- Kirsten Dupuy
- 1 day ago
- 2 min read
Our March 2026 roundtable focused on the role of depreciation in shaping UK infrastructure outcomes, asking a fundamental question:
How should depreciation balance the trade-off between lowering bills today, reducing bills tomorrow, and preserving confidence in the value of regulated assets?
Drawing on Vallorii’s Infrastructure Asset Intelligence, we explored how depreciation choices shape not just current and future bills, but also regional affordability, intergenerational fairness, and investor perceptions of regulated value. The discussion suggested that depreciation is becoming a more important regulatory lever: slower run-off can ease pressure on current consumers, while faster run-off can reduce future bill burdens, but both approaches have implications for how the market understands the economic reality of long-lived infrastructure.
What we discussed
Depreciation as an affordability lever, not just an accounting choice. We benchmarked UK electricity and gas network asset values against European comparators and found materially higher asset values per capita in the UK, feeding through into higher bill impacts. Our analysis showed the return on RAV alone adds around £60 to the UK electricity bill and roughly £28 to the gas bill, versus materially lower levels in comparable European systems.
Infrastructure burden is regional, not evenly distributed. We compared utility RAV per capita across UK regions and found a wide spread: around £2.7k in London and Birmingham, versus roughly £4.3k in Wales, with water and wastewater the main driver of the difference. When set against income, the gap widens further: the RAV-to-income ratio is around 3x higher in Wales than in London, making infrastructure affordability not just a UK-wide issue, but a geographically uneven one with growing implications for fairness, cross-subsidy, and regulatory design.
Physical asset value versus regulated value. Discussion then focused on Thames Water, where an estimated ~£196bn modern equivalent asset value sits alongside a regulated asset value of ~£21bn. The analysis suggests a large share of the physical asset base has already been depreciated from the regulatory balance sheet despite still requiring maintenance and eventual replacement, raising the question of whether RAV is an increasingly incomplete proxy for economic value.
Participants broadly saw depreciation as a material strategic issue, not simply an accounting mechanic. The roundtable’s conclusion was that depreciation now sits much closer to the centre of the infrastructure debate, because it shapes who pays, when they pay, and how credibly regulated value reflects physical reality.