Cost of capital calculation needs rethink

June 2008
Utility Week;6/27/2008, Vol. 29 Issue 10, p13
Trade Publication
The article reports that the premium that water companies in Great Britain have commanded on stock exchanges compared with their asset values have been driven by a bubble in investment in infrastructure companies, according to Nera Consulting. Ofwat should therefore look more broadly than at market value and asset ratios when setting the cost of capital at the next price review. The analysis came in a report by Nera, Cost of Capital for Price Review 2009, published by industry group Water UK.


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