ANACOM determined the cost-of-capital rate that for regulatory purposes will be applied to CTT’s cost accounting system (CAS) in 2021, which was set at 7.4712%, thus bringing about a reduction of approximately 2 percentage points compared to 2020.
The cost-of-capital is one of the cost components of the regulated products and services provided by CTT which should be recovered through the price regulation operated by ANACOM, whereby the reduction in the weighted average rate of the cost-of-capital (Chart 1) on invested capital now determined by ANACOM should be reflected on consumers.
Chart 1: Cost-of-capital rate applicable to CTT
The cost-of-capital is a concept generally associated with the return that a certain investment should provide, being defined as the rate of return required by investors, taking into account the business risk, being particularly relevant in regulated areas of economic activity.
In the context of postal regulation, the obligation of cost-orientation of prices aims at setting prices at a level which allows the market to operate as far as possible as if it were a competitive market, taking into account the investment made by the operator and allowing him an adequate return, taking into account the risks involved.
The determination of the cost-of-capital rate thus seeks to balance the need to ensure the correct incentives for investment and, at the same time, protect consumers from excessive prices, seeking also to ensure that there are no market distortions, through discriminatory and anti-competitive practices.
Consult:
- Approval of CTT's cost of capital rate applicable to 2021 https://www.anacom.pt/render.jsp?contentId=1682182
