PIAC submission to IPART’s Weighted Average Cost of Capital methodology Issues Paper

PIAC responded to IPART’s Issues Paper for its review of its methodology for calculating its Weighted Average Cost of Capital (WACC).  PIAC supports the routine review to ensure that the methodology remains fit for purpose. PIAC considers that the stability and consistency of the WACC are generally a positive outcome for consumers, yet stresses the importance of keeping WACC no higher than absolutely necessary, particularly in the interest of supporting affordability and allowing households to budget effectively for the essential service of water. PIAC recommends that IPART emphasises the impact on consumers from any changes to the WACC method in this review to ensure that the WACC methodology is, indeed, working in the best interests of consumers. PIAC also comments on IPART’s method of developing a Benchmark Efficient Entity and the value of imputation credits (gamma).