On 11 December 2008, the AER released its proposed statement (transmission) and proposed statement of regulatory intent (distribution) on the revised WACC parameters. The AER also published its explanatory statement on the proposed WACC parameters, and consultants reports commissioned by the AER in the context of the proposed statements.
Proposal - Proposed statement (transmission) and proposed statement of regulatory intent (distribution)
Proposed statements Review of electricity transmission and distribution WACC parameters - 11 December 2008
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Explanatory statement - Review of electricity transmission and distribution WACC parameters - 11 December 2008
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Consultant reports
In the context of the proposed statements, the AER comissioned expert reports from Associate Professors John Handley and Olan Henry from Melbourne University and Deloitte. The reports are attachments to the explanatory statement
Attachment A - Handley - Comments on the CEG report 'establishing a proxy for the risk free rate'
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Attachment B - Deloitte - Refinancing, debt markets and liquidity
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Attachment C - Henry - Econometic advice and beta estimation
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Attachment D - Handley - Comments on the CEG reports on 'biases inherent in the Sharpe CAPM formula' and 'implied cost of equity'
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Attachment E - Handley - A note on the historical equity risk premium
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Attachment F - Handley - Supplement to a note on the historical equity risk premium
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Attachment G - Handley - A note on the valuation of imputation credits
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Submissions - on the explanatory statement
Submissions on the explanatory statement closed on 28 January 2009. The AER granted an extension to 2 February 2009, for the submissions from the Joint Industry Associations, ENA, Energex, Ergon Energy, ESAA, Grid Australia and Queensland Government.
JIA Appendix B- Commentary on AER's analysis of gearing levels
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JIA Appendix C- Term of the risk free rate under the NER
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JIA Appendix D- CGS as a proxy for the risk free rate
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JIA Appendix F- Statement of Gregory Meredith (Envestra)
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JIA Appendix G- Statement of Andrew Noble (Citipower and Powercor)
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JIA Appendix H- Statement of Alastair Watson (SP AusNet)
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JIA Appendix I- Queensland Treasury Corporation- Expert statement
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JIA Appendix J- Market risk premium- Further comments
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JIA Appendix K- Forward looking estimates of the equity premium
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JIA Appendix L- AER's draft conclusions on the WACC paramaters
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JIA Appendix M- Estimating the NER equity beta based on stock market data
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JIA Appendix N- The reliability of empirical beta estimates
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JIA Appendix O- Credit rating for the 'benchmark efficient NSP'
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JIA Appendix P- Market practice in relation to franking credits and WACC
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JIA Appendix Q- AER's proposed WACC statement-Gamma
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JIA Appendix R- Using redemption rates to estimate theta
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JIA Appendix S- The value of imputation credits as implied by the methodology of Beggs and Skeels (2006)
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JIA Appendix T- The consistency of estimates of the value of cash dividends
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JIA Appendix U- Peer review of SFG Consulting reports on gamma
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JIA Appendix W - Bruce Grundy CV- (University of Melbourne)
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JIA Appendix X - Tom Hird CV- (Competition Economists Group)
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JIA Appendix Y - Stephen Gray CV- (Strategic Finance Group)
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JIA Appendix Z - Steve Bishop CV- (Value Adviser Associates)
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JIA Appendix AB - Jeff Balchin CV- (Allen Consulting Group)
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JIA Appendix AC - Michael Lawriwsky CV- (Allen Consulting Group)
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Stakeholder forum - on explanatory statement
On 17 December 2008, the AER held a public forum for the purposes of explaining its proposed statements on the WACC parameters and to receive oral submissions from interested stakeholders.
AER presentation - WACC public forum - 17 December 2008
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Financial Investor Group presentation - WACC public forum - 17 December 2008
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ENA presentation - WACC public forum - 17 December 2008
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EUAA presentation - WACC public forum - 17 December 2008
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MEU and National Consumers Roundtable on Energy presentation - WACC public forum - 17 December 2008
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Submissions - from other interested parties on explanatory statement
Submissions on the explanatory statement closed on 28 January 2008. The AER granted an extension to 2 February 2009, for the submissions from the Joint Industry Associations, ENA, Energex, Ergon Energy, ESAA, Grid Australia and Queensland Government.
ENERGEX submission on explanatory statement - 2 February 2009
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EnergyAustralia submission on explanatory statement - 17 December 2009
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Envestra submission on explanatory statement - 28 January 2009
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Equity market participants submission on explanatory statement - 30 January 2009
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Ergon Energy submission on explanatory statement - 2 February 2009
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ETSA Utilities, Citipower, Powercor - submission on explanatory statement - 2 February 2009
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Financial Investor Group submission on explanatory statement - 29 January 2009
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Grid Australia submission on explanatory statement - 2 February 2009
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Jemena submission on explanatory statement - 2 February 2009
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MEU and national consumers roundtable on energy - 30 January 2009
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NSW Treasury submission on explanatory statement - 28 January 2009
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Queensland Government submission on explanatory statement - 30 January 2009
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Queensland Treasury Corporation submission on explanatory statement - 2 February 2009
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RARE submission on explanatory statement - 27 January 2009
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United Energy Distribution submission on explanatory statement - 2 February 2009
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Submissions - further submissions on explanatory statement
Subsequent to the closure of the consultation period on the explanatory statement (including the extension granted to certain parties), the AER received two additional submissions.
On 6 March 2009, the AER received a further submission from the Joint Industry Associations (JIA) which is in response to a submission lodged by the Major Energy Users (MEU). On 19 March 2009, the AER received a submission from the Energy Networks Association (ENA).
Under the National Electricity Rules (NER), the AER may, but is not required to, consider any submission received after the time for making submissions has expired.
ENA - Letter to submission on explanatory statement - 19 March 2009
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ENA - Submission to explanatory statement - 19 March 2009
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JIA - Gilbert and Tobin - Cover letter to submission to explanatory statement - 6 March 2009
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JIA - CEG - Response to MEU submission to explanatory statement - 6 March 2009
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