National Grid's views on cost of capital for transmission

National Grid note (1 page, PDF), published by Ofgem, suggesting that the appropriate return on capital to be allowed for its electricity and gas transmission businesses for the transmission price control from 2007 is 4.8 per cent real post-tax, subject to any changes to the regulatory regime. This is the same figure as used by Ofgem in the 2004 distribution price control review.

A National Grid submission (28 pages, PDF) provides details of the calculations underpinning this estimate, including a 4.7 per cent estimate based on CAPM and a 4.8 per cent estimate based on recent observed returns and market asset ratios in UK utilities.

For further information or advice please contact Franck Latrémolière.

Filed under Electricity, Gas, Ofgem, Price controls.

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