Cost of Capital Lab
See what each regulator's method gives on current market data
We run each regulator's method on current market data, beside the return it allowed.
For water, energy networks and airports, the implied cost of equity moves with market data while the allowed return stays fixed.
How Cost of Capital Lab works
- 01
Each regulator sets an allowed return by its own method
The water, energy network and airport regulators each publish a method and fix the allowed return in a final determination.
- 02
Markets keep moving
Index-linked gilt yields, market sensitivity and the market risk premium keep changing after the determination.
- 03
We run each regulator's method on current market data
Each run gives an implied cost of equity for that regulator.
- 04
Set beside the final determination
The gap shows how far the implied figure has moved from the allowed return.
- 05
With the working shown
Each estimate opens into its inputs and peer companies, with market-to-asset ratios, price-to-NAV and input sensitivity.
- Inputs
- Market sensitivity
- Peer companies
- Market-to-asset ratios
- Price-to-NAV
- Input sensitivity
Three questions it answers
Regulatory strategy
For directors of regulation at utilities
What does each method give today, against the allowed return?
Checking the working
For regulatory and economic analysts
What sits behind the figure, and how much does it change if one input moves?
Valuation inputs
For infrastructure fund managers
Where does the market value regulated companies and listed funds against their asset values?
Have a different regulatory question?
We run the same methods and market data on your question.