The Electricity and Cogeneration Regulatory Authority (ECRA) is the regulator for electricity and water desalination in the Kingdom of Saudi Arabia and is responsible for ensuring safe, reliable, reasonably priced and efficient electric power. As part of this it determines the revenues of the Saudi Electricity Company (SEC), the vertically integrated electricity incumbent. IPA was commissioned to advise ECRA on the appropriate return to ensure SEC’s financial viability and protect consumers.
To inform our consideration of the appropriate return in the form of the WACC IPA:
This analysis was informed by intimate knowledge of the sources SEC uses to raise funds for capital, including the Saudi Stock Exchange (Tadawul). IPA also took into account the split between revenues from customer charges and Government sources to inform the WACC calculations. Additionally, the outputs were structured to reflect proposals to restructure the Saudi electricity sector, including potentially unbundling SEC.