Letter to IASB on the Exposure Draft ED/2021/1 Regulatory Assets and Regulatory Liabilities

The UKEB recently wrote to the IASB Chair, Andreas Barckow, on the IASB’s Rate-regulated Activities project. The letter was accompanied by the ‘Consolidated report on the UKEB Secretariat’s top-down approach’.

The letter highlights the UKEB’s concerns with the IASB’s tentative decisions relating to the direct (no direct) relationship concept. In particular, it highlights potential consequences of the IASB’s decision on the proposed treatment of timing differences included in the regulatory capital base (RCB) of entities whose property, plant and equipment (PPE) and RCB have no direct relationship. The top-down approach was developed for regulatory entities with no direct relationship between their (PPE) and RCB, to fully reflect their total allowed compensation and recognise the related regulatory assets and regulatory liabilities on the statement of financial position.

The consolidated report summarises the UKEB Secretariat’s work on the top-down approach carried out to-date and identifies the additional work required to fully develop it to a standard setting solution.

Thank you to all stakeholders who participated in the UKEB Secretariat’s work on the top-down approach, in particular the UKEB Rate-regulated Activities Technical Advisory Group.