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 elements of the cost of capital fibre IM that are common with services regulated under Part 4 (airports, electricity lines, and gas pipelines), with the relevant Part 4 cost of capital IMs so that our approach is aligned where possible.
We are reviewing our overall methodology for estimating the WACC, including our approach to the risk-free rate of interest for debt and equity and the debt premium, as well as the tax-adjusted market risk premium (TAMRP).
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, two Notices of Intention and an Open letter seeking stakeholder views on the process and initial focus areas of the Fibre IM review were published. This included signalling that the where the fibre cost of capital IMs were common regulated suppliers under Part 4 of the Commerce Act we would be considering these IMs, these common areas include our approach to the cost of debt, the risk-free rate of interest 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.
Further consultation on matters relating to the tax-adjusted market risk premium (TAMRP)
We have revised our draft decision on three specific components relating to the tax-adjusted market risk premium (TAMRP). In order to inform our final decision on those matters we are seeking stakeholder views. The documents are on our timeline below at 17 August 2026.
The submission period will close on 28 August 2026. We will publish public submissions but at this stage do not intend to invite cross-submissions.