Outturn inflation

On 22 March 2018, we clarified our position on DBCTM’s proposal to use the latest ABS inflation index to calculate outturn inflation. Subject to considering feedback from stakeholders, we said we were minded to accept that DBCTM’s proposal was consistent with the 2017 access undertaking (schedule C, part A, cl. 4(a)) and to permit DBCTM to use the most recent ABS inflation index to calculate outturn inflation in the future.

We did not receive any submission on this matter. Consequently, the most recent ABS inflation index was applied to calculate outturn inflation in the 2018–19 annual revenue requirement (ARR) amendment process.

DBCTM’s proposal and our letter to DBCTM can be downloaded below.

DBCT Management (DBCTM) proposed to change the inflation index used to calculate outturn inflation, which is applied to the regulatory asset base (RAB) when amending the annual revenue requirement (ARR) each year.

The change to directly use the latest inflation index was initially proposed in DBCTM’s modelling draft amending access undertaking (Modelling DAAU) in September 2017. However, the proposal was not in a form we could consider and as such, we ceased considering the Modelling DAAU.

DBCTM subsequently proposed the change via a letter. The change was suggested as an improvement over current practice, subject to our agreement the update was consistent with the DBCT 2017 access undertaking.