The NMa has commissioned The Brattle Group to calculate the Weighted Average Cost of Capital (WACC) for:
- The Dutch Pilotage Organisation. In the Netherlands Pilotage, being the activity of assisting boats into harbour, is a regulated activity;
- Dutch Transmission System Operators (TSOs) and Distribution System Operators (DSOs) for electricity and gas;
- Water distribution companies.
In all cases the purpose of the WACC calculation is to estimate an allowed return in the context of future price controls. The NMa has instructed us to calculate the WACC for the three business activities above according to a methodology which they have developed. In developing the methodology we advised the NMa on the issues of the risk-free rate and the Equity Risk Premium (ERP).However, the final methodology chosen (‘the methodology’) is the NMa’s. The methodology does not distinguish a separate cost of capital for DSOs and TSOs, or for electricity and gas distribution/transmission.