Today we are publishing our latest Cost of Capital – Annual Update Report and a UKRN position paper on the use of inflation indices

Published: 4th June 2018

2018 UKRN Annual Update Report
This year’s Cost of Capital – Annual Update Report follows those we published in 2017 and 2016 and is researched and written by the UKRN Cost of Capital Network.

Participating regulators are signed up to the UKRN Cost of Capital Principles to ensure continued collaboration on cost of capital issues.  We are collaborating in a number of ways, and one of our commitments is to produce and publishing an annual update report on cost of capital decisions.

The purpose of this report is to update readers with information on cost of capital decisions taken by regulators over the last year so that readers can relate them across sectors and with decisions in previous years. The report offers some commentary, but is mainly intended to be a resource for readers to help them identify key decisions and, this year, also relevant consultation papers.

2018 UKRN Position paper on inflation indices
Accompanying this update report is a UKRN position paper on the use of inflation indices. As many stakeholders will be aware, we have seen some important developments in inflation measurement in recent years. Perhaps most notably, an important inflation index used by economic regulators, the Retail Prices Index (RPI), lost its status as a National Statistic in 2013. Meanwhile, the Office of National Statistics has been working on developing new inflation indices, including its new lead measure of inflation, the CPIH.

The regulators are having to work out how to respond to these developments. This position paper summarises the background and sets out the range of issues that regulators need to consider. The paper includes an annex that summarises how each of the economic regulators currently uses inflation and their proposals for change.

If you have any comments on either of these papers, or would like more information on the UKRN Cost of Capital Network’s approach to collaborative working, we would be delighted to hear from you, so please get in touch.