Investor Uncertainty November 2008. Investor Uncertainty WA Energy 2008 – Tonkin Corporation. K Peter Kolf General Manager & CEO Economic Regulation Authority 25 November 2008. Important Notice.
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Reflect on experience to date
Not offering advice or policy prescriptions
1 Regulator’s perspective
2 The role of markets & their impact on investors
3 Investor uncertainty
4 The importance of gas to the WA economy
5 Managing risks in the energy sector
6 The future for investment – a positive outlook?
Interests of Consumers
All other commodities
Election of Minister
Source: Australian Securities Exchange Web Site
Market Risk Premium = Broad-based stock index - Risk-free rate (Bonds)
Reference: “Review of Rate of Return Methodologies and Practices” IRIC, 2003, ERA Web Site
Gas Supply and DemandWestern Australia Domestic Market
~ Year to Sept 2007
mineral processing 35%
213.8 PJ 64%
110.8 PJ 33%
9.9 PJ 3%
Sources: ABARE & Energy Quest, Energy Quarterly Nov 2008
Note: Supply excludes gas used for LNG production but is included in demand
3 June 08
An investment of $1 in stocks at the end of 1882 and rolled over at the end of each year, stocks would have grown to $273,466 at the end of 2005.
A similar investment in bills would have grown to $539 and a similar investment in bonds would have grown to $834.
Brailsford Tim, Handley John C and Maheswaran Krishnan (2007), p16
The challenge is to develop rules that promote efficient decentralised decisions harmonising personal and public interests (Adam Smith’s invisible hand).
Need to avoid intrusive information intensive and administratively costly approaches through the development of market based systems.