The Tribunal engaged Frontier Economics to provide advice on an appropriate allowance for a retail margin. Under Frontier Economics’ expected returns approach, the retail margin is partially determined by the systematic risk of returns, which is directly related to volume risks associated with the overall state of the economy. This report sets out Frontier Economics’ further analysis on the relationship between unexpected GDP growth and unexpected volume growth.
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The association between unexpected changes in electricity volume and GDP growth for residential customers - prepared for IPART by Frontier Economics - May 2007
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