Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Commission to begin further work on WACC input methodologies

Commission to begin further work on WACC input methodologies

Following recent stakeholder consultation, the Commerce Commission has decided to issue a notice of intention to do further work on the input methodologies relating to the percentile estimate of the weighted average cost of capital (WACC). The WACC is used in the price-quality path and information disclosure regimes that apply to businesses regulated under Part 4 of the Commerce Act 1986.

In its recent merits review judgment, the High Court suggested that using the 75th percentile may be at odds with the Part 4 objective to limit the ability of regulated suppliers to earn excessive profits. In light of the High Court’s comments, and subsequent requests from consumers, the Commission sought submissions on whether it should consider reviewing or amending the input methodologies for the cost of capital at this time.

“Having considered submitters’ views, we have decided to begin further work on whether using the 75th percentile is appropriate,” said Commerce Commission Deputy Chair Sue Begg. “We believe that this process is necessary to address the return on investment uncertainty that will exist until this issue is resolved. Our aim is to complete this work prior to November 2014, when electricity lines prices will be set for the next five years,” said Ms Begg.

“The Commission has an open mind about the outcome of this work and we are keen to hear from interested parties with further evidence or expert reports. We are not pre-judging the direction of any potential change or whether any change is even necessary,” Ms Begg said.

“While we aim to complete the work by November, in the event that all the issues involved cannot be satisfactorily resolved before then, we will consider bringing forward the overall review of the WACC input methodologies,” said Ms Begg.

The process update paper can be viewed at http://www.comcom.govt.nz/regulated-industries/input-methodologies-2/further-work-on-wacc/

The Commission welcomes further submissions until 5pm on 1 May 2014, these should be emailed toregulation.branch@comcom.govt.nz

Ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

NASA, NOAA: Find 2014 Warmest Year In Modern Record

Since 1880, Earth’s average surface temperature has warmed by about 1.4 degrees Fahrenheit (0.8 degrees Celsius), a trend that is largely driven by the increase in carbon dioxide and other human emissions into the planet’s atmosphere. The majority of that warming has occurred in the past three decades. More>>

ALSO:

Scoop Business: New Zealand’s Reserve Bank Named Central Bank Of The Year

The Reserve Bank of New Zealand’s efforts to stifle house price inflation by using new policy tools has seen the institution named Central Bank of the year by Central Banking Publications, a publisher specialising in global central banking practice. More>>

ALSO:

Science Media Centre: Viral Science And Another 'Big Dry'?

"Potentially, if there is no significant rainfall for the next month or so, we could be heading into one of the worst nation-wide droughts we’ve seen for some time," warns NIWA principal climate scientist Dr Andrew Tait. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news