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. Material Adverse Effect A Warning Sign ...
    Markets

    Material Adverse Effect A Warning Sign ...

  4. Changes In Tax Legislation And Regulation
    Taxes

    Changes In Tax Legislation And Regulation

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center