Postcomm consult on price controls

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Consultation on changes to price control from April 2010

From today Postcomm is consulting on proposals to make two changes to the ‘price control’ which limits the prices Royal Mail can charge its customers.

These proposals will cover the period April 2010 to March 2011.

The price control is a regulatory tool designed to protect the customer when there is not enough competition in the marketplace. Royal Mail’s price control ensures it cannot raise its prices or let its quality of service drop unreasonably. It also encourages Royal Mail to be more efficient, though at the same time is designed to ensure it can afford to deliver the universal service – a requirement of its licence.

These measures are designed to limit the impact of negative RPI on Royal Mail (as the formula used in Royal Mail’s price control is based on RPI) and to make the formula for limiting individual product price rises (sub-caps) more effective.

These proposals are a response to significant changes in the postal market that were not foreseen by both Royal Mail and Postcomm when the price control was set in 2006.

Postcomm has a statutory duty to protect the universal service. These measures should help Royal Mail to generate more revenue to fund the universal service during this period.

Responses to this consultation should be submitted to us by October 26, 2009. We are keen to consider the views of all interested parties and are happy to meet to discuss these proposals with you, if you so wish.

Please visit Postcomm’s website for more information and links to a full list of related documents: http://www.psc.gov.uk/news-and-events/n ... -2010.html" onclick="window.open(this.href);return false;

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These proposals are a response to significant changes in the postal market that were not foreseen by both Royal Mail and Postcomm when the price control was set in 2006.

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