Published Date: 21 Feb 2020

Sectors:
  • Water Icon
    Water

Cost of Capital – CRU Approach

The CRU has, on 21 February 2020, published an Information Paper titled ‘Cost of Capital – CRU Approach’.

 This paper provides stakeholders clarity on an important component of the CRU’s regulatory review process: how it has set the cost of capital in recent decisions. In particular, the paper discusses what a Weighted Average Cost of Capital (WACC) is, why it is important, and the factors that the CRU has taken into account when setting a WACC. The CRU discusses its approach to the WACC in its most recent regulatory review decisions in gas, electricity and water and highlights areas of the methodology which may require consideration in future regulatory reviews.

 

The CRU is responsible for ensuring that customers and network users receive a quality service and value for money, while the network companies earn a fair return on their activities to enable necessary network investments. The cost of capital is an important element of this fair return and this paper is intended to inform stakeholders of the recent decisions in this area.

Contact Name:
Daniel Ward
Contact Email:
dward@cru.ie