Economic Insights - Report to the AER - Methodological issues in estimating the equity beta for Australian network energy businesses - 30 June 2021

On 15 July the AER published three draft working papers on Overall rate of return, Equity and Debt. Our three working papers focus on key technical aspects of the rate of return and provide the AER’s preliminary positions and issues for further consideration, in particular:

• Overall rate of return draft working paper provides an overview of our rate of return framework, our decision-making process and our positions to date. It also explores a number of discrete topics that relate to the overall rate of return.
• Equity draft working paper explores a number of technical aspects of estimating the expected return on equity. In particular, we want to check that the approach we employ is robust in a range of market conditions.
• Debt draft working paper discusses the data that is available to allow us to set a return on debt that aligns with the debt costs that network businesses experience.