Report to the AER - A Review of International Approaches to Regulated Rates of Return - 30 June 2020

On Thursday 27 August 2020 the AER published our draft working paper on International regulatory approaches to rate of return. The working paper seeks to:

• Compare and evaluate differences between our current rate of return approach and the approaches used by international regulators.
• Identify options for potential changes to our current approach based on international practice.
• Seek submissions on the use of international approaches for informing the rate of return.

To help us understand overseas regulatory regimes, we commissioned expert advice from The Brattle Group, which is released alongside this working paper.

There are areas of overlap between this paper and our third draft working paper, Capital Asset Pricing Model (CAPM) and alternative return on equity models. We have published the two working papers simultaneously (together with the expert reports accompanying each) so that stakeholders can consider the links between them.