Summary of PwC’s Arguments Sample Clauses

Summary of PwC’s Arguments. PwC expressed “strong disagreement” with the comment in our 12 October report that “it appears reasonable to argue that, as a first order approximation, the reallocation of expected losses among industry participants implied by a reduction in Transpower’s threshold credit rating is a zero sum game. (It is difficult to see why, for example, the change in rating threshold should lead to any change – upward or downward – in overall industry risk.)” In particular, PwC’s contention is that a higher threshold credit rating, under which a greater number of Transpower’s customers are required to provide credit support, results in more credit risk being shifted from the electricity industry to providers of credit support located outside the industry than would be the case at a lower threshold rating, where (by implication) the residual risk is borne in full by Transpower.

Summary of PwC’s Arguments. We noted in our 12 October report that PwC did not provide any guidance on how the Commission or Transpower should go about determining the level of capital that Transpower should be required to put at risk in the course of providing credit support. PwC’s response is, in essence, that this is a matter appropriately left to Transpower’s board, having regard to such matters as operational and other risks, and that there are generally accepted means of operationalising either a Basel II-based approach or a customised approach.