Updating X factors to incorporate the annual update to the trailing average portfolio return on debt In the X factors sheet, select the relevant year of update in cell F21. In the PTRM input sheet (row 210), enter the trailing average portfolio return on debt values up to and including the relevant year of update, consistent with that selected in cell F21 of the X sheet. Caution notes will appear in rows 211 to 212 of the sheet to show factors PTRM input which inputs are necessary. No other inputs should be changed. In the X factors sheet, ensure the equity raising cost update option (cell H16) is set to 'update ERC when smoothing (default)'. In the X factors sheet, apply smoothing to recalculate the X factor by using the button for the relevant year as identified in step 1 and for the relevant form of control. The correct year for update will be identified by a caution note in the rows (rows 51, 67 and 87) under the smoothing X factor buttons for the three forms of control. Only the relevant form of control should be used. It is important that the X factors for past years in the regulatory control period are not altered, since these X factors reflect the revenue (and price) outcomes from those years. Further, the default approach is that only the X factor for the year of update should be altered (rather than multiple X factors, for this year and remaining years within the regulatory control period). This means that the impact of increases/decrease in that year's return on debt will be fully reflected in price changes in that year. For example, under a revenue cap form of control, to re-smooth for a return on debt update in year 2 the button labelled 'Set X2 (rev cap)' would be used, and all other X factors as determined during the final decision process would remain unaltered.
Updating X factors to incorporate the annual update to the trailing average portfolio return on debt In the X factors sheet, select the relevant year of update in cell F21. In the PTRM input sheet (row 210), enter the trailing average portfolio return on debt values up to and including the relevant year of update, consistent with that selected in cell F21 of the X factors sheet. Caution notes will appear in rows 211 to 212 of the PTRM input sheet to show which inputs are necessary. No other inputs should be changed. In the X factors sheet, ensure the equity raising cost update option (cell H16) is set to 'update ERC when smoothing (default)'. In the X factors sheet, apply smoothing to recalculate the X factor by using the button for the relevant year as identified in step 1 and for the relevant form of control. The correct year for update will be identified by a caution note in the rows (rows 51, 67 and 87) under the smoothing X factor buttons for the three forms of control. Only the relevant form of control should be used. It is important that the X factors for past years in the regulatory control period are not altered, since these X factors reflect the revenue (and price) outcomes from those years. Further, the default approach is that only the X factor for the year of update should be altered (rather than multiple X factors, for this year and remaining years within the regulatory control period). This means that the impact of increases/decrease in that year's return on debt will be fully reflected in price changes in that year. For example, under a revenue cap form of control, to re-smooth for a return on debt update in year 2 the button labelled 'Set X2 (rev cap)' would be used, and all other X factors as determined during the final decision process would remain unaltered.
Distribution%20post-tax%20revenue%20model%20handbook%20-%20January%202015%20-%20Appendix%20D_1.DOCX