Publications

This report presents MCC Economics's evidence submission to the UK Climate Change Committee (CCC) on the role of carbon offsetting within national decarbonisation pathways. Drawing on our experience in regulatory economics and market design, the report evaluates the effectiveness, credibility, and governance of offsetting mechanisms in supporting net zero delivery. It considers both voluntary and compliance markets, highlighting the risks of overreliance on offsets and proposing frameworks to ensure integrity, transparency, and additionality in emission reduction claims.

The Climate Change Committee launched a call for evidence to assess the contribution of carbon offsetting to the UK’s net zero strategy. MCC Economics’ submission responds with a critical economic assessment of current offsetting practices, identifying where market and policy interventions can improve outcomes. The report outlines key challenges in monitoring, verification, and permanence of offsets; economic incentives that drive offset demand and supply; principles for integrating offsetting within credible transition plans; and recommendations for regulatory consistency, data disclosure, and international coordination. Our evidence supports a balanced approach that recognises offsetting’s potential while reinforcing the primacy of direct emission reductions.

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Abu Dhabi faces a strategic choice in scaling up solar energy: centralised mega-projects or decentralsed rooftop systems. This paper by our Director PJ McCloskey and analyst Rodrigo Remor analyses why distributed solar uptake remains low in Abu Dhabi and evaluates its economic viability under current conditions. Abu Dhabi has so far favored large solar parks (e.g. the 1.17 GW Noor Abu Dhabi plant) while rooftop solar adoption is minimal (~2.94 MW on government buildings by 2020, <1% of Noor’s capacity). Given the UAE’s net-zero commitment and Energy Strategy 2050 targets (44% renewable electricity by 2050), the study explores whether decentralised solar could play a larger role and what policy shifts might be required.

This paper evaluates the economic viability of decentralised solar systems in Abu Dhabi. By analysing levelised cost of electricity (LCOE), net present value (NPV), and internal rate of return (IRR) across customer groups, it finds that while rooftop solar generation is not yet cost-effective for heavily subsidised sectors, it remains viable for industrial and commercial users. The study suggests that subsidy reform could significantly improve the financial appeal of decentralised systems, aligning with Abu Dhabi’s decarbonisation targets under the UAE Energy Strategy 2050.

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MCC Economics, on behalf of the Consumer Council for Water (CCW), has reviewed Ofwat’s PR24 final WACC determination to assess whether it fairly balances customer and investor interests. The report questions Ofwat’s decision to include costs stemming from companies with high financial gearing, arguing this may shift undue risk to customers. By applying a market-based, notional-efficient approach, MCC finds the WACC could have been set 1.08% lower — potentially saving customers £5.4 billion, or £41 per household, over five years. The review also highlights how new risk-reduction mechanisms in PR24 could justify a lower return, offering critical insight for both policymakers and the Competition and Markets Authority.

MCC Economics was commissioned by the Consumer Council for Water (CCW) to review Ofwat’s PR24 final WACC determination. The report examines whether Ofwat’s approach appropriately balances customer interests against investor requirements. It identifies potential upward bias in key components — including the cost of equity and debt — largely influenced by financial behaviours of highly geared companies. MCC proposes a market-led recalibration of the WACC that aligns with the notional efficient company and regulatory best practice. This would reduce the WACC by 1.08%, potentially saving customers £5.4 billion over five years. The report also assesses risk protection measures introduced in PR24 and offers recommendations for future regulatory frameworks and CMA deliberations.

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Regulatory frameworks are evolving to place consumers at the heart of decision-making. "Excellence in Consumer Engagement: 10 Fundamentals" explores the shift from traditional regulatory processes—where decisions were imposed on consumers—to a model where consumers actively influence outcomes. The paper identifies 10 key principles that drive successful engagement, including the importance of social license, leadership commitment, and setting the right incentives. Through case studies and real-world examples, it highlights both the risks of poor engagement and the benefits of genuine collaboration. This guide serves as a resource for regulators, businesses, and policymakers looking to enhance consumer participation in regulatory decision-making.

The landscape of consumer engagement in regulation has undergone a significant transformation, moving from a model where consumers had little influence to one where they play a central role in shaping decisions. This paper presents 10 fundamental principles that underpin effective consumer engagement, including commitment from leadership, social license, and consumer empowerment. It examines both successful and failed approaches to engagement, drawing lessons from key case studies such as the Powerlink Queensland electricity transmission decision and Australia’s banking and energy sector reforms. The study also explores the regulatory incentives that encourage engagement, from reputational benefits to financial rewards. By implementing these principles, businesses and regulators can foster trust, improve regulatory outcomes, and create a more balanced and consumer-centric decision-making process.

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The cost of capital is a fundamental consideration in regulated industries, influencing investment decisions, regulatory outcomes, and financial stability. This publication explores 10 hot topics that are currently shaping cost of capital discussions, including climate change objectives, stability and predictability of regulatory approaches, diminishing comparator firms, and competition for the right to supply. It also examines emerging trends, such as the impact of large-scale investments in renewable energy and the challenges of estimating market risk premiums. Backed by extensive research and regulatory case studies from Australia, New Zealand, and the UK, this paper offers valuable insights for policymakers, industry professionals, and investors.

Cost of capital plays a crucial role in determining regulated revenues, investment attractiveness, and financial resilience in capital-intensive industries. This paper identifies and examines 10 key topics currently influencing regulatory cost of capital decisions, including climate change considerations, evolving methodologies for estimating the market risk premium, and the impact of diminishing publicly listed comparator firms. The study provides a comparative analysis of regulatory approaches from key jurisdictions such as Australia, New Zealand, and the UK, offering insights into best practices and emerging challenges. Additional areas of interest include the role of reasonableness checks, financeability testing, and competition in infrastructure investment. By addressing these pressing issues, this publication serves as a resource for regulators, businesses, and investors seeking to understand and navigate the complexities of cost of capital determinations.

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Electricity North West Limited (ENWL), a regulated monopoly distributing electricity to 5 million customers across North West England, was acquired by Iberdrola in 2024 for €5 billion. MCC Economics’ publication examines the intricacies of this deal, including a significant 44% premium over ENWL’s Regulatory Asset Value (RAV). The analysis delves into ENWL’s financial inefficiencies, high cost of embedded debt, and regulatory challenges under Ofgem’s framework, juxtaposed with its strong equity performance and potential synergies with Iberdrola’s existing networks. This publication provides a comprehensive exploration of the value drivers, risks, and opportunities associated with the acquisition, offering valuable insights for investors and stakeholders in regulated utility markets.

This publication investigates the 2024 acquisition of Electricity North West Limited (ENWL) by Iberdrola, a transaction valued at €5 billion, including debt, and reflecting a substantial 44% premium over ENWL’s Regulatory Asset Value (RAV). ENWL serves as a regulated monopoly responsible for electricity distribution across North West England, supporting the UK’s decarbonisation goals. Key themes explored include ENWL’s financial challenges, regulatory constraints, and Iberdrola’s strategic motivations, including synergies with adjacent networks and growth potential in the transition to electrification. This case study offers critical insights into the valuation of utility assets, regulatory impacts, and the evolving energy landscape.

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Dive into MCC Economics' in-depth review of the Phoenix Energy acquisition, focusing on its valuation, regulatory framework, and the broader energy market dynamics. With exclusive gas distribution rights across Greater Belfast, Phoenix Energy faces both challenges and opportunities in the shift towards renewable energy. This case study examines the company’s performance within Northern Ireland’s unique regulatory environment, the implications of stranded assets, and the potential pace of electrification. The report also considers the strategic value of this acquisition for CK Infrastructure Holdings and its alignment with global trends in sustainable energy.

This publication provides a comprehensive analysis of the 2024 acquisition of Phoenix Energy by CK Infrastructure Holdings, valued at approximately £760 million. Phoenix Energy operates as the sole gas distributor in Greater Belfast and has rebranded to reflect its renewable energy aspirations. The report evaluates the deal’s valuation metrics, highlighting a rare alignment with its regulatory asset base, and discusses the risks posed by stranded assets and the potential acceleration of electrification. It further explores the implications of Northern Ireland’s regulatory framework, which supports renewable gas solutions while promoting continued gas network connections. This case study serves as a key reference for stakeholders in mergers, acquisitions, and regulatory policy within the energy sector.

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Abu Dhabi stands at the forefront of the UAE's clean energy transformation, and distributed solar generation plays a pivotal role in achieving its sustainability goals. Our report delivers a comprehensive analysis of the potential for rooftop and ground-mounted solar systems to reshape the emirate's energy future. The report examines the inefficiencies of electricity subsidies, compares solar costs with current tariffs, and evaluates the economic benefits of adopting distributed solar. It features real-world data on levelized cost of energy (LCOE), payback periods, and return on investment (IRR) for different consumer groups. By modeling growth scenarios, the report highlights how solar adoption could reduce government subsidies by AED 1.5 billion annually and avoid 5 million tonnes of CO₂ emissions by 2030. Packed with actionable insights and practical recommendations, this report is essential for policymakers, investors, and energy professionals looking to lead the UAE’s transition to a sustainable, clean energy future.

This report investigates the potential for distributed solar generation to drive Abu Dhabi's transition to clean energy while addressing the inefficiencies of current electricity subsidies. It explores the economic and environmental case for rooftop and ground-mounted solar systems, highlighting recent cost declines that make solar a viable alternative to fossil fuel-based power. By outlining a clear roadmap, the report positions distributed solar as a key driver of economic efficiency and environmental sustainability in Abu Dhabi.

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Our comprehensive study on UAE GDP forecasting evaluates the effectiveness of three popular econometric models: ARIMA, VAR, and Linear Regression. Using real GDP data, the paper highlights each model's strengths and limitations over short-term and long-term horizons. The findings suggest that ARIMA is most effective for long-term forecasting, while Linear Regression shines in short-term, scenario-based predictions, provided accurate exogenous variable forecasts are available. Dive into this publication to gain valuable insights into forecasting methodologies that can enhance decision-making for businesses and policymakers in the UAE's dynamic economic landscape.

Forecasting GDP is crucial for economic planning and policymaking. This study compares the performance of three widely-used econometric models—ARIMA, VAR, and Linear Regression—using GDP data from the UAE. Employing a rolling forecast approach, we analyze the models’ accuracy over different time horizons. Results indicate ARIMA’s robust long-term forecasting capability, LR models perform better with short-term predictions, particularly when exogenous variable forecasts are accurate. These insights provide a valuable foundation for selecting forecasting models in the UAE’s evolving economy, suggesting ARIMA’s suitability for long-term outlooks and LR for short-term, scenario-based forecasts.

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MCC Economics and Finance has submitted a detailed response to the Australian Energy Market Commission’s (AEMC) proposed rules for accelerating smart meter deployment. Our submission examines several strategic trade-offs such as balancing consumer consent with retailer flexibility, flat tariffs versus cost-reflective pricing, and managing implementation costs while ensuring consumer benefits. It emphasises the importance of consumer-centric outcomes, particularly for vulnerable groups, and explores international examples from the UK, Finland, Germany, and France to highlight successful models of smart meter integration. MCC also raises questions about whether retailers are best positioned to lead the roll-out and suggests considering network companies for this role if early success is not achieved under the current proposal. The submission concludes by supporting the AEMC’s initiatives while advocating for ongoing evaluation and innovation to maximise consumer benefits.

This paper discusses the strategic trade-offs involved in implementing new rules, including balancing consumer protection with retailer flexibility and cost-effectiveness. It draws from international case studies to illustrate best practices for smart meter integration, particularly in relation to consumer benefits, technology, and phased implementation. The submission also questions whether retailers are best placed to lead the deployment and suggests considering network companies if needed. MCC fully supports the AEMC’s efforts and offers recommendations for ensuring the success of smart meter rollouts in Australia.

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The submission emphasises the importance of balancing trade-offs like WACC impacts and regulatory stability while advocating for a stronger focus on consumer outcomes. MCC also highlights the need for innovative pricing reforms and practical, phased implementation strategies.

In this publication, MCC presents strategic insights on the AEMC’s draft ToR for electricity pricing reviews. With a focus on consumer outcomes, MCC emphasises balancing trade-offs, strengthening the focus on vulnerable consumers, and integrating technology with pricing reforms. The submission calls for a phased implementation approach and stronger retailer obligations to enhance consumer benefits, urging the AEMC to prioritise practical, consumer-driven solutions.

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Discover the comprehensive insights provided by Economic Impact Assessments (EIA). This article delves into how EIAs measure the effects of economic activities on specified areas, highlighting direct, indirect, and induced impacts. Learn about economic multipliers, input-output models, and case studies from Scotland, Ireland, and the UAE to understand the broader economic implications of investments and projects.

Economic Impact Assessments (EIA) are vital tools for understanding the comprehensive effects of economic activities on specified regions. This article explores how EIAs quantify impacts in monetary terms, such as GDP, Gross Value Added, and employment opportunities, categorized into direct, indirect, and induced effects. It explains the role of economic multipliers, like the Keynesian and bank multipliers, and their practical applications through input-output models. Readers will gain insights into the methodologies behind EIA, including the development of industry-specific multipliers and their use in calculating total economic impacts. The article features detailed case studies from Scotland, Ireland, and the UAE, demonstrating the real-world application of EIAs. Through these examples, the article illustrates how EIAs help businesses and governments make informed decisions by revealing the ripple effects of investments and projects on local economies. Explore this article to understand the foundational principles and practical benefits of Economic Impact Assessments.

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Discover the financial implications of Public-Private Partnerships (PPPs) in this insightful article. By focusing on contingent liabilities, uncover the potential fiscal risks and obligations that often accompany PPP projects. From valuation methods to strategic approaches, this article provides practical guidance for policymakers navigating the complexities of PPPs.

This article scrutinizes the fiscal implications of Public-Private Partnerships (PPPs) by examining the concept of contingent liabilities. It underscores how governments often underestimate the potential risks and obligations associated with PPP projects, leading to unforeseen fiscal burdens. Through case studies and global examples, it explains the diverse approaches taken by governments in managing and reporting contingent liabilities. Moreover, the article explores valuation techniques and proposes strategies for prudent fiscal risk management, advocating for centralized control mechanisms to enhance the effectiveness and sustainability of PPP initiatives.

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This study dives deep into the complexities of long-term stock market predictability, utilizing Tobin's Q and dividend yield across a 119-year dataset. By scrutinizing the equilibrium relationship within the US aggregate stock market, the research offers practitioners robust forecasting tools, challenging conventional perspectives on market returns.

This research adopts an approach leveraging Tobin's Q and dividend yield. Spanning over a century of data, the study constructs a comprehensive Vector Error Correction Model (VECM) for the US stock market, providing practitioners with effective forecasting capabilities. The results challenge conventional ways, emphasizing the significance of long-term predictions and offering valuable insights applicable to the landscape of UK price controls.

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Unlock the secrets to seamless financial modeling with our comprehensive Best Practice Guide, designed to demystify complexities. From strategic planning to formatting, we dive into the crucial elements of planning, structure, and content rules that make financial models not only easy to understand but also adaptable for future needs.

From the foundational importance of planning and structure to the nuances of formatting and content, this publication empowers you with the knowledge to create models that are transparent, user-friendly, and easily modifiable. Whether you're a novice or an experienced financial analyst, upgrade your modeling game with insights that surpass industry standards.

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With a universal thinking framework, these case studies guide government departments in the UK through a structured process, ensuring the optimal use of public resources. From the Strategic Case outlining change rationale to the Economic Case pinpointing societal value, each facet plays a crucial role in developing robust business cases.

Explore the cornerstone of UK public resource management through the Five Case Model business study. From the Strategic Case laying the groundwork for change to the Economic Case identifying the publication with the highest public and social value, this method ensures a comprehensive understanding of projects.

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Northern Ireland suffers from persistently lower Gross Disposable Household Income (GDHI) compared to its counterparts. Office for National Statistics (ONS) data reveals a concerning decline in GDHI, particularly in Belfast City Council, indicating an imminent drop into the lowest 15% bracket. This calls for a critical evaluation of energy policies, urging a strategic reinforcement to address the escalating economic challenges.

This publication unwraps the complicated terms of UK disposable incomes, spotlighting Northern Ireland's unique economic challenges. With six out of eleven Northern Irish Councils ranking in the bottom 22%, the stark 19% disparity in disposable income compared to the UK average demands urgent attention. The data underscores a critical need for a strategic reassessment of energy policies to effectively address the escalating economic strain and pave the way for a more equitable future.

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We decode conflicting data from ONS and BEIS, while questioning the accuracy of reported household costs. This paper delves into methodologies, revealing the disparity in how costs are captured, and explores the facts behind the contradictory evidence.

We navigate the perplexing case study of Northern Ireland's electricity costs. This paper not only dissects data discrepancies but also invites a re-evaluation of prevailing assumptions, inviting a fresh outlook on the intricate knot of factors influencing household energy expenses in Northern Ireland.

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From reforming measurement techniques to getting to the roots of inequality, particularly the pivotal role of education, we delved into the profound impact on economic growth, stability, crime, and health. By advocating for reduced inequality, we aim to guide the UK Government toward policies that foster societal well-being & harmony.

In this publication, we navigate the complicated scenarios of inequality, unfolding its definitions and measurement complexities. Also, unraveling income and wealth as key metrics, we scrutinize their correlations with education, happiness, and health. Our findings advocate for a reduction in inequality, positing its potential benefits for the UK population.

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In the dynamic landscape of GB water networks, MCC Economics & Finance navigates the challenges of PR19, spotlighting the 4 key factors for success.

As GB water networks gear up for the challenging PR19 review, MCC Economics & Finance takes the lead in outlining indispensable factors. From navigating cost benchmarking intricacies to fostering transparent communication, this publication serves as a compass for water companies aiming to deliver meticulous business plans. Explore the comprehensive strategies designed to ensure sustainability, integration, and effective storytelling in an evolving regulatory landscape.

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