The U.S. Surface Transportation Board has withdrawn a notice of proposed rulemaking that would have incorporated a third model in its methodology for calculating the cost-of-equity component of the railroad industry’s cost of capital.
Each year, the STB determines the railroad industry’s cost of capital, then uses the figure in a variety of regulatory proceedings.
The proposed changed to how it figures those things, was proposed last fall.
The STB said it was considering using an additional model, referred to as the Step Multi-Stage Discounted Cash Flow Model, to complement its use of Morningstar/Ibbotson Multi-Stage Discounted Cash Flow Model and the Capital Asset Pricing Model in determining the cost-of-equity component of the cost of capital.
In announcing its decision to drop the rulemaking process, the STB said it was acting in response to public comment on the proposal.
Tags: railroad industry cost of capital, STB decisions, STB rulemaking, U.S. Surface Transportation Board
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