This is a comparative analysis of the design, application and impact of regulatory tests for capital expenditure (capex) used by IPART and selected regulators in Australia and overseas.
The central focus of this report is the question of how a regulator should undertake a direct assessment of the prudency of regulated businesses’ past capex and of the efficiency of forecast capex. After quite recent and extensive enhancements, IPART now employs many of the tools used by other regulators to assess capital investment. PwC therefore recommends that IPART makes only relatively minor enhancements to it capex assessment process.
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