Ofwat preference for a "revenue-corrected price cap"

Ofwat letter (about 6 pages, plus bulky appendices) announcing that Ofwat favours replacing the price cap form of price control with a revenue-corrected price cap, under which deviations between actual and planned revenues would be taken into account (in present value terms) at a future price control review. This is preferred to a price cap as it removes a perverse incentive to encourage higher level of consumption, and to a revenue cap because it makes price levels more predictable.

For further information or advice please contact Franck Latrémolière.

Filed under Ofwat, Price controls, Water.

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