Alternative Measures of Inflation in the Regulatory Framework

 ISBN - 1 84057 617 0 Published Date - 11/01/2012 14:28:27
 UKWIR Reference - 12/RG/07/24 Cost - £18

 

Abstract

This is the report from the UKWIR study on alternative measures of inflation. Its purpose is two-fold: to examine the implications of using the Consumer Prices Index (CPI) rather than the Retail Price Index (RPI) as the water and sewerage industry's main price control index; and to consider how best to index Ofwat's capital expenditure allowances.
On the first of these issues, the report highlights how a switch of index might reduce unhelpful volatility in prices, but would also result in higher customers bills and have unsettling effects on investors. The report recommends that Ofwat should index price controls in line with RPI for the forseeable future. On the second issue, the report identifies a number of candidate capital cost inflation indices, but finds concerns with all of these options. The report concludes that Ofwat should consult during the next periodic review on the possibility of dispensing with a specific capital cost indexation mechanism in favour of indexing capex allowances in line with RPI.

 

 

 

 

 

 

 

 

 

If you wish to purchase this report, please click here to be taken to the UKWIR Forefront Library.

Upcoming Meetings

  • Trunk Main Flow Monitoring Zones Dissemination Event
     Wed 19 August 2020 09:30
  • Environment Assessments for Water Resources Planning
     Tue 01 September 2020 13:00
  • Deriving a best value Water Resources Management Plan
     Wed 02 September 2020 10:00
  • Carbon sequestration webex
     Wed 02 September 2020 11:00
  • Contractor Interviews
     Mon 07 September 2020 09:30