Sign In
Publikuoti: 2/9/2014. Atnaujinta: 7/31/2020

Rate of return on investments (WACC)


National Energy Regulatory Council (NERC), in accordance with the Methodology on Rate of Return on Investments, approved by Commission Resolution No. O3-510 as of September 22, 2015 (text in Lithuanian), publishes data for the calculation of the rate of return on investments (WACC). The data will be applied to electricity companies for setting the price caps for the 2022-2026 regulatory period.

Table 1. Data  used to calculate the rate of return on investments

​​


Cap of cost of debt (interest rate), percent2,532The average interest rate during the most recent twelve-month period of long-term loans in euros given to non-financial corporations, as announced by the Bank of Lithuania, para. 6 of the Methodology on Rate of Return on Investments.
Return on equity:Para. 9 of the Methodology on Rate of Return on Investments.
 - for electricity undertakings, engaging in transmission;5,185
 - for undertakings, recognized as having significant market power in electricity markets in accordance with the Law on Electricity, except for undertakings specified in para. 9.3.5 of the Methodology on Rate of Return on Investment.
 - for undertakings providing services provided for in Paragraph 11 of Article 67 of the Law on Electricity, services of public interest in accordance with the procedure established by the Law on Electricity, except for electricity produced using renewable energy sources;
 - for electricity produced using renewable energy sources;7,815
 - for electricity undertakings, engaging in distribution and public energy supply;5,315
 - for undertakings, recognized as having significant market power in the market of independent energy supply.
Share of equity  capital (optimal capital structure)0,500Para. 11 of the Methodology on Rate of Return on Investments
Share of debt capital (optimal capital structure)0,500Para. 11 of the Methodology on Rate of Return on Investments
Tax rate0,150The income tax rate applied in Lithuania
Risk-free rate of return on investments, percent1,420The arithmetic mean of the average weighted profitability of the auctions of the Government bonds  denominated in Litas (till December 31,2014) and Euros (from January 1, 2015) with the maturity period of no less than 3468 days), held during the recent ten-year period, para. 9.1 of the Methodology on Rate of Return on Investments
Equity risk premium, percent5,000Para. 9.2 of the Methodology on Rate of Return on Investments
Beta coefficient (levered β): Para. 9.3 of the Methodology on Rate of Return on Investments
 - for electricity undertakings, engaging in transmission;

0,753

 

 

 

 

 

 

 

 

 

Using the arithmetic average of non-leveraged beta (βU) in electricity transmission activities, calculated on the basis of data published in the annual report of the Council of European Energy Regulators (CEER)   (excluding Lithuanian data), para. 9.3.3 of the Methodology on Rate of Return on Investments.
- for undertakings, recognized as having significant market power in electricity markets in accordance with the Law on Electricity, except for undertakings specified in para. 9.3.5 of the Methodology on Rate of Return on Investment.
- for undertakings providing services provided for in Paragraph 11 of Article 67 of the Law on Electricity, services of public interest in accordance with the procedure established by the Law on Electricity, except for electricity produced using renewable energy sources;
 - for electricity produced using renewable energy sources;1,279Using the arithmetic average of the non-leveraged beta (βU) of European green and renewable energy activities in the publicly available A. Damodaran database, para. 9.3.4. of the Methodology on Rate of Return on Investments.
 - for electricity undertakings, engaging in distribution and public energy supply;

0,779

 

 

Using the arithmetic average of non-leveraged beta (βU) in electricity distribution activities, calculated on the basis of data published in the annual report of the Council of European Energy Regulators (CEER)  (excluding Lithuanian data), para. 9.3.5 of the Methodology on Rate of Return on Investments.
- for undertakings, recognized as having significant market power in the market of independent energy supply.
Actual weighted average cost of debt capital in the electricity sector, percent1,951Para. 8 of the Methodology on Rate of Return on Investments
Actual weighted average cost of debt capital in electricity sector sector without loans from international financial institutions, which are listed on page of Ministry of Finance of the Republic of Lithuania (https://finmin.lrv.lt/lt/es-ir-tarptautinis-bendradarbiavimas/tarptautines-finansu-institucijos), percent2,060Para. 7 of the Methodology on Rate of Return on Investments

 

WACC as of year 2022 by electricity companies:                

Compa​nyWACC, percent
AB „Litgrid“4,03
AB „Energijos skirstymo operatorius“4,16
AB „Ignitis gamyba“4,03
AB „Achema“3,37
AB „Lifosa“3,37
AB „Akmenės cementas“3,37
UAB „Dainavos elektra“3,73
UAB „Ignitis“3,05

 

Archive: 2021​