Price controls

We understand utility price control reviews, particularly in the UK. We are familiar with the key building blocks: cost of capital, efficiency projections and benchmarking, regulatory asset value, demand forecasts, incentive schemes.

*Nicholas Francis

Efficiency studies

We have particular knowledge and experience of methods for "efficiency analysis" to be used in price control reviews.

This includes ways of determining assumptions for future efficiency improvement. We understand how cross-industry studies of productivity improvement and within-sector analysis of expenditure levels can contribute to the development of these estimates, and how they need to be combined with each other.

See also: Efficiency studies

Cost of capital and financeability

We are familiar with the debates that inform the estimation of the cost of capital and the determination of the return on capital to be allowed in price controls, including:

*Energiekamer cost of capital validation (2010)

*Ofwat cost of capital (2003-2004)

Price control structure and incentives

We have expertise in:

See also: Performance incentive regimes

Reckon's staff have experience of advising both regulators and regulated companies on these issues.

*Electricity transmission price control review (2005)

*Electricity distribution price control review (2002-2004)

Implementation of price controls

Once the policy, the numbers and the incentives schemes have been set, price controls need to be converted into workable legal documentation.

We have specific expertise and experience in drafting and reviewing the licence conditions or other legal documents which give effects to the price control determinations, particularly in cases where there are complex revenue driver arrangements or financial incentive schemes.

We can also help with modelling, forecasting and other tasks involved in the day-to-day management of price controls.

See also: Price control licence conditions

*Advice on utility price control reviews in central European countries

Reckon LLP31 Southampton Row, London, WC1B notices
Reckon LLP is an economics consultancy with expertise in data analysis, economic regulation and competition law.