Table Australian regulators' approaches to the value of imputation credits Value of imputation Regulator Form of adoption Year Distribution rate Utilisation rate credits Price review, greater metropolitan water 0.5, based on 2011 ESC 2013 N/A N/A businesses, final guidance decision Cost of capital market 0.84, using the financial 0.56, based primarily on QCA parameters, final 2014 statements of 20 largest the domestic ownership 0.47 decision ASX-listed companies share of listed equity 0.45, chosen from within the range of possible Fixed line services estimates and with ACCC (telecommunications), 2011 N/A N/A regard to a wide range of final access decision evidence, including industry specific factors Review of rate of return 0.35 to 0.55, using SFG 0.3, chosen from within estimation for rail 0.7, using cumulative ERA 2014 and ERA dividend drop the range of 0.25 to networks, draft payout ratio approach off studies 0.385 determination Review of imputation 0.7, using cumulative 0.35, using SFG IPART 2012 0.25 credits, final decision payout ratio approach dividend drop off study Source: As specified in table. As noted above, 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 draft decision value of imputation credits of 0.4 sits within the range adopted by regulators.
Table Australian regulators' approaches to the value of imputation credits Regulator Form of adoption Year Distribution rate Utilisation rate Value of imputation credits ESC Price review, greater metropolitan water businesses, final decision 2013 N/A N/A 0.5, based on 2011 guidance QCA Cost of capital market parameters, final decision 2014 0.84, using the financial statements of 20 largest ASX-listed companies 0.56, based primarily on the domestic ownership share of listed equity 0.47 ACCC Fixed line services (telecommunications), final access decision 2011 N/A N/A 0.45, chosen from within the range of possible estimates and with regard to a wide range of evidence, including industry specific factors ERA Review of rate of return estimation for rail networks, draft determination 2014 0.7, using cumulative payout ratio approach 0.35 to 0.55, using SFG and ERA dividend drop off studies 0.3, chosen from within the range of 0.25 to 0.385 IPART Review of imputation credits, final decision 2012 0.7, using cumulative payout ratio approach 0.35, using SFG dividend drop off study 0.25 Source: As specified in table. As noted above, 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 draft decision value of imputation credits of 0.4 sits within the range adopted by regulators.
AER%20%E2%80%93%20Draft%20decision%20Ausgrid%20distribution%20determination%20%E2%80%93%20Attachment%204%20%E2%80%93%20Value%20of%20imputation%20credits%20%E2%80%93%20November%202014_0.DOCX