On 30 August 2013, the AER released its Draft rate of return guideline. This is accompanied by an Explanatory statement and Factsheet.
Draft guideline
Chairmont Consulting - Draft rate of return guideline - Debt risk premium report - February 2012
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Frontier Economics - Draft rate of return guideline - Assessing risk when determining the appropriate rate of return report - July 2013
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McKenzie and Partington - Draft rate of return guideline - Risk, asset pricing models and the WACC report - June 2013
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Lally - Draft rate of return guideline - Estimating the cost of debt report - August 2013
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AER Better Regulation factsheet - Draft rate of return guideline - August 2013 View details
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AER Explanatory statement - draft rate of return guideline - August 2013 View details
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Stakeholder forum
Information session on draft rate of return guideline
Following the release of the draft guideline the AER held an information session on 30 August 2013, presented by AER Chairman, Andrew Reeves outlining the details of our draft guideline. We have published a copy of the presentation and answers to all questions asked during the session.
AER - Andrew Reeves speech - Rate of return - information session - 30 August 2013 View details
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AER - Questions and answers - Rate of return - information session - 30 August 2013 View details
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Submissions
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Submissions to AER's draft rate of return guideline closed on 11 October 2013.
Trevor St Baker - Submission on the AER Better regulation draft rate of return guideline (personal submission) - 11 September 2013
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ActewAGL - Submission to the draft AER rate of return guideline - 11 October 2013
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APA Group - Submission to the draft AER rate of return guideline - 11 October 2013
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APIA Cover letter - Submission to the draft AER rate of return guideline - 11 October 2013
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APIA - Submission to the draft AER rate of return guideline - 11 October 2013
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Canegrowers - Submission to the draft AER rate of return guideline - 11 October 2013
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CitiPower, Powercor, SA Power Networks - Joint submission to the draft AER rate of return guideline - 11 October 2013
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COSBOA - Submission to the draft AER rate of return guideline - 10 October 2013
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Ethnic Communities' Council of NSW - Submission to the draft AER rate of return guideline - 10 October 2013
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Energy Networks Association - Submission to the draft AER rate of return guideline - 11 October 2013
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ENA - Submission to the draft AER rate of return guideline - Attachment 1 - NERA report: The Fama-French three-factor model - 11 October 2013
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ENA - Submission to the draft AER rate of return guideline - Attachment 2 - SFG report: Reconciliation of dividend discount model estimates with those compiled by the AER - 11 October 2013
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ENA - Submission to the draft AER rate of return guideline - Attachment 3 - NERA report: The Market risk premium, analysis in response to the AER's draft rate of return guideline - 11 October 2013
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ENA - Submission to the draft AER rate of return guideline - Attachment 4 - NERA report: Imputation credits and equity prices and returns - 11 October 2013
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ENA - Submission to the draft AER rate of return guideline - Attachment 5 - SFG report: Using market data to estimate the equilibrium value of distributed imputation tax credits - 11 October 2013
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ENA - Submission to the draft AER rate of return guideline - Attachment 6 - Hathaway report: Imputation credit redemption ATO data 1988-2011 - 11 October 2013
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ENA - Submission to the draft AER rate of return guideline - Attachment 7 - PWC letter: Responding to AER's criticism of PwC's report on the benchmark term of debt - 11 October 2013
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ENA - Submission to the draft AER rate of return guideline - Attachment 9 - CEG Report: Mechanistic cost of debt extrapolation from 7 to 10 years - 11 October 2013
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ENA - Submission to the draft AER rate of return guideline - Attachment 10 - CEG report: Review of Lally and Chairmont reports - 11 October 2013
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ENA - Submission to the draft AER rate of return guideline - Appendix D - Jones Day memorandum: Application of the decision in the Envestra case to the AER's draft guideline - 11 October 2013
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Energex - Submission to the draft AER rate of return guideline - 11 October 2013
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Ergon Energy Cover letter - Submission to the draft AER rate of return guideline - 11 October 2013
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Ergon Energy - Submission to the draft AER rate of return guideline - 11 October 2013
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EUAA - Submission to the draft AER rate of return guideline - 11 October 2013
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Jemena - Submission to the draft AER rate of return guideline - 11 October 2013
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Major Energy Users - Submission to the draft AER rate of return guideline - 10 October 2013
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NSW DNSP's - Joint submission to the draft AER rate of return guideline - 11 October 2013
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NSW DNSPs - Submission to the draft AER rate of return guideline - Attachment 2 - CEG report: Transition to a trailing average approach - 11 October 2013
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NSW Treasury Corp - Submission to the draft AER rate of return guideline - 9 October 2013
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PIAC - Submission to the draft AER rate of return guideline - 11 October 2013
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Queensland Treasury - Submission to the draft AER rate of return guideline - 11 October 2013
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Queensland Treasury - Submission to the draft AER rate of return guideline - Attachment A - An alternative extrapolation method - 11 October 2013
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SP AusNet - Submission to the draft AER rate of return guideline - 11 October 2013
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Spark Infrastructure - Submission to the draft AER rate of return guideline - 11 October 2013
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TransGrid - Submission to the draft AER rate of return guideline - 11 October 2013
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United Energy and Multinet Gas - Joint submission to the draft AER rate of return guideline - 11 October 2013
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Envestra - Submission to the draft AER rate of return guideline - 11 October 2013
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Envestra - Submission to the draft AER rate of return guideline - Attachment 1 - CommSec quotes - 11 October 2013
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Envestra - Submission to the draft AER rate of return guideline - Attachment 2 - Liquidity costs, Victorian draft decision PTRM - 11 October 2013
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Late submissions
Late submissions to AER's draft rate of return guideline.
NSW Irrigators' Council - Submission to the draft AER rate of return guideline - 14 October 2013
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United Energy/Multinet Gas - Joint submission to the draft AER rate of return guideline - Research into the new issue premium and its applicability to the Australian corporate bond market - 15 October 2013
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AFMA - Submission to the draft AER rate of return guideline - 17 October 2013
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ENA - Submission to the draft AER rate of return guideline - 2013 Nobel Prize in economic sciences - 17 October 2013
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ENA - Submission to the draft AER rate of return guideline - Understanding asset prices - 17 October 2013
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United Energy and Multinet Gas - Submission to the draft AER rate of return guideline - Yields and par value yields for corporate bonds - 17 October 2013
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Stakeholder forum
Draft rate of return guideline
The AER held a stakeholder forum on 1 October 2013 to discuss our draft rate of return guideline. The forum provided interested stakeholders with an opportunity to clarify aspects of the draft guideline and to present their views on the draft guideline.
Issues paper
Equity beta
On 11 October 2013, the AER released an issues paper on equity beta as part of its consultation for developing the rate of return guideline.
The equity beta is an important component of the rate of return. This issues paper sets out our proposed approach to estimating the equity beta. Applying this approach, we propose to adopt an equity beta of 0.7, chosen from within a range of 0.4 to 0.7. In previous decisions, since our 2009 weighted average cost of capital (WACC) review, we have adopted an equity beta of 0.8.
Links to the key consultant reports referred to in this issues paper can be found within the paper. We have previously published these reports on our website.
McKenzie and Partington Equity Beta (public) report - Roma to Brisbane Pipeline - 3 April 2012
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AER - Equity beta issues paper - Rate of return guideline - October 2013 View details
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Submissions
Submissions to AER issues paper on equity beta closed on 28 October 2013.
ActewAGL - Submission to AER equity beta issues paper - 28 October 2013
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APIA - Submission to the AER equity beta issues paper - 28 October 2013
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CitiPower, Powercor, SA Power Networks - Joint submission to AER equity beta issues paper - 28 October 2013
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ENA - Submission to AER equity beta issues paper - 28 October 2013
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ENA - Submission to AER equity beta issues paper - Attachment A - CEG report - International comparators - 28 October 2013
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ENA - Submission to AER equity beta issues paper - Attachment B - SFG letter - Water utility beta estimation - 28 October 2013
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Ergon Energy - Submission to the AER equity beta issues paper - 28 October 2013
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Major Energy Users - Submission to AER equity beta issues paper - 28 October 2013
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NSW DNSPs - Submission to AER equity beta issues paper - 28 October 2013
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PIAC - Submission to the AER equity beta issues paper - 28 October 2013
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Spark - Submission to AER equity beta issues paper - 28 October 2013
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Late submissions
Late submissions to AER issues paper on equity beta
FIG - Submission to AER equity beta issues paper - 29 October 2013
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APA Group - Submission to AER equity beta issues paper - 30 October 2013
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COSBOA - Submission to the AER equity beta issues paper - 1 November 2013
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