Overview

Consultation paper

On Thursday 27 August 2020 the AER published our draft working paper on CAPM and alternative return on equity models. The working paper seeks to:

  • Compare and evaluate the strengths and weaknesses of the Capital Asset Pricing Model (CAPM) and a number of alternative return on equity models.
  • Identify options for how these model/s might be used.
  • Seek submissions on the use of these models to inform the return on equity.

To help us understand finance theory and practice, we commissioned expert advice from Professors Graham Partington and Stephen Satchell.

There are areas of overlap between this paper and our second draft working paper, on International regulatory approaches to the rate of return. We have published the two working papers simultaneously (together with the expert reports accompanying each) so that stakeholders can consider the links between them.

Report to the AER - Alternative Asset Pricing Models - 30 June 2020

Authors
Graham Partington and Stephen Satchell
Content type
Document

Rate of return - CAPM and alternative return on equity models - Draft working paper - 27 August 2020

Authors
AER
Content type
Document

Submissions

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We invited interested parties to make submissions on our draft working paper on CAPM and alternative return on equity models. Submissions closed on 9 October 2020. This submission period coincided with our submission period for our draft working paper on International regulatory approaches to rate of return. Many parties responded to both working papers in a single submission.

APGA - Submission to the AER - Draft working papers on return on equity models and international approaches to the rate of return - 9 October 2020

Authors
Australian Pipelines and Gas Association (APGA)
Content type
Document

Ausgrid - Submission - International regulatory approaches to rate of return and CAPM - 9 October 2020

Authors
Ausgrid
Content type
Document

CRG - Submission to AER - Return on equity - 9 October 2020

Authors
Consumer Reference Group (CRG)
Content type
Document

CRG - Final consumer engagement framework - 30 September 2020

Authors
Consumer Reference Group (CRG)
Content type
Document

ENA - Submission - Best practice framework for setting the allowed return on equity - 9 October 2020

Authors
Energy Networks Australia (ENA)
Content type
Document

Endeavour Energy - Submission - Draft working papers - Return on equity - 9 October 2020

Authors
Endeavour Energy
Content type
Document

Energy Queensland - Submission - Pathway to rate of return 2022 instrument - Return on equity - 9 October 2020

Authors
Energy Queensland
Content type
Document

EUAA - Submission - CAPM and alternative return on equity models - 9 October 2020

Authors
Energy Users Association of Australia (EUAA)
Content type
Document

MEU - Submission on Rate of return - CAPM and alternative RoE models and International regulatory approaches to RoR - Draft working papers - 7 October 2020

Authors
Major Energy Users Inc (MEU)
Content type
Document

NSG - Submission to AER RoE and International RoR working paper - 9 October 2020

Authors
Network Shareholder Group (NSG)
Content type
Document

SA Power Networks - Submission on AER draft working paper - Rate of return CAPM and alternative return on equity models - 7 October 2020

Authors
SA Power Networks
Content type
Document

Late submissions

We received four submissions after the closing date.

APA - Late submission - CAPM and alternative return on equity models - 12 October 2020

Authors
Australian Pipeline Limited (APA Group)
Content type
Document

Nyrstar - Late submission - On the AER draft working paper on CAPM and alternative return on equity models - 14 October 2020

Authors
Nyrstar
Content type
Document

QTC - Late submission - Pathway to the 2022 Rate of return instrument - 12 October 2020

Authors
Queensland Treasury Corporation (QTC)
Content type
Document

TransGrid - Late submission - AER Pathway to 2022 Rate of return instrument - Draft return on equity working papers - 12 October 2020

Authors
Transgrid
Content type
Document

Stakeholder forum

On 16 September 2020 we hosted an online forum to present key points from our draft working paper and hear some stakeholder perspectives on the issues. This was a joint forum that also covered our working paper on International regulatory approaches to rate of return.

The AER would like to thank those who presented at the forum, as well as those who were able to attend on the day to listen to the views of other stakeholders.

AER - Rate of Return Working Papers Forum presentation - 16 September 2020

Authors
AER
Content type
Document

The Brattle Group - Rate of Return Working Papers Forum presentation - 16 September 2020

Authors
The Brattle Group
Content type
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Partington & Satchell - Rate of Return Working Papers Forum presentation - 16 September 2020

Authors
Graham Partington and Stephen Satchell
Content type
Document

ENA - Rate of Return Working Papers Forum presentation - 16 September 2020

Authors
Energy Networks Australia (ENA)
Content type
Document

APGA - Rate of Return Working Papers Forum presentation - 16 September 2020

Authors
Australian Pipelines and Gas Association (APGA)
Content type
Document

QTC - Rate of Return Working Papers Forum presentation - 16 September 2020

Authors
Queensland Treasury Corporation (QTC)
Content type
Document

CRG - Rate of Return Working Papers Forum presentation - 16 September 2020

Authors
Consumer Reference Group (CRG)
Content type
Document

RRG - Rate of Return Working Papers Forum presentation - 16 September 2020

Authors
Retailer Reference Group (RRG)
Content type
Document