Australian Competition Tribunal quotes Ockerby

CEG's Jason Ockerby has been quoted by the Australian Competition Tribunal.  In examining Telstra's Undertaking for its unconditioned local loop service, the Tribunal considered whether it was appropriate to allow a 'markup' on the allowed weighted average cost of capital (WACC) to reflect alleged asymmetric risks associated with regulatory error.  The Tribunal considered that in the circumstances outlined by Mr Ockerby such an allowance was not reasonable.  Regulated businesses that seek such an allowance will need to empirically investigate the implications of under or over investment from a misspecified WACC.