This thesis explores how capital structure decisions in regulated utilities are shaped by financial incentives, institutional frameworks, and interactions with regulators. While traditional financial theory provides useful insights into capital choices, it doesn’t fully account for how utilities firms behave in environments of strong regulation. In sectors like water and energy transport, debt isn’t just a tool for financing, it’s also used strategically to influence regulatory outcomes. To investigate this, the study combines theoretical insights with institutional analysis and real-world data from selected utilities in the UK and Italy. The findings reveal that UK utilities tend to maintain higher and more stable levels of debt.