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Cost of Capital


We assist with:

  • Advice and quantification of cost of capital parameters
  • Regulatory submissions
  • Expert testimony in contested proceedings

We employ our expertise in estimating the cost of capital in various contexts such as regulatory finance, state aid investigations or in litigation. In particular, the estimation of the allowed cost of capital is often an important component of price regulation in regulated network industries.

Calculating the weighted average cost of capital (WACC) is a particularly challenging tasks for regulators, regulated companies and access-seeking competitors. Small changes in these calculations may have substantial impact on operating margins. The CAPM (Capital Asset Pricing Model) is often used to derive the cost of equity as an element of the WACC calculation. CEG has extensive experience with WACC estimations in various sectors and jurisdictions. To develop our WACC models we apply rigorous and cogent economic analysis and empirical work based on a deep understanding of the regulatory and policy contexts.


Representative Engagements

Analysis for the Australian Energy Networks Association (ENA) of the cost of debt incurred by all privately owned energy network businesses regulated by the Australian Energy Regulator

Advice to the Singapore telecommunications regulator (IDA) on the incentive properties of adopting various benchmarks to set the cost of debt allowance in regulatory cost modelling.

Expert testimony in support of Telstra to the Federal Court of Australia on alleged errors made by the Australian Competition and Consumer Commission (ACCC) in estimating the cost of capital (WACC) for Telstra.

Cost of capital analysis for several power generators in the UK as part of their regulatory reviews.

Cost of capital and performance analysis for a global energy player across three business lines (generation, transmission, and telecoms) across 40 jurisdictions.

Cost of capital analysis for an energy group restructuring its power generation and transmission portfolio in emerging markets.

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