Price Cap Regulation

AAA

DEFINITION of 'Price Cap Regulation'

A form of economic regulation generally specific to the utility industry in the United Kingdom. Price cap regulation sets a cap on the price that the utility provider can charge. The cap is set according to several economic factors, such as the price cap index, expected efficiency savings and inflation.

INVESTOPEDIA EXPLAINS 'Price Cap Regulation'

After the rising costs of inputs (inflation) and the prices charged by competitors are considered, price cap regulation is introduced to protect the consumers while ensuring that the business can remain profitable.


Price cap regulation stands in contrast to rate of return regulation and revenue cap regulation, other forms of price and profit controls used in the United Kingdom. All private British utility networks are now required to adhere to price cap regulation.

RELATED TERMS
  1. Revenue Cap Regulation

    A form of economic regulation generally applied to utility companies. ...
  2. Session Price

    The session price is the price of a stock over the trading session. ...
  3. Breakeven Price

    1. The amount of money for which an asset must be sold to cover ...
  4. Price Protection

    A little-known, but common feature offered by most credit card ...
  5. Price Level

    The average of current prices across the entire spectrum of goods ...
  6. Setup Price

    A price level predetermined as the point of entry into a specific ...
Related Articles
  1. Curbing The Effects Of Inflation
    Bonds & Fixed Income

    Curbing The Effects Of Inflation

  2. Gauging Support And Resistance With ...
    Active Trading Fundamentals

    Gauging Support And Resistance With ...

  3. The Nordic Model: Pros and Cons
    Economics

    The Nordic Model: Pros and Cons

  4. Material Adverse Effect A Warning Sign ...
    Markets

    Material Adverse Effect A Warning Sign ...

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center