Remuneração de Capital das Distribuidoras de Energia Elétrica: Uma Análise Comparativa
The relevance of the rate of return given by the regulatory agency and the recognitionthat, in the long run, the private investor has to recover an opportunity cost of capitalincluding the country, regulatory and project-specific risks, are crucial and presentissues in discussions over the best practices in economy of regulation.This paper analyzes the electricity distribution segment in Brazil from 1998 toJune 2005, trying to assess whether the return on capital invested was in line with therisk and opportunity cost required in the segment.It concludes that the return on capital in this segment in Brazil wassystematically negative until 2003. Only in 2005 did the distribution segment reallybegin to recover, presenting profitability partly consistent with the estimated cost ofcapital. Comparisons with Argentine, Chilean and American companies reveal thatfirms in the latter two countries, particularly in Chile, generally managed to rewardshareholders according to the opportunity cost of capital.Among the groups with greater return to profitability after the rationing episodein Brazil in 2002 are EDP Brasil, CPFL Energia, Neoenergia and starting in 2004,Elektro and companies still in government hands. The EDF Group performed theworst in the study period, with negative returns from 1999 onward.Since the power distribution segment relies on cash flow to pay for much of thecapital expenditures needed to expand the system, regulation has to be concernedwith allowing distributors to obtain a consistent return on capital, established in therate adjustment mechanisms, also considering the segment?s effective opportunitycost. The correct remuneration of capital, particularly in price-cap regulatory models,is a crucial aspect in the attraction and economic feasibility of new investments.
|Date of creation:||Jan 2006|
|Contact details of provider:|| Postal: SBS - Quadra 01 - Bloco J - Ed. BNDES, Brasília, DF - 70076-90|
Web page: http://www.ipea.gov.br
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pereiro, Luis E., 2001. "The valuation of closely-held companies in Latin America," Emerging Markets Review, Elsevier, vol. 2(4), pages 330-370, December.
- MacKinlay, A. Craig, 1995. "Multifactor models do not explain deviations from the CAPM," Journal of Financial Economics, Elsevier, vol. 38(1), pages 3-28, May.
- William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, 09.
- Taggart, Robert A, Jr, 1985. "Effects of Regulation on Utility Financing: Theory and Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 33(3), pages 257-276, March.
- Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, 03.
- Camacho, Fernando, 2004.
"Custo de capital de indústrias reguladas no Brasil
[Cost of capital of regulated industries in Brazil]," MPRA Paper 5396, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:ipe:ipetds:1153. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fabio Schiavinatto)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.