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Discussion paper
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The Australian Energy Regulator (AER) regulates energy markets and networks in jurisdictions other than Western Australia.

The energy market is in transition, and our work takes place in the context of significant technological, behavioural and systemic change. Our work places consumers at the heart of this transition, as we play our part in delivering a secure, reliable and affordable energy future for Australia. This means contributing our expertise and insight to policy debates, regulating in a flexible way that fosters innovation, and ensuring consumers are supported as the market evolves. We work in partnership with other energy market bodies and the COAG Energy Council (Energy Council) to provide strong governance and to ensure our work programs aligns with broader energy priorities so reforms can be coordinated and efficiently sequenced.

We want to see successful businesses thrive and be appropriately rewarded because they meet the needs of consumers. This is best delivered through competition, with regulation advancing the long term interests of consumers where necessary.

Through the regulatory reset process, consumer groups and other stakeholders have raised concerns about the profit levels of regulated electricity and gas network businesses. They argue the regulatory framework enables regulated network businesses to achieve returns above expected returns given the risks they face.

Under the national energy laws and rules, the AER may prepare and publish reports on financial performance or operational performance, including profitability and efficiency, of regulated businesses. While we have previously published some information on the profitability of the network businesses in our performance reports, this has not been on a continuous or consistent basis.

We are commencing a consultation process to identify profitability measures and the data required to calculate these measures.

We plan to begin collecting this data from electricity and gas network businesses as part of our annual regulatory reporting processes. We will publish this information and use it to report on profitability in performance reports. In addition to measuring the actual profitability of a regulated entity, the measures should also allow comparison of forecast returns against actual returns, comparison of regulated businesses against each other and comparison of regulated businesses against other businesses.

We would like feedback from stakeholders on the matters raised in this discussion paper. 

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