The Central Electricity Generation Board of Britain is in the process of being privatized, and it has been suggested that the discount rate for investments used by the privatized entity should be much higher than the one previously used by the CEGB. This raises interesting conceptual issues which are relevant to both shareholder and publicly owned utilities. The analysis presented in this article suggests that in order to achieve the lowest economic cost of generation the privatized utility should continue to use the same discount rate it had when it was a government entity.