PR19 - Initial Assessment of the Cost of Capital

We are in the process of developing our methodology for Price Review (PR19), building on the decisions we made in May 2016 on Water 2020. We plan to consult on our methodology in July 2017, and to finalise our methodology in December 2017.

Our learning from PR14 has highlighted the need to provide upfront guidance to companies on our expectations for the cost of capital. At PR14 companies submitted a wide range in their own estimates as part of their business plans. We did not consider this led to an efficient process, so we plan to provide more guidance to better inform companies' submissions and the discussions they have with their customers in preparing their business plans. The objective of this work is to provide us with an estimate of the cost of capital. We plan to publish this alongside the final methodology in December 2017.