In calculating a regulated business’s costs for the purpose of setting prices we generally include an allowance for a return on capital. This requires us to estimate a weighted average cost of capital (WACC). We are currently reviewing the debt margin, one of the input parameters of our WACC calculation.

We have released a draft decision to seek further input from stakeholders on one of the aspects of the review; the term to maturity we assume in setting the debt margin and other WACC parameters.

We invite further new evidence from stakeholders on this issue by 10 March 2011.