Table 1.3 Building block costs Building block costs Attachments where elements are discussed Return on capital Regulatory asset base (attachment 2) Capex (attachment 6) Rate of return (attachment 3) Regulatory depreciation (return of capital) Regulatory asset base (attachment 2) Capex (attachment 6) Depreciation (attachment 5) Operating expenditure (opex) Opex (attachment 7) Efficiency benefits/penalties Efficiency benefit sharing scheme (attachment 9) Estimated cost of corporate tax Corporate income tax (attachment 8) Value of imputation credits (attachment 4) Adjustment for shared assets Maximum allowed revenue (attachment 1) Source: AER analysis. Annual revenue adjustment process The PTRM incorporates an expected inflation rate to calculate the expected MAR (excluding performance incentive scheme revenue adjustments and pass through amount that may apply to each regulatory year) in nominal dollar terms, whereas the actual MAR for each year is adjusted for actual inflation. As discussed in the return on debt appendix of attachment 3, we will update AusNet return on debt Services’ annually. This means the actual MAR for each year will also be adjusted for revised X factors after the annual return on debt update. This annual revenue adjustment process is set out below. The MAR for the subsequent year of the regulatory control period requires an annual adjustment based on the previous allowed revenue. That is, the subsequent year’s allowed revenue is determined by adjusting the previous allowed revenue year’s year’s for actual inflation and the X factor determined after the annual return on debt update: ARt = where: AR = the allowed revenue t = time period/financial year (for t = 2 (2018–19), 3 (2019–20), 4 (2020–21), 5 (2021–22)) = the annual percentage change in the ABS Consumer price index ∆CPI all groups, weighted average of eight capital cities from September in year t 2 to September in year t 1 – –
Table 1.3 Building block costs Building block costs Attachments where elements are discussed Return on capital Regulatory asset base (attachment 2) Capex (attachment 6) Rate of return (attachment 3) Regulatory depreciation (return of capital) Regulatory asset base (attachment 2) Capex (attachment 6) Depreciation (attachment 5) Operating expenditure (opex) Opex (attachment 7) Efficiency benefits/penalties Efficiency benefit sharing scheme (attachment 9) Estimated cost of corporate tax Corporate income tax (attachment 8) Value of imputation credits (attachment 4) Adjustment for shared assets Maximum allowed revenue (attachment 1) Source: AER analysis. Annual revenue adjustment process The PTRM incorporates an expected inflation rate to calculate the expected MAR (excluding performance incentive scheme revenue adjustments and pass through amount that may apply to each regulatory year) in nominal dollar terms, whereas the actual MAR for each year is adjusted for actual inflation. As discussed in the return on debt appendix of attachment 3, we will update AusNet Services’ return on debt annually. This means the actual MAR for each year will also be adjusted for revised X factors after the annual return on debt update. This annual revenue adjustment process is set out below. The MAR for the subsequent year of the regulatory control period requires an annual adjustment based on the previous year’s allowed revenue. That is, the subsequent year’s allowed revenue is determined by adjusting the previous year’s allowed revenue for actual inflation and the X factor determined after the annual return on debt update: ARt = where: AR = the allowed revenue t = time period/financial year (for t = 2 (2018–19), 3 (2019–20), 4 (2020–21), 5 (2021–22)) ∆CPI = the annual percentage change in the ABS Consumer price index all groups, weighted average of eight capital cities from September in year t – 2 to September in year t – 1
AER%20-%20Draft%20decision%20Ausnet%20Services%20transmission%20determination%20-%20Attachment%201%20-%20Maximum%20allowed%20revenue%20-%20July%202016.docx