The ERRA training course on Setting the Weighted Average Cost of Capital (WACC) will review one of the most important regulatory determinations in the tariff-setting process. Regulators use the WACC to estimate the efficient cost of capital which provides debt and equity holders of the regulated utility a return equivalent to the risk they assume by investing in the infrastructure. In regulated networks, the WACC contributes to the allowed return of the regulated utilities, one of the largest revenue blocks and therefore the largest contributor to the costs. In the current context where we have to ramp up investments to accommodate the energy transition, it is of vital importance to set a WACC which is sufficient to attract capital yet is efficient and affordable.

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 cover the various forms of WACC (pre-tax, post-tax, vanilla, real or nominal) and couple policy considerations with excel exercises and case-study examples from regulatory precedents to add to the practical learning experience.

For detailed course agenda please contact the ERRA Secretariat.