The genius of leverage
- From: Vol 3, Issue 11 (November 2002)
- Category: Analysis
- Region: Europe
- Country: United Kingdom
- Related Companies: Anglian Water, Glas Cymru, Oxera Consulting and Sutton & East Surrey Water
It says something about the naivety of the UK regulator that in response to the trend towards highly leveraged water companies in England and Wales, he commissioned a study – published last month – on the extent to which he should take capital costs into account in price regulation (see report, p.14).
It is like a man who he feels the cold steel of a gun barrel behind his ear and asks: “Do you think I need some ear drops?”
As Oxera, the company commissioned to investigate the capital structure of the English and Welsh water companies, points out, the issue is not really about the cost of capital. It is about ...
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