Price Controls for a Regulated Monopoly Network Company

Discover how MCC supported the early preparations for Abu Dhabi’s RC2 price control, helping a regulated monopoly network company optimise regulatory frameworks and ensure effective implementation of its electricity and water networks.

What the Client Needed?

The Regulated Monopoly Network Company required expert support in preparing for the RC2 price control, set to take effect on 1st January 2023. they needed a thorough evaluation of the price control model used to set the Maximum Allowed Revenue (MAR) for electricity and water monopoly network services. Additionally, the company required an in-depth analysis of the Weighted Average Cost of Capital (WACC) used in the previous price controls (RC1) and recommendations to develop an updated WACC allowance for RC2.

How we Helped them?

RC2 Price Control

MCC was involved with the early preparations for the RC2 price control, which were due to take effect from 1st January 2023. This involved a review of the multi-year, incentive-based price controls that have been applied to the water, wastewater, recycled water and electricity companies in the Emirate of Abu Dhabi (AADC, ADDC, ADSSC, TRANSCO, and EWEC). ​

MCC reviewed the price control model used in Abu Dhabi to set the Maximum Allowed Revenue (MAR) for electricity and water monopoly network services. Unlike most price controls in the UK, this involved a fixed and variable term for allowable revenues: which was designed to incentivize the growth of electricity and water services in the region.​

MCC’s role was to provide analysis of WACC calculations from previous price controls (RC1), and to guide WACC developments for the upcoming price control (RC2). MCC used both regulators’ benchmarks and bottom-up analysis to generate an anticipated WACC allowance.​

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I was delighted that MCC's work was completed on time, and within budget, helping us deliver important changes and improvements, to the benefit of our stakeholders. ​ MCC's report is published on the CCC website.

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Team Leader at Climate Change Committee, UK

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Head of Nuclear Policy at Ofgem, UK

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Section Head at Department of Energy, Abu Dhabi

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Head of Environment in the Energy Infrastructure Planning Policy, UK

I am delighted to recommend PJ and his team from MCC Economics. They helped us with our price controls for Heathrow airport and for NATS (En Route) plc (the air traffic services provider). Specifically, the MCC team helped us deliver important changes and improvements to our financial models and supporting policy documents, to the benefit of our stakeholders.

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Director at Utility Regulator, Northern Ireland

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