Extended Accrual

The prior post outlined the concept of a ‘ramp’ to achieve full cost recovery for infrastructure that relies on regulated rates. At the core of the ‘slow and certain’ approach is very long-term debt that can accrue in the early years (strictly in accordance with a plan) but is cost-effective overall.

In effect, that means a private placement with a pension fund or insurance company — or, sometimes even better, a loan from a federal infrastructure loan program that offers concessionary rates. Not quite available as yet though — what would the extent of required legislative changes? Perhaps small and technical enough to happen?

Maybe. The following is a short thought-experiment about what changes would be required for Cost Recovery Ramp financing to be sourced from a water loan program.