WACC Misestimation Risks
Definition
AER calculates WACC using gearing (0.6), risk premiums, and equity beta; disputes have led to tribunal appeals changing WACC from 8.80% to 10.02%, affecting massive RAB.
Key Findings
- Financial Impact: AUD 10M+ revenue impact per 1% WACC change on AUD 10B RAB; 6-12 months appeal delays
- Frequency: Every 5-year reset
- Root Cause: Manual financial modeling without real-time data
Why This Matters
The Pitch: Utilities waste AUD 1M+ on WACC disputes per cycle. Automated forecasting tools prevent appeal costs.
Affected Stakeholders
Treasury Manager, Financial Modelers
Deep Analysis (Premium)
Financial Impact
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Current Workarounds
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Methodology & Sources
Data collected via OSINT from regulatory filings, industry audits, and verified case studies.
Evidence Sources:
Related Business Risks
AER Revenue Determination Delays
Imprudent Cost Disallowances
Rate Case Filing Bottlenecks
Bond Tender Compliance Breaches
Debt Service Execution Risk Premium
Poor Maturity Selection Cost Variability
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