Tariffs for electricity transmission and distribution in Switzerland are subject to cost-plus regulation. Operators are allowed to earn a return on their asset based on the level of the weighted average cost of capital (WACC). Swiss Economics assessed how the existing methodology for determining the WACC could be amended to better reflect currently low-interest rates and other peculiarities of the Swiss context.   

Methods

• Assessment of national and international regulatory precedent
• Summary of academic literature
• Economic analyses of equity returns and interest rates in the area of electricity transmission and distribution