This session explains methods for deriving the cost of equity and debt finance, evaluation of the sources of funds, and the effects of taxation. Participants solve a problem in estimating cost of capital. Regional groups then meet to discuss these issues. This session describes the alternative forms of regulation, how they work, the incentives they provide, and their effects on companies, government, and customers. Evening Break Participants are given an evening break for recreational activities.
Transportation is provided to area shopping.
No evening dinner is served. The focus is on treatment of capital investment, determination of rate base, and resolving issues. Teams examine how to set priorities and submit their recommendations to the plenary for decision. This session concludes with an overview of pricing issues relevant to incentive regulation. This session explains the basic principles, including how to align incentives with regulatory objectives, and how to choose service baskets, inflation indices, productivity offsets, allowances for exogenous cost changes, and correction factors.