The Independent Regulators Group (IRG) has published a document, ''Regulatory Accounting - Principles of Implementation and Best Practice for WACC Calculation'', providing national regulatory authorities (NRAs) with twelve principles of implementation and best practice for the calculating the cost of capital when imposing obligations on operators with relation to cost recovery and price controls.
The correct determination of the cost of capital is a crucial element in the regulatory process, in view of the fact that under the terms of Directive 2002/19/EC of the European Parliament and of the Council, NRAs may impose obligations on operators with relation to cost recovery and price controls, but in doing so must take investments made by the operator and risks associated with this investment into account, allowing a reasonable rate of return on invested capital.
The IRG has in this way set out to share experiences in the calculation of the cost of capital, provide the NRAs with guidelines on the issue, analyse the various methodologies that have already been developed and identify the main problems faced by NRAs in implementation.
Consult:
Related information on ANACOM's website:
- IRG - Independent Regulators Group https://www.anacom.pt/render.jsp?categoryId=66730
- Electronic communications - regulatory framework https://www.anacom.pt/render.jsp?categoryId=60209
