Asset valuation as part of a dispute between a railway company and an electricity transmission system operator

Expertise : Litigation

Business challenge

• Our client, a railway company, was under the obligation to transfer their high voltage equipment to the public electricity transmission system operator. A dispute had taken place since 2004 between the two parties on the economic valuation of the equipment to be transferred.
• A parliamentary committee had calculated a value of the equipment considered too low by the railway company, who then referred the matter to the Council of State.
• TERA Consultants acted as advisor to the railway company in order to propose a fair asset evaluation.

Approac

TERA contribution consisted of:

• Giving a synthetic and pedagogic presentation of different asset valuation methods to the judges of the Council of State,
• Defending the choice of several of these methods, considering their specific characteristics and the situation of the railway company,
• Identifying key parameters of the valuation model based on our knowledge of electrical networks,
• Searching for data in the transmission operator’s financial reports to calibrate the model.

Benefits and results

TERA proposed a robust valuation method resulting in an asset price twice the price previously established. After seven years of litigation, the new elements were found to be strong enough to warrant further investigation by the Council of State.