BEREC Report Regulatory Accounting in Practice 2023

Document number: BoR (23) 196

Document date: 07-12-2023

Date of registration: 12-12-2023

Document type:
Author: BEREC

This is the nineteenth Regulatory accounting annual report, which summarises the findings of a detailed survey of regulatory accounting systems in the regulatory context in access markets across Europe. Information has been gathered from National Regulatory Authorities (NRAs) and covers the implementation of regulatory cost accounting methodologies in the national market situations. As is it includes the state of play in terms of remedies of market regulation and focuses on price control, and the way in which it is defined in practice. The report provides also (i) elements about structural parameters of each country, (ii) WACC methodologies applied by NRAs and WACC values currently in force focusing on the implementation of the corresponding European Commission WACC Notice on the calculation of the cost of capital for legacy infrastructure.

The document offers an up-to-date factual report on the regulatory accounting frameworks implemented by NRAs and an assessment of the level of consistency achieved. Where possible, trends and comparisons with data collected in the past years are illustrated.

The report focuses on the analysis of services in key wholesale markets: Wholesale Local Access (former Market 3a/2014, now market 1/2020), Wholesale Central Access (Market 3b/2014) and Wholesale high quality access (former Market 4/2014, now market 2/2020).

In line with the last reports it also provides information about the regulatory and competitive framework in each member state, such as the presence of a geographical regulation, the equivalence model applied, the application of retail margin squeeze test, and the cable regulation. A brief analysis of symmetric remedies is included. Outcomes of the survey are simply reported in a descriptive form.

In Chapter 5 the report delivers an extended survey on WACC parameters, mainly focusing on market 1. The WACC chapter summarises the main methodologies currently used by NRAs and sets out the reasons behind the estimation of single parameters needed to evaluate the cost of capital under the CAP-M model. The main focus this year report is related to the adoption of the Commission Notice on WACC.

Appendix I contains a number of figures/tables providing further details on some of the analyses in the report.