Antinuclear

While the consulting industry thrives on selling so-called expert valuations to justify this rort, Sydney University finance professor David Johnstone says it should end…….

energy companies are valuing old assets such as gas pipelines – things that consumers have already paid for – as if they were brand-spanking new. We, the mug punters, are lumbered with the cost on our power bills.

This is the DORC rort (depreciated optimised replacement cost), its moniker alone sufficient to discourage further inquiry.

Suffice to say that a reasonable thing for regulators to do might simply be to value assets at their cost, or to recognise only what their owners actually spend. Suffice to say that in Singapore and Hong Kong they would not be silly enough to use DORC, yet large corporations from these places are here enjoying riskless 10 per cent returns by stinging we mug Aussies twice for access to old gas pipelines, things that were paid for, and privatised, years ago……

why are assets that are already in private hands given the same favourable regulatory treatment? “I think it comes down to ideology as well as vested interests,” Johnstone says. “Economists fall in love their own models and crave the authority of being scientists.”  http://www.smh.com.au/business/dorc-rort-the-art-of-getting-energy-infrastructure-paid-for-twice-20140919-10jega.html#ixzz3DuqE0nIm