The Board tentatively decided that two criteria should define the rate-regulated activities in the scope of this project:
- an authorised body is empowered to establish rates that bind customers; and
- the rate regulation takes the form of a cost-of-service regulation. In such regulation, the rates are designed to recover the specific entity�s costs of providing the goods and services that are subject to regulation and to earn a specified return. The specified return could be a minimum or range and need not be a fixed or guaranteed return.
The Board generally agreed with the analysis supporting the staff�s conclusion that cost-of-service regulation gives rise to items that meet the definition of an asset or a liability in the Framework. However, the Board asked the staff to provide further analysis to clarify the nature of the asset, whether financial or intangible, and if intangible, whether and how this asset is distinguishable from the entity�s operating licence. The staff will present recommendations on recognition, measurement and disclosure at a future meeting.