Disagreement over setting appropriate rates of return has been a key driver behind recent appeals of regulatory settlements, with different regulators and the CMA in hearing appeals taking often fundamentally different approaches in calculating the cost of capital. Falling interest rates combined with consumer and political pressure to reduce costs have made this a critical issue as past settlements have been criticised for being too generous. Some regulators have made specific adjustments to allow for outperformance or to ensure financeability. This lecture will review current methodologies, suggest potential alternatives and consider whether there should be a more consistent approach to calculating the cost of capital.
Professor Robin Mason,
Pro-Vice-Chancellor, University of Birmingham
Panel Member, Competition and Markets Authority
For more information see: https://marketforcelive.com/econolex/events/beesley-lecture-series-2021/