Royal Mail's price control 2010
23 November 2009
Postcomm has been consulting on proposals to make two changes to the ‘price control’ which limits certain prices Royal Mail can charge its customers (Tariff 2010).
We have received 26 responses to the consultation which opened on September 28, 2009.
After considering these, we have decided it is still appropriate to make the changes set out in the proposals document. These changes will affect the period from April 2010 to March 2011.
As this policy decision will involve changes to Royal Mail’s licence, we are now consulting on these. Responses should be submitted to us by Monday, 21 December 2009. (The Notice of proposed licence modifications is attached as Annex A to the decision document.)
The measures in our consultation for the price control for 2010 were designed to achieve the following:
- Limit the impact of negative RPI on Royal Mail (as the formula used in Royal Mail’s price control is based on RPI)
- Make the formula for limiting individual product price rises (sub-caps) more effective.
These proposals were in response to significant changes in the postal market that were unforeseen by both Royal Mail and Postcomm when the price control was set in 2006. We have a statutory duty to protect the universal service. These measures will help Royal Mail generate more revenue to fund the universal service during this period.
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 certain prices or let the quality of service of specified services fall, within limits. 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.
A summary of responses to the consultation and our reasons for the decision can be found in the Decision document below.
For more information please contact Caroline Longman (email link), tel: 020 7593 2154.
Related Documents:
- 23 November 2009 – Decision and Notice of proposed licence modifications
- Royal Mail's price control from April 2010 (Tariff 2010) - Decision and Notice of proposed licence modifications (pdf, 458KB)
- Further documents including consultation responses
