2027 Input Methodologies Review – Common cost of capital
The Common cost of capital IM review has implications across suppliers regulated under Part 4 of the Commerce Act and Part 6 of the Telecommunications Act (Fibre).
We are reviewing common cost of capital IM elements for fibre and services regulated under Part 4 of the Commerce Act (airports, electricity lines, and gas pipelines) to ensure that our approach is aligned where possible.
The scope of this review is limited to those elements of the WACC IMs that are common to all sectors. It will not include sector-specific parameters, such as the asset beta, equity beta and leverage.
The project was initiated as part of our statutory review of all fibre IMs
On 27 March 2025 we published the Notices of Intention for the Fibre IM review 2027 and Cost of Capital review for Part 4 services and an Open letter on the Fibre IM review seeking stakeholder views on the process and initial focus areas of our review. This included signalling that where the cost of capital IMs are common between fibre and services regulated under Part 4 of the Commerce Act, we would consider the IMs for these services in our review. Common areas between fibre and services regulated under Part 4 of the Commerce Act include our approach to the cost of debt, the risk-free rate for equity and the tax-adjusted market risk premium. Submissions on the Open letter closed on 29 April 2025.
The Fibre IM Review 2027: Issues paper (Tranche 1) and the Fibre input methodologies draft decision-making framework paper were published on 10 July 2025. Stakeholders provided their views on these papers through submissions and cross-submissions.
We have consulted on our draft decision
Our draft decision for tranche 1 was delivered as two packages:
- The Common cost of capital input methodologies review (fibre and regulated suppliers under Part 4) draft decision package published on 10 March 2026. Submissions and cross-submissions that we received are published on the timeline below.
- The Fibre IM Review 2027 (Tranche 1) draft decision package published on 17 March 2026. Documents relating to our review of the Fibre IMs can be found at 2027 Fibre Input Methodologies Review.
On 17 August 2026 we sought further stakeholder views on three specific matters relating to the tax-adjusted market risk premium (TAMRP). The documents outlining the three specific matters are on our timeline below at 17 August 2026 and the submissions received in response are on the timeline at 8 September 2026.
Revised Notices of Intention
On 23 September 2026 we published amended and revised Notices of Intention relating to our review of the input methodologies (IMs) for Fibre and Part 4 sectors (electricity, gas, and airports). The revised notices set out updated timeframes for reaching a final decision on the common cost of capital where we now intend to adopt a trailing average approach to estimating the risk-free rate for the cost of debt.
The revised Notices of Intention and accompanying email outlining the reasons can be found on our timeline below.