Ofgem’s RIIO-3 Draft Determinations, released on 1 July 2025, set out headline cost-of-equity allowances. But the CAPM methodology to calculate Cost of Equity is complex, and in practice, only specialist economic consultancies have been able to reverse-engineer each gearing, beta and risk-free-rate results.

The step-by-step reconstruction presented here turns that black box into a transparent, replicable workflow, enabling investors, network operators and policymakers to refresh the numbers as markets evolve. Future instalments from Vallorii will apply the same forensic approach to determinations from Ofwat, CAA, and other regulators.