Updated Analysis on Cost of Equity

We will publish our final methodology for PR19 in December 2017. As part of that, we will publish our final approach to cost of equity for the next price review, and confirm how we will analyse company business plan submissions once they are submitted in September 2018. As such, we are looking to commission an update to the analysis carried out as part of the report on refining the balance of incentives for PR19 we published in July 2017.

Key Tasks We would like the successful bidder to provide an updated view on the cost of equity in a lower for longer interest rate environment on a fully forward looking basis, taking account of critique from the consultancy reports linked in section 2.2 above, other relevant consultancy reports, and other up to date market data or information.

We would want this to take the form of a report that we would publish alongside the final methodology.

The Contractor will provide Ofwat with all spreadsheet models used in its assessment. All spreadsheet models should be compatible with 16-bit Excel 2013.