We have released our Final Report on the review of the financeability test, which we generally use as part of our building block approach in price regulation decisions.
While stakeholder feedback confirmed that our 2013 financeability test has worked well, we have made changes to:
- broaden the test by calculating financeability tests for both the benchmark and actual business
- adjust the target ratios (benchmark values) we use to assess financeability
- clarify the process to identify any financeability concerns, and
- tailor the remedy for a financeability concern based on its source.
In response to stakeholder feedback, we have made changes to a few of our draft decisions. These include:
- using the actual cost of debt of the business to calculate the metrics for the actual test, and
- revising the target ratios for the benchmark test.
Our reasoning for making our final decisions and other minor amendments are discussed in our Final Report.
Later in the month, we will upload an updated Spreadsheet Model, which implements our final decisions.