IPART review of WACC methodology

PIAC lodged a submission to IPART draft report in its review of Weighted Average Cost of Capital (WACC). PIAC supports IPART’s routine review of its WACC methodology to ensure that it remains fit for purpose. PIAC considers that the stability and consistency of the WACC are generally positive outcomes for consumers, yet stressed the importance of keeping WACC no higher than necessary, particularly to support affordability and allow households to effectively budget for the essential service of water.

PIAC supported IPART’s inclusion of a principle for the review reflecting that consumer impacts must remain central to any regulatory decisions. PIAC also made comment on IPART’s proposed changes to its cost of debt, data sampling, estimation of risk and inflation.