We have released our Final Report and decisions on our 2018 method. While feedback from stakeholders broadly confirmed that our existing WACC method was working well, we have made incremental improvements to:
- estimate the historic cost of debt as a 10-year trailing average
- estimate the current cost of debt as a short-term trailing average over the length of the regulatory period, but using a 10-year bond tenor
- synchronise sampling dates for selected current parameters
- the combination of market risk premium estimates
- the calculation of the inflation adjustment, and
- our process for estimating equity beta and gearing at each price review.
Our reasoning for making these decisions and other minor amendments are discussed in our Final Report.