analysed data as possible. We intend to apply benchmarking in conjunction with other expenditure assessment techniques to review forecasts. We will not preclude using Consumers would favour the AER consider using benchmarking to determine expenditure allowances. If, on the balance benchmarks as a forecast, that is, in considering whether of evidence (accounting for submissions), we consider benchmarking proposals for expenditure are acceptable. provides the most appropriate forecast, then we will use it to set expenditure allowances. At this stage, it is too early to form a view on the appropriate weight to apply to assessment techniques. AER should recognise weakness in the current regime This issue is addressed in the design of the capital expenditure assuming symmetrical risk. Where they can include it into incentive arrangements. This is considered in the explanatory RAB if overspend, and if they underspend it doesn't get statement to the Capital Expenditure Sharing Scheme. clawed back as it is under the allowance. Where expenditure decisions are being made it would be helpful to know why it is being spent and when it is being We will report NSPs’ actual expenditure in our annual performance and spent. As an example, is expenditure occurring in the last benchmarking reports. year in particular? Consumers would like up-to-date capex. For example, if We will report NSPs’ actual expenditure and actual demand in our expectations of demand were wrong, then consumers would annual performance and benchmarking reports. like to know what capex is being spent.
analysed data as possible. Consumers would favour the AER consider using benchmarks as a forecast, that is, in considering whether proposals for expenditure are acceptable. We intend to apply benchmarking in conjunction with other expenditure assessment techniques to review forecasts. We will not preclude using benchmarking to determine expenditure allowances. If, on the balance of evidence (accounting for submissions), we consider benchmarking provides the most appropriate forecast, then we will use it to set expenditure allowances. At this stage, it is too early to form a view on the appropriate weight to apply to assessment techniques. AER should recognise weakness in the current regime assuming symmetrical risk. Where they can include it into RAB if overspend, and if they underspend it doesn't get clawed back as it is under the allowance. This issue is addressed in the design of the capital expenditure incentive arrangements. This is considered in the explanatory statement to the Capital Expenditure Sharing Scheme. Where expenditure decisions are being made it would be helpful to know why it is being spent and when it is being spent. As an example, is expenditure occurring in the last year in particular? We will report NSPs’ actual expenditure in our annual performance and benchmarking reports. Consumers would like up-to-date capex. For example, if expectations of demand were wrong, then consumers would like to know what capex is being spent. We will report NSPs’ actual expenditure and actual demand in our annual performance and benchmarking reports.
AER%20Explanatory%20statement%20-%20draft%20expenditure%20forecast%20assessment%20guideline%20-%20August%202013.DOCX