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Date: December 2019 | Client: UKRN | Sector: Communications & media | Energy | Financial services | Expertise:

Considerations for UK regulators setting the value of debt beta

The UK Regulators Network (UKRN), a member organisation formed by 11 of the UK’s sectoral regulators that facilitates co-operation and communication across its members, have published a report:  Considerations for UK regulators setting the value of debt beta.

The report reflects the commitment UKRN made in their 2019 Cost of Capital Report to commission a short report on approaches to debt beta estimation and the link between debt beta and gearing levels.

The report was carried out by CEPA and is a review of the methodologies used to estimate the debt beta, and of the ways in which different regulators used debt beta in estimating the WACC. The report aims to identify key insights for future regulatory determinations.

Commenting on the work the UKRN says “the cost of capital network will work closely together to reflect on this analysis, as well as continuing to bring together experts from across our member regulators, ensuring that our work in this area is aligned where possible and sharing knowledge and best practice.”

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