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. Bonds & Fixed Income

    Curbing The Effects Of Inflation

  2. Active Trading Fundamentals

    Gauging Support And Resistance With ...

  3. Economics

    The New Global Banking Regulations To ...

  4. Economics

    Indian Banking Regulations -- What You ...

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center