Citizens Advice response to UK Regulators Network (UKRN) guidance for regulators on the methodology for setting the cost of capital
Citizens Advice agrees with a large part of the UKRN consultation, especially its proposals for greater alignment. We are nevertheless concerned that, overall, the proposals do not adequately identify opportunities to ensure the affordability of consumers’ essential bills, and therefore do not provide a fair deal for consumers. We believe the process and proposals do not balance the interests of investors and consumers. This is for a combination of reasons.
Firstly, the consultation process and proposals do not recognise the substantial asymmetries between consumer (and Government) stakeholders on the one hand – and in the favour of investor (and company) stakeholders on the other.
Secondly, the consultation does not fully consider the evidence and views we have provided in recent regulatory appeals, especially relating to equity risk premium, equity beta, and cost of debt.
So, we ask the UKRN Cost of capital taskforce to reconsider its proposed approach, in terms of both process and proposals.