Other cost and accounting issues The cost of capital Only a few regulators review the cost of capital included in the pricing of the infrastructure. This is the case of Austria, France, Germany, Italy, Hungary and the UK. The methodology that prevails when determining this cost of capital is a CAPM/WACC approach. In Italy, the regulatory body has identified criteria for the determination of the parameters used in the CAPM/WACC formula, and for some of them, the specific economic values to fill in the formula. In France and Germany, the cost of capital is considered as a fixed cost. Definition of complete cost France and Italy are among the countries where the national legislation provides a definition for the full cost of the infrastructure. Article L. 2111-10 of the French transport code states that the complete cost corresponds to all the charges borne by the IM related to construction, operation, maintenance and renewal of the infrastructure, including the amortization of investments and the remuneration of the capital invested by the IM. In Italy, the same content is provided by Article 16(1) of the national Legislative Decree 112/2015 that implements the Recast. Charges based on article 32.3 of the Directive 2012/34/EU Five IRG-members reported that the IMs base part of charges on Article 32(3) of Directive 2012/34/EU (recovery of long term cost). This is the case for the Diabolo project in Belgium, for the high speed line Amsterdam-Breda-Belgian border in the Netherlands, for the rail line between Stockholm and the Arlanda airport in Sweden, for the line in France, and for the Channel Tunnel linking France to the UK.. The regulatory asset base In four IRG-Rail members a regulatory asset base is determined for charging purposes. This is the case in Croatia, Germany, Italy and the United Kingdom. In Germany, Italy and the United the calculation is based on both internal data (cost data) and external data (annual report). In Croatia the estimation is only based on internal data. Valuation of assets Only a few regulators reported having a national law or a practice for valuing assets for consideration within the calculation of charges. In Austria, Croatia, Portugal and Finland use an historic value approach for the value of assets. Germany uses the historic costs based on the balance sheets at the start of the regulation period which over time are adjusted by inflation and productivity increase. In Italy, the net book value of the assets
Other cost and accounting issues The cost of capital Only a few regulators review the cost of capital included in the pricing of the infrastructure. This is the case of Austria, France, Germany, Italy, Hungary and the UK. The methodology that prevails when determining this cost of capital is a CAPM/WACC approach. In Italy, the regulatory body has identified criteria for the determination of the parameters used in the CAPM/WACC formula, and for some of them, the specific economic values to fill in the formula. In France and Germany, the cost of capital is considered as a fixed cost. Definition of complete cost France and Italy are among the countries where the national legislation provides a definition for the full cost of the infrastructure. Article L. 2111-10 of the French transport code states that the complete cost corresponds to all the charges borne by the IM related to construction, operation, maintenance and renewal of the infrastructure, including the amortization of investments and the remuneration of the capital invested by the IM. In Italy, the same content is provided by Article 16(1) of the national Legislative Decree 112/2015 that implements the Recast. Charges based on article 32.3 of the Directive 2012/34/EU Five IRG-members reported that the IMs base part of charges on Article 32(3) of Directive 2012/34/EU (recovery of long term cost). This is the case for the Diabolo project in Belgium, for the high speed line Amsterdam-Breda-Belgian border in the Netherlands, for the rail line between Stockholm and the Arlanda airport in Sweden, for the line in France, and for the Channel Tunnel linking France to the UK.. The regulatory asset base In four IRG-Rail members a regulatory asset base is determined for charging purposes. This is the case in Croatia, Germany, Italy and the United Kingdom. In Germany, Italy and the United the calculation is based on both internal data (cost data) and external data (annual report). In Croatia the estimation is only based on internal data. Valuation of assets Only a few regulators reported having a national law or a practice for valuing assets for consideration within the calculation of charges. In Austria, Croatia, Portugal and Finland use an historic value approach for the value of assets. Germany uses the historic costs based on the balance sheets at the start of the regulation period which over time are adjusted by inflation and productivity increase. In Italy, the net book value of the assets
IRG-Rail175-IRG-RailOverviewonchargingpractices.docx