Regulatory finance

Cost of capital and financeability

Frontier has vast experience of estimating the cost of capital and carrying out financeability assessments for our clients. We have provided support within many regulated industries, including: energy, post, telecommunications, transport and water. We work extensively on helping to determine reasonable allowed rates of return with different stakeholders, including regulators, regulated networks and customers.

We are also experienced in carrying out financeability assessments, including applying financial analysis to forecast and assess credit metrics. Where relevant, we incorporate credit rating agencies’ methodologies into our assessments to determine whether a target credit rating is likely to be achieved.

Read more about our cost of capital work.

Balance of risk/reward and regulatory incentives

We help clients design and evaluate their risk and reward mechanisms within the relevant regulatory incentives framework. Our analysis often includes assessing the Return on Regulated Equity (RoRE) and how that ties in with the overall risk and reward package. This includes the allowed equity return, risk exposure to costs and other incentive and risk sharing mechanisms.

Regulatory cost analysis

We have extensive experience in carrying out cost assessments in network industries. We work for regulators and regulated entities on topics including cost benchmarking, efficiency and productivity analysis, cost accounting and developing regulatory information and business plans. In all cases, accurately assessing the relevant underlying actual or allowed costs is vital.

Regulatory accounting

We have broad experience of advising on the development, preparation and analysis of regulatory accounts. Our work includes producing regulatory accounts, reviewing them either for the regulated company or for the relevant regulator, as well as interpreting them in various contexts. In addition we have often advised regulators in the early stages of developing regulatory accounting frameworks, including guidance on the role of external auditors.

Read more about our regulation work.

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