to fixing the problem, it must go further. Every cent matters right now to people in Australia,” Energy Consumers Australia CEO Brendan French said.
“More than a billion dollars of consumers’ hard-earned money is being poured down the energy network drain. That’s money that can and should be back in Australians’ pockets for other essentials.
“The Rate of Return Instrument is one of the single biggest decisions that will impact on the energy bills of households and small businesses. The Australian Energy Regulator needs to put consumers first and not let energy networks needlessly profit from this complex regulatory process.”
“The current proposal addresses some of the billion-dollar premium, but there’s still hundreds of millions on the table. Our joint letter to the Australian Energy Regulator makes a simple request—maximise every cent possible back to households and small businesses facing cost-of-living pressures.”
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The Australian Energy Regulator is expected to make its final decision on the Rate of Return Instrument in December.
Energy Source & Distribution has contacted Energy Networks Australia for comment.
