RAB Roll-Forward

Overview

The Regulatory Asset Base (RAB) is the AER’s estimate of the value of a DNSP’s network assets for regulatory purposes. The RAB forms the basis for calculating the allowed return on capital (WACC × RAB) — the largest single component of the building block revenue model.

Modelling the RAB roll-forward accurately is critical for DNSPs preparing for regulatory reset submissions and for understanding expected revenue over the regulatory period.

RAB Roll-Forward Formula

The RAB moves each year through this formula:

RAB_end = RAB_start × (1 + CPI%) + Capex_additions - Depreciation - Disposals

Where:

RAB_start: opening RAB for the year
CPI%: CPI indexation rate (set by AER, usually current-year CPI forecast)
Capex_additions: prudent and efficient capex added during the year
Depreciation: straight-line depreciation based on asset life
Disposals: assets removed from the regulated network

Dashboard Pages

RAB Roll-Forward Model (`/dnsp/rab/rollforward`)

Interactive 5-year RAB waterfall chart
Configurable inputs: capex profile, CPI scenario (low/base/high), asset disposal assumptions
Year-by-year breakdown: CPI uplift, capex additions, depreciation, disposals
Comparison: proposed vs AER-determined capex scenarios

Screenshot: RAB roll-forward waterfall chart showing 5-year projection with CPI uplift (green), capex additions (blue), and depreciation (red) components.

WACC Sensitivity Analysis (`/dnsp/rab/wacc-sensitivity`)

The allowed return on capital = WACC × RAB. Small changes in WACC have large revenue impacts:

WACC Change	Revenue Impact (per $1B RAB)
+0.1%	+$1M/year
+0.5%	+$5M/year
+1.0%	+$10M/year

The WACC sensitivity tool models revenue across a range of WACC scenarios (±200bps) and shows the impact on allowed revenue, customer bills, and return on assets.

Depreciation Schedule

The platform maintains a detailed depreciation schedule by asset class:

-- RAB depreciation by asset class
SELECT
    asset_class,
    opening_rab_aud,
    new_additions_aud,
    annual_depreciation_aud,
    depreciation_rate_pct,
    remaining_life_years,
    closing_rab_aud
FROM energy_copilot.gold.dnsp_rab_schedule
WHERE financial_year = 2025
  AND dnsp_name = 'Ausgrid'
ORDER BY opening_rab_aud DESC;

Standard asset lives used in the model:

Asset Class	Standard Life (Years)
Transmission connections	50
Zone substations	50
Distribution transformers	40
Underground cables	50
Overhead conductors	40
Wood poles	50
Steel poles	65
Switchgear (HV)	30
Meters (smart)	15

CPI Indexation

RAB is indexed annually to CPI to preserve the real value of regulated assets in real terms. The AER uses the June quarter CPI rate:

# RAB indexation calculation
def index_rab(rab_opening: float, cpi_rate: float) -> float:
    """
    Apply CPI indexation to opening RAB.
    cpi_rate: annual CPI as a decimal (e.g., 0.034 for 3.4%)
    """
    return rab_opening * (1 + cpi_rate)

5-Year Waterfall Projection

The RAB model projects the full regulatory period (typically 5 years):

Year 1: RAB_open × (1 + CPI_1) + Capex_1 - Dep_1
Year 2: RAB_1 × (1 + CPI_2) + Capex_2 - Dep_2
...
Year 5: RAB_4 × (1 + CPI_5) + Capex_5 - Dep_5

Scenario modelling:

Base case: AER-approved capex, RBA CPI forecast
High capex: 20% above base (augmentation program)
Low CPI: 1% CPI (low inflation scenario)
High CPI: 5% CPI (inflationary scenario)

API Endpoints

# Current RAB by asset class
GET /api/dnsp/rab/current?dnsp=sa_power_networks

# 5-year roll-forward projection
GET /api/dnsp/rab/projection?dnsp=ausgrid&years=5&scenario=base

# WACC sensitivity
GET /api/dnsp/rab/wacc-sensitivity?dnsp=ergon&wacc_range=0.05,0.09

# Depreciation schedule
GET /api/dnsp/rab/depreciation?dnsp=energex&year=2025

# Capex vs RAB comparison
GET /api/dnsp/rab/capex-impact?dnsp=essential_energy