How we Helped them?
Peer review of Ofwat’s PR24 WACC
MCC assisted the Consumer Council for Water (UK) by peer reviewing Ofwat’s indicative WACC for the PR24 price control. This work included extensive analysis of Ofwat’s historical WACC allowances, positions, and decisions. MCC also took into consideration approaches by other regulators (e.g. Ofgem, CMA) and best practice guidance.
To provide a robust evaluation, MCC undertook an in-depth examination of each WACC parameter, focusing on critical elements such as:
- Cost of equity
- Cost of debt
- Financing and gearing
- Risk-free rate
- Total market return
- Equity beta
In addition, we reviewed Ofwat’s financial models, such as their balance sheet cost of debt model, and built alternative and complementary models to enhance our analysis and provide additional perspectives. The insights from this work were compiled into a detailed final report, which has been published online (May 2023).
