Price Cap Regulation

What is a 'Price Cap Regulation'

A price cap regulation is 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.

BREAKING DOWN '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. Mid Cap

    A company with a market capitalization between $2 and $10 billion.
  3. Large Cap - Big Cap

    A term used by the investment community to refer to companies ...
  4. Capped Rate

    An interest rate that is allowed to fluctuate, but which cannot ...
  5. Annual Cap

    A clause found in the contract of an adjustable-rate mortgage ...
  6. Regulation F

    A regulation set forth by the Federal Reserve. Regulation F specifies ...
Related Articles
  1. Professionals

    Regulations

    Regulations
  2. Professionals

    Regulations and Requirements

    Regulations and Requirements
  3. Investing

    Market Cap

    Learn more about how market cap represents the "price tag" of a company.
  4. Stock Analysis

    Small Cap Vs. Mid Cap Vs. Large Cap Stocks in 2016

    Find out what to expect from small-, mid- and large-cap stocks in 2016, learn and why markets might not perform much better than 2015.
  5. Markets

    Understanding Small- And Big-Cap Stocks

    If you don't realize how big small-cap stocks can be, you'll miss some good investment opportunities.
  6. Stock Analysis

    Why You Need to Watch Small Caps (IWM)

    Small cap performance impacts broad market tone and direction while revealing important details about market psychology.
  7. Economics

    The Pitfalls Of Financial Regulation

    Regulatory actions usually have lofty intentions that end up with unintended and negative consequences.
  8. Term

    Should You Invest In Big- Or Small-Cap Stocks?

    The term “cap” refers to market capitalization, and it’s calculated by multiplying the price of a stock by the number of shares outstanding.
  9. Investing

    What's a Small Cap Stock?

    The “cap” in small cap stocks refers to a company’s capitalization as determined by the total market value of its publicly traded shares. Small cap stocks are generally defined as the stock of ...
  10. Chart Advisor

    Small Caps Are Just Too Risky At These Levels

    With the rise in the markets over the past few weeks many traders are starting to wonder if now is the time to buy small caps. These 3 charts suggest that it may be best to wait.
RELATED FAQS
  1. Are small cap companies a safer investment than large cap companies?

    Learn about the safety of small caps compared to large caps. Find out which key measures they differ on and which to pick ... Read Answer >>
  2. What is the best way to invest in small cap companies?

    Learn about the best ways to invest in small cap companies. Find out when small cap companies yield the highest return and ... Read Answer >>
  3. Are small cap companies more risky investments than large cap companies?

    Learn about the risk of small cap companies compared to large cap companies. Compare the volatility of both and learn how ... Read Answer >>
  4. How strongly does government regulation impact the utilities sector?

    Read about the impact of government regulation on the utilities sector, particularly as is pertains to the water and electricity ... Read Answer >>
  5. How can I use market capitalization to evaluate a stock?

    Find out how market capitalization affects valuation in fundamental analysis, which valuation ratios use market cap and how ... Read Answer >>
  6. What impact does government regulation have on the financial services sector?

    Learn about how the financial services industry is affected by government regulation, and the different types of regulations ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center