1. The Australian Energy Regulator Economic benchmarking Input data

2. Agenda TimeItem 13:00Introduction 13:15Model specification 14:05Break 14:20Measurement of opex 13:50Measurement of capital 15:25Break 15:35Measurement of capital continued 16:25Next steps 16:30Close

3. How does this fit into the broader consultation? This is the 6 th workshop on economic benchmarking techniques – one more to come Draft explanatory guidelines in August Final by 29 November

4. Economic benchmarking workshops DateSubject 13 MarchDNSP outputs and environmental factors 14 MarchTNSP outputs and environmental variables 20 MarchNSP inputs 30 AprilMeasurement – DNSP outputs and environmental variables 2 MayMeasurement – TNSP outputs and environmental variables 7 MayMeasurement - NSP inputs 22 MayPrescription in the EFA guideline & potential application techniques 30 MayExpenditure setting process

5. Objective of this workshop To discuss data requirements measurement of inputs Is the data list comprehensive? Are the preliminary definitions suitable? To consider some input specification issues ◦ Easements ◦ Distribution network complexity ◦ System capacity and capital input quantities ◦ The WACC for economic benchmarking

6. Objective of next workshop To discuss the role of economic benchmarking in the review of expenditure forecasts Provide an illustration of its application Consider practical application issues Discuss the specification of economic benchmarking in the EFA guideline

7. Overlap with category analysis Some common issues ◦ Cost allocation ◦ Definitions of cost categories Workshop on 16 May to consider shared costs Consistent reporting requirements

8. Economic Insights presentation

9. Model specification Discussion points Treatment of easements Complexity of different distribution networks WACC for economic benchmarking

10. Economic Insights presentation

11. Opex discussion points AWOTE or WPI? Data requirements DNSP definitions pg. 14 TNSP definitions pg. 23

12. Economic Insights presentation

13. Capital discussion points Two main components Asset quantities Asset costs – RAB depreciation

14. Capital discussion points Asset quantities DNSP quantities – pg. 15 TNSP quantities – pg. 24

15. Capital discussion points RAB parameters DNSP – pg. 18 TNSP – pg. 26