Table 44 Australian regulators' approaches to the value of imputation credits of imputation Regulator Form of adoption Year Distribution rate Utilisation rate credits 0.35, using 2011 Review of imputation 0.7, using cumulative IPART 2012 version of SFG 0.25 credits, final decision payout ratio approach dividend drop off study Price review, greater metropolitan water 0.5, on 2011 ESC 2013 N/A N/A businesses, final guidance decision 0.84, the 0.56, based primarily Cost of capital market financial statements on the domestic QCA parameters, 2014 0.47 of 20 largest ownership share of decision companies listed equity 0.7, most weight to simple domestic ownership share of all Review of rate of equity, some weight to return estimation for 0.7, using cumulative ERA 2014 conceptual goalposts 0.5 rail networks, revised payout ratio approach approach, low weight to draft determination tax statistics and dividend drop off studies 0.45, set for consistency with Fixed line services previous ACCC (telecommunications), decisions, but with ACCC 2015 N/A N/A draft decision on regard to a range of access determination recent evidence, including firm specific factors Source: As specified in table. Conceptually, the value of imputation credits must be between 0 and 1. The range of values adopted by Australian regulators is from 0.25 to 0.5. This range is narrower than the range of estimates recommended by experts (from 0.25 to 0.84), but it is still quite wide. This highlights the lack of consensus among regulators on the value of imputation credits. Given the lack of consensus among experts, this is perhaps not surprising. Our final decision value of imputation credits of 0.4 sits within the range adopted by regulators. Previous Australian Competition Tribunal considerations The Australian Competition Tribunal has considered in detail the value of imputation credits (gamma) in three proceedings since 2010, relating to applications by: Energex Limited DBNGP (WA) Transmission Pty Ltd, and WA Gas Networks Pty Ltd.
Table 44 Australian regulators' approaches to the value of imputation credits Regulator Form of adoption Year Distribution rate Utilisation rate of imputation credits IPART Review of imputation credits, final decision 2012 0.7, using cumulative payout ratio approach 0.35, using 2011 version of SFG dividend drop off study 0.25 ESC Price review, greater metropolitan water businesses, final decision 2013 N/A N/A 0.5, on 2011 guidance QCA Cost of capital market parameters, decision 2014 0.84, the financial statements of 20 largest companies 0.56, based primarily on the domestic ownership share of listed equity 0.47 ERA Review of rate of return estimation for rail networks, revised draft determination 2014 0.7, using cumulative payout ratio approach 0.7, most weight to simple domestic ownership share of all equity, some weight to conceptual goalposts approach, low weight to tax statistics and dividend drop off studies 0.5 ACCC Fixed line services (telecommunications), draft decision on access determination 2015 N/A N/A 0.45, set for consistency with previous ACCC decisions, but with regard to a range of recent evidence, including firm specific factors Source: As specified in table. Conceptually, the value of imputation credits must be between 0 and 1. The range of values adopted by Australian regulators is from 0.25 to 0.5. This range is narrower than the range of estimates recommended by experts (from 0.25 to 0.84), but it is still quite wide. This highlights the lack of consensus among regulators on the value of imputation credits. Given the lack of consensus among experts, this is perhaps not surprising. Our final decision value of imputation credits of 0.4 sits within the range adopted by regulators. Previous Australian Competition Tribunal considerations The Australian Competition Tribunal has considered in detail the value of imputation credits (gamma) in three proceedings since 2010, relating to applications by: Energex Limited DBNGP (WA) Transmission Pty Ltd, and WA Gas Networks Pty Ltd.