The Australian Energy Regulator (AER) has today released its final working papers on International regulatory approaches to rate of return and the Capital Asset Pricing Model (CAPM) and alternative return on equity models.
These final working papers form part of our pathway to the 2022 rate of return instrument. They reflect our consideration of the submissions we received in response to our August 2020 draft working papers.
The International regulatory approaches to rate of return paper analyses the decisions of international regulators and how they use different methods and data to set the rate of return. The paper outlines the AER’s preferred options for how this might influence the rate of return in our decisions.
The Capital Asset Pricing Model and alternative return on equity models paper identifies the AER’s current understanding of various equity models and our preferred options for how they could be used to determine the rate of return for regulated networks.
The proposals from these final working papers will contribute to the main phase of the 2022 review, commencing in mid-2021. There will be further consultation on the findings of these papers and how they might best be implemented as part of developing the 2022 rate of return instrument.