IPART has reviewed the method we use to calculate the working capital allowance we include in regulated businesses’ notional revenue requirement (NRR) for price setting purposes.
We established our previous method for calculating the working capital allowance in 2005. We have incrementally improved on our 2005 method.
We will use our method to calculate the working capital allowance in setting prices for any regulated business:
- with a Regulatory Asset Base (RAB), and
- where we use a ‘building block’ approach to set the NRR).
This includes price regulated businesses in the water and transport sectors, as well as other price regulated entities such as the Valuer General
We released an Information Paper which explained how we proposed to change our method for calculating the working capital allowance. We sought stakeholder views on our proposed changes.
Following stakeholder consultation we released our Policy Paper.