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FINANCIAL MODELLING FOR UTILITY TARIFF SETTING

Financial Modelling for Utility Tariff Setting is offered by Managing Infrastructure Investment Reform and Regulation in Africa (MIRA), a leading centre of excellence at the UCT GSB. This specialised one-week course provides managers, senior professionals and advisors in utilities, regulatory authorities and government the skills needed to set tariffs in a regulated context.

 

Gain practical know-how

Professionals in the power sector need specialised skills. In particular, financial modelling for tariff setting is a core skillset that is lacking on the continent and in South Africa’s regulatory, municipal and utility space. This course teaches delegates the practical skills to build a financial model – including all constituent parts such as regulatory asset base, weighted average cost of capital, and energy and input costs – that can run sensitivity analyses and provide various tariff paths.

 

WHO WILL BENEFIT FROM THE COURSE

You will benefit highly from this course if you are a:

  • Manager or senior professional in a utility, a regulatory authority or government
  • Utility Board member
  • Professional in the power sector
  • Manager or senior professional in a utility, a regulatory authority or government

 

WHAT WILL I GAIN FROM THIS COURSE?

The course will see delegates build their own financial model for “utility tariff setting”, with the constituent parts (regulatory asset base, weighted average cost of capital, energy/input costs etc.) unpacked and developed in detail throughout the week. At the end of the week they should have built a model that can run sensitivity analyses and provide various tariff paths.

 

WHAT DOES THE COURSE FOCUS ON?

Topics covered include:

  • An optional module on basic financial concepts and basic Excel financial formulas
  • Tariff objectives
  • Cash flow and accounting equivalence: Building a simple model from scratch
  • Valuation techniques
  • Capital costs: Asset base, capex, depreciations
  • Endogenous and exogenous capex
  • Costs of capital: WACC, costs of debt, costs of equity
  • Opex: efficiency levels, benchmarking, demand projections
  • Fixed and variable costs
  • Tariff level and tariff structure, efficiency and affordability

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Graduate School of Business  |  University of Cape Town

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