Summary of CRG and ENA current perspectives on elements of the RoR Guideline Cells coloured pink are promoted by that group for consideration at the concurrent evidence sessions. Cells coloured green have been nominated by that group as potential low hanging fruit. NOTE: Gearing is most significant gap. Prepared by David Havyatt 1 Feb 2018 Component CRG ENA Proposed priority of issue being discussed in concurrent evidence session The concept of risk and how to What is the concept of risk in Propose discuss at a joint compensate for it corporate finance? Experts Session? Risks actually faced by What impacts investor confidence How should the changing risk High providers and how to measure/take account profile by networks be taken of it when with a range of into account in the regulatory possibilities? framework? What risk should the rate of return compensate? How can the risk of businesses providing regulated services be estimated? Differences in between Propose discuss at a joint providers Experts Session? Data How do you deal with inadequate Where does the balance between Medium data? judgement and data lie, and how How best to deal with a range of precisely can we seek to estimate outcomes and picking a point rate of return parameters estimate? objectively, and in a way that can Can the foundational model be be replicated independently by converted to a (e.g. to any stakeholder, using market ‘formula’ address the concept of data? ‘’being informed by’) or does it just reconcile to point estimates? How should the AER pick the estimate from a range of equity
Summary of CRG and ENA current perspectives on elements of the RoR Guideline Cells coloured pink are promoted by that group for consideration at the concurrent evidence sessions. Cells coloured green have been nominated by that group as potential low hanging fruit. NOTE: Gearing is most significant gap. Prepared by David Havyatt 1 Feb 2018 Component CRG ENA Proposed priority of issue being discussed in concurrent evidence session The concept of risk and how to compensate for it What is the concept of risk in corporate finance? Propose discuss at a joint Experts Session? Risks actually faced by providers What impacts investor confidence and how to measure/take account of it when with a range of possibilities? What risk should the rate of return compensate? How can the risk of businesses providing regulated services be estimated? How should the changing risk profile by networks be taken into account in the regulatory framework? High Differences in between providers Propose discuss at a joint Experts Session? Data How do you deal with inadequate data? How best to deal with a range of outcomes and picking a point estimate? Can the foundational model be converted to a ‘formula’ (e.g. to address the concept of ‘’being informed by’) or does it just reconcile to point estimates? How should the AER pick the estimate from a range of equity Where does the balance between judgement and data lie, and how precisely can we seek to estimate rate of return parameters objectively, and in a way that can be replicated independently by any stakeholder, using market data? Medium
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