|Client||New Zealand Commerce Commission|
|Sector(s)||Communications & Media, Energy, Transport, Water|
|Service(s)||Policy & Economics, Regulation & Competition, Review & Evaluation|
CEPA were retained to provide advice on international regulatory precedent on the cost of capital, in particular the approach taken by UK and Australian regulators. The report looked at four key issues:
· The impact of the form of regulation on the equity beta;
· The use of a trailing average for setting the risk-free rate and debt premium;
· Options for dealing with a lack of data for the cost of debt allowance; and
· Dealing with inflation within the risk-free rate estimate.
The report was published in December 2015 and can be accessed here.