Ofwat consult on approach to the cost of debt

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6th September 2016
Ofwat have today published a consultation on the approach to the cost of debt for PR19. The Ofwat preferred option is the indexation of new debt, following evidence that forecasting debt costs is difficult with significant errors in market forecasts and with little benefit from companies bearing this risk. The consultation paper is available here.

Ofwat, together with the CAA, had commissioned CEPA to produce a report on the cost of debt. This report has been published alongside the consultation and can be accessed here.