A study into certain aspects of the cost of capital for regulated utilities in the UK
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The cost of capital is a key input in the regulatory process for utilities. The utility regulators are responsible for regulating a wide range of industries - gas, electricity, water, telecom, rail, airports and postal services. An important function of each of the regulators is to set price limits for those parts of those industries where firms have significant monopoly power in setting prices faced by customers. In setting these price limits, regulators need to decide what would constitute a "fair" rate of profit.