This book develops a comprehensive concept of regulatory risk integrating existing theoretical and empirical research. The focus is on explaining how the design of the regulatory system influences the risk of a rate-regulated firm, as well as on elaborating appropriate methods for the determination of the regulatory rate base and the allowed rate of return. Regarding the regulatory rate base, the question of whether market value of capital or book value of assets should be employed and the choice of the depreciation scheme are at the center of the discussion. Specific methodical issues concerning cost of capital assessment for rate-regulated firms are analyzed, i.e. the circularity of rate regulation, the sharing of risks between capital owners and rate payers, the length of the regulatory review period, the regulation of the capital structure as well as the conversion of a post-tax to pre-tax weighted average cost of capital.

Basic Elements for a Comprehensive Concept of Regulatory Risk - Models, Objectives, Process, Cost Concepts and Types of Rate Regulation

Impact of Rate Regulation on the Risk of a Regulated Firm
Development of a Regulatory Control Panel - Analysis of Individual Variables of Rate Regulation as Determinants of Regulatory Risk
Determination of the Regulatory Rate Base
Market-Based Assessment of the Cost of Capital for a Rate-Regulated Firm
Conclusions.

Pedell, Burkhard

Publikationen von Pedell, Burkhard

ISBN	978-3-540-30801-0
Artikelnummer	9783540308010
Medientyp	Buch
Copyrightjahr	2006
Verlag	Springer, Berlin
Umfang	XI, 221 Seiten
Abbildungen	XI, 221 p.
Sprache	Englisch