Division
United Kingdom
Table 11
Selected regulatory allowed returns calculations
| Final Proposals for National Grid Electricity Distribution and National Grid Gas | |||
| Ofwat Future water and sewerage charges 2010-2015: Final determinations | |||
| Ofwat: Setting price controls for 2015-20 — risk and reward guidance | |||
| Source: Presentation of EDF Energy to Commission officials of 15 July 2014, slide ‘Comparison of HPC with UK regulated utilities’. | |||
| Electricity Transmission (Ofgemf1) | Ofwatf2 — PR09 | Ofwat — PR 14 (not finalised)f3 | |
|---|---|---|---|
| Note | |||
| Period | 2013-21 | 2010-15 | 2015-20 |
| Real | |||
| Levered cost of equity (post-tax) | 7,00 per cent | 7,10 per cent | 5,65 per cent |
| Cost of debt (pre-tax real) | 2,92 per cent | 3,60 per cent | 2,75 per cent |
| Notional gearing | 60,0 per cent | 57,5 per cent | 62,5 per cent |
| Vanilla WACC | 4,55 per cent | 5,10 per cent | 3,85 per cent |
| Inflation assumption | 3,50 per cent | 3,50 per cent | 3,50 per cent |
| Allowed Nominal Costs/Returns (geometric calc) | |||
| Levered cost of equity | 10,7 per cent | 10,8 per cent | 9,3 per cent |
| Cost of debt (pre-tax) | 6,5 per cent | 7,2 per cent | 6,3 per cent |
| Vanilla WACC* | 8,2 per cent | 8,8 per cent | 7,5 per cent |
| Nominal (arithmetic calc) | |||
| Levered cost of equity* | 10,5 per cent | 10,6 per cent | 9,2 per cent |
| Cost of debt (pre-tax)* | 6,4 per cent | 7,1 per cent | 6,3 per cent |
| Vanilla WACC | 8,1 per cent | 8,6 per cent | 7,3 per cent |
| https://www.ofgem.gov.uk/ofgem-publications/53602/4riiot1fpfinancedec12.pdf | |||
| http://www.ofwat.gov.uk/pricereview/pr14/gud_tec20140127riskreward.pdf | |||
| http://www.ofwat.gov.uk/pricereview/pr09phase3/det_pr09_finalfull.pdf | |||
Annotations
Footnotes
- f1
-
Final Proposals for National Grid Electricity Distribution and National Grid Gas
- f2
-
Ofwat Future water and sewerage charges 2010-2015: Final determinations
- f3
-
Ofwat: Setting price controls for 2015-20 — risk and reward guidance