Rate of return and price cap regulation

regulated firm's true cost opportunities she will have to set a relatively high fixed price (or dynamic price cap) to ensure that if the firm is indeed inher- ently high  return regulation or price caps. Second, most that “these rate increases and price regulation, in general, have of-return regulation with price cap regulation. Finally, the cost and time required to conduct a rate case at a regulatory commission average revenue per customer was capped; rate-of return incentives, which Under price cap regulation, the regulator sets a price cap for each class of 

Originally implemented in the UK, it was used to set the maximum price of private network utilities. Various factors such as the inflation rate, CPI, etc are taken into  Price-cap regulations stand in contrast to rate-of-return regulations and revenue-cap regulations, other forms of price and profit controls used in the United Kingdom. All private British utility Rate of return regulation is a form of price setting regulation where governments determine the fair price which is allowed to be charged by a monopoly. It is meant to protect customers from being The goal of rate-of-return regulation is for the regulator to evaluate the effects of different price levels on potential earnings for a firm in order for consumers to be protected while ensuring investors receive a "fair" rate of return on their investment. infrequent (say, every five years), price cap and rate-of-return regulation should have different effects on regulated firms. In particular, a price cap subjects businesses to more risk. For ex-ample, under price cap regulation, if a firm’s costs rise, its profits will fall because it cannot raise its prices to compensate for the cost in- meanings, such as “rate of return” (known equivalently as “cost of service”) regulation, price cap regulation, and CPI-X regulation. Not only is “price based” regulation not a commonly used term, but there is a reasonable sense in which all regulation could be interpreted as being “price based”. Rate-of-return regulation has been criticized for providing inappropriate incentives to regulated firms and for being costly to administer. An alternative is price-cap regulation, by which ceilings (“caps”), based on indices of price and technological change are imposed, below which the regulated firm has full pricing freedom.

21 Dec 2017 the continuum between pure rate-of-return (ROR) or cost-of-service (COS) regulation, and pure price-cap (PCR) or revenue-cap regulation.

Rate-of-return regulation has been criticized for providing inappropriate incentives to regulated firms and for being costly to administer. An alternative is price-cap regulation, by which ceilings (“caps”), based on indices of price and technological change are imposed, below which the regulated firm has full pricing freedom. Each electing carrier that elects incentive regulation must set its initial price cap indexes for the special access basket and associated service band indices at 100 and use the rate adjustment rules for price cap carriers contained in §§ 61.45 to 61.48 of our rules, as appropriate, to reflect the prescribed productivity factor, the inflation factor, and any required exogenous cost adjustment in the price cap index. Price-cap regulation is a form of regulation. Designed in the 1980s by UK Treasury economist Stephen Littlechild, it has been applied to all privatized British network utilities. It is contrasted with both rate-of-return regulation , with utilities being permitted a set rate of return on capital, and with revenue-cap regulation , with total revenue being the regulated variable. Price caps and rate-of-return regulation the rule is RPI + K, where K represents both expected productivity gains and a permitted There are two main approaches to preventing annual increase in the Yardstick or ‘Rate of Return’ Regulation This is a different way of regulating monopolies to the RPI-X price capping. Rate of return regulation looks at the size of the firm and evaluates what would make a reasonable level of profit from the capital base.

return regulation or price caps. Second, most that “these rate increases and price regulation, in general, have of-return regulation with price cap regulation.

21 Sep 2000 resulting incentives differ from those generated by rate of return regulation. Keywords: Regulation, Price-cap, Incentive, Rate of Return,  However, price cap regulation provides some incentives for cost reduction by instituting an Rate of return regulation makes sense for natural monopolies. The price cap differs from rate of return regulation in providing a cap on the caps, rate of return and other forms of price or profit regulation in these countries.

Energy utility sectors in Europe are regulated either via a rate-of-return or via incentive regulation. Over the past decade the price cap approach has become 

Welfare Effects of Price Cap Regulation in comparison with Rate of Return Regulation: A Stochastic Frontier Analysis of Efficiency Costs of Flour Factories in  

Rate-of-return regulation has been criticized for providing inappropriate incentives to regulated firms and for being costly to administer. An alternative is price-cap regulation, by which ceilings ("caps"), based on indices of price and technological change are imposed, below which the regulated firm has full pricing freedom.

Finally, the cost and time required to conduct a rate case at a regulatory commission average revenue per customer was capped; rate-of return incentives, which Under price cap regulation, the regulator sets a price cap for each class of  Energy utility sectors in Europe are regulated either via a rate-of-return or via incentive regulation. Over the past decade the price cap approach has become  It is well-known that rate of return regulation provides poor incentives for companies to operate efficiently and that alternative forms of regulation, such as price cap  10 Apr 2002 This section looks at the key features of price cap and rate of return (or cost of service) regulation that can impact on regulatory risk as a result of  (e) Notwithstanding the requirements of paragraphs (c) and (d) of this section, a telephone company subject to rate-of-return regulation may return lines acquired  

Rate of return regulation is a form of price setting regulation where governments determine the fair price which is allowed to be charged by a monopoly. It is meant to protect customers from being The goal of rate-of-return regulation is for the regulator to evaluate the effects of different price levels on potential earnings for a firm in order for consumers to be protected while ensuring investors receive a "fair" rate of return on their investment. infrequent (say, every five years), price cap and rate-of-return regulation should have different effects on regulated firms. In particular, a price cap subjects businesses to more risk. For ex-ample, under price cap regulation, if a firm’s costs rise, its profits will fall because it cannot raise its prices to compensate for the cost in- meanings, such as “rate of return” (known equivalently as “cost of service”) regulation, price cap regulation, and CPI-X regulation. Not only is “price based” regulation not a commonly used term, but there is a reasonable sense in which all regulation could be interpreted as being “price based”. Rate-of-return regulation has been criticized for providing inappropriate incentives to regulated firms and for being costly to administer. An alternative is price-cap regulation, by which ceilings (“caps”), based on indices of price and technological change are imposed, below which the regulated firm has full pricing freedom. Each electing carrier that elects incentive regulation must set its initial price cap indexes for the special access basket and associated service band indices at 100 and use the rate adjustment rules for price cap carriers contained in §§ 61.45 to 61.48 of our rules, as appropriate, to reflect the prescribed productivity factor, the inflation factor, and any required exogenous cost adjustment in the price cap index. Price-cap regulation is a form of regulation. Designed in the 1980s by UK Treasury economist Stephen Littlechild, it has been applied to all privatized British network utilities. It is contrasted with both rate-of-return regulation , with utilities being permitted a set rate of return on capital, and with revenue-cap regulation , with total revenue being the regulated variable.