Cost of capital for a natural gas transmission business operating under the Finnish regulation framework

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dc.contributor Aalto-yliopisto fi
dc.contributor Aalto University en Jäntti, Henri Jäntti 2016-06-14T06:01:00Z 2016-06-14T06:01:00Z 2016
dc.description.abstract Abstract PURPOSE OF THE STUDY The purpose of this thesis is to study the required rate of return ie. WACC for Gasum's gas transmission business. All natural gas in Finland is imported from Russia and transmitted through pipelines operated and owned by Gasum. The company has a natu-ral monopoly in the natural gas transmission business. Because of the monopoly posi-tion in Finland, the Energy Authority (EA) regulates the gas transmission business in Finland. The regulator ensures reasonableness in the pricing of distribution and transmission network operations. The objective of regulation is on one hand to ensure that customers are not exploited by the monopoly and on the other hand guarantee a sufficient regulation model for the company, whereby it could profitably and efficiently operate. DATA AND METHODOLOGY The cost of capital for the company, which operates in the natural gas market that is isolated and not linked to European gas markets is analysed by going through all the components of WACC. Analysis begins by introducing the case company and describing its business environment and will built to a general framework and a comparable peer group for a utility company operating in Europe and afterward adjusting it to peculiari-ties in the Finnish natural gas market. The majority of the data was collected from Datastream and Bloomberg Terminal. In addition, internal and publicly available sources were utilized in this study. In essence, all equity markets data is gathered from Datastream and the money market data from Bloomberg. Natural gas data was collect-ed from various sources. FINDINGS The estimate of the WACC for Gasum's transmission business settles between the range 4.6 and 6.4 percent depending should we apply the additional risk premium or not. Gasum will of course seek to influence so that the premium should be as high as possible since it has a direct impact on how much the transmission business could earn during next four years. en
dc.format.extent 71
dc.language.iso en en
dc.title Cost of capital for a natural gas transmission business operating under the Finnish regulation framework en
dc.type G2 Pro gradu, diplomityö fi Kauppakorkeakoulu fi School of Business en
dc.contributor.department Rahoituksen laitos fi
dc.contributor.department Department of Finance en
dc.subject.keyword Cost of capital
dc.subject.keyword WACC
dc.subject.keyword Natural Monopoly
dc.subject.keyword Natural gas
dc.subject.keyword Gas transmission
dc.identifier.urn URN:NBN:fi:aalto-201609083374
dc.type.dcmitype text en
dc.programme.major Rahoitus fi
dc.programme.major Finance en
dc.type.ontasot Pro gradu tutkielma fi
dc.type.ontasot Master's thesis en
dc.subject.helecon rahoitus
dc.subject.helecon financing
dc.subject.helecon kustannukset
dc.subject.helecon costs
dc.subject.helecon pääoma
dc.subject.helecon capital
dc.subject.helecon toimialat
dc.subject.helecon business branches
dc.subject.helecon energiatalous
dc.subject.helecon energy economy
dc.subject.helecon maakaasu
dc.subject.helecon natural gas
dc.subject.helecon kaasu
dc.subject.helecon gas industry
dc.ethesisid 14339 2016-04-08
dc.location P1 I

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