The ERRA training course on setting the Weighted Average Cost of Capital (WACC) will review one of the most critical regulatory determinations in the tariff-setting process. The WACC compensates debt and equity holders for the risk they assume by investing in regulated infrasture. This topic is becoming increasingly important due to the current economic uncertainty and high inflation.

The training will feature theoretical and practical discussions determining the cost of debt and cost of equity of regulated licensees, and the manner in which these are optimally weighted to ensure an efficient and sustainable financing structure. We will include practical excel training exercises and case-study examples from previous regulatory determinations. The course is now eligile for ERRA Certified Energy Regulator (CER) credits.

What you will learn:

• Various forms of WACC and the manner in which these affect allowed revenues;
• Regulatory approaches to estimating the cost of debt, factoring in country-specific risks;
• Optimal gearing levels balancing financing efficiency and solvency;
• Estimating return on equity, with emphasis on the CAPM model.