Amendments to the methodology for determining the WACC for Swiss power grids
How should the weighted average cost of capital (WACC) of Swiss power grids be determined?
Bundesamt für Energie (BFE)
Project period2020 – 2021
Related expertiseRegulation, Valuation, Energy, Data Science
TeamUrs Trinkner, Tobias Binz, Felix Wüthrich
ContactProject Description
Tariffs for electricity transmission and distribution in Switzerland are subject to cost-plus regulation. Operators are allowed to earn a return on their asset based on the level of the weighted average cost of capital (WACC). Swiss Economics assessed how the existing methodology for determining the WACC could be amended to better reflect currently low-interest rates and other peculiarities of the Swiss context.
Methods
- Assessment of national and international regulatory precedent
- Summary of academic literature
- Economic analyses of equity returns and interest rates in the area of electricity transmission and distribution
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