Price control 2003 - 2006
The 2003 - 2006 price control allowed Royal Mail approximately £750 million extra cash over the three years of the control and also opened the way to an enforceable scheme to compensate domestic and business mail users for late delivery of post.
The package was based on the retail price index (RPI) and used the RPI-X regulatory formula to control price rises. It included:
- a three per cent increase in prices in 2003
- further increases of RPI-1% in 2004 and 2005
- a "tariff basket" form of control that was designed to ensure revenues moved in line with costs in the event of any change in Royal Mail's product mix towards higher or lower priced products
- flexibility to allow Royal Mail to raise or lower the prices of individual products, to bring products better into line with costs. Increases of more than 1.5% above inflation were subject to Postcomm's prior approval. Any increases were to be balanced by reductions elsewhere
- specific consent to immediate increases of 1p in the price of both first and second class stamp and the facility, without Postcomm's prior approval, of a further increase of 1p for second class stamps in 2004 or 2005, in each case subject to balancing these increases with reductions elsewhere to keep within the overall limits
- provision for new products to sit outside the price control
- a tightening of Royal Mail's service standards, including tighter targets for the delivery of first class letters
- provisions to permit the first enforceable scheme to compensate domestic and business customers for late deliveries of their post, and
- safeguards for the universal service by permitting Royal Mail to seek relief if, in exceptional circumstances, it was faced with unavoidable and unforeseen shortfalls over the three years from 2003 to 2006.
More background on Postcomm's latest price control.
Related documents:
- 1 April 2003 - Royal Mail's amended licence
- Postal Services Act 2000. Section 11. Amended licence granted to Royal Mail Group plc (formerly Consignia plc) on 23 March 2001 and amended on 1 April 2003 (pdf, 199KB)
- 31 March 2003 - licence modification
- Postal Services Act 2000. Section 14. Modification of the conditions of the licence granted to Royal Mail Group plc (pdf, 672KB)
- 31 March 2003 - news release
- Postcomm modifies Royal Mail's licence to include new price control
- 31 March 2003 - decision document
- Review of Royal Mail Group plc's price and service quality regulation. Second price control, quality service targets and compensation - licence modification and decision document (pdf, 1.1MB)
- 24 March 2003 - consultation responses
- Responses to the February 2003 consultation paper "Review of Royal Mail Group plc's price and service quality regulation. Second price control, quality service targets and compensation - final proposals" (pdf, 1.6MB)
- 21 February 2003 - news release
- Postcomm extends consultation on price control
- 10 February 2003 - news release
- Wreck-u-lation? No, normal regulatory practice
- 6 February 2003 - final proposals
- Review of Royal Mail Group plc's price and service quality regulation. February 2003. Second price control, quality service targets and compensation - final proposals document (pdf, 1.9MB)
- 6 February 2003 - final proposals - technical annexes
- Review of Royal Mail Group plc's price and service quality regulation. February 2003. Second price control - technical annexes (pdf, 1.6MB)
- 6 February 2003 - news release
- Postcomm allows Royal Mail £750 million to improve services and prepare for competition
- 5 December 2002 - consultation responses
- Responses to Postcomm's "Review of Consignia plc's price and service quality regulation (pdf, 1.4MB)
- 5 December 2002 - consultation responses
- Responses to Postcomm's "Review of Consignia plc's price and service quality regulation: A compensation scheme. A consultation document" (pdf, 407KB)
- 5 December 2002 - WS Atkins efficiency study of Consignia's inland letters business
- Excised version of an efficiency study of Consignia's inland letters business (pdf, 2.1MB)
- 21 November 2002 - Price control issues Royal Mail paper 1 of 6
- The performance of the UK inland mails business of Consignia (pdf, 519KB)
- 21 November 2002 - Price control issues Royal Mail paper 2 of 6
- Consignia's comments in April 2002 on "The impact of liberalisation on efficiency. A survey." A report prepared for Postcomm by Frontier, January 2002 (pdf, 410KB)
- 21 November 2002 - Price control issues Royal Mail paper 3 of 6
- Allowed profit I: Cost of capital - for the UK inland mails business of Consignia (pdf, 424KB)
- 21 November 2002 - Price control issues Royal Mail paper 4 of 6
- Allowed profit II: regulatory asset base - for the UK inland mails business of Consignia (pdf, 227KB)
- 21 November 2002 - Price control issues Royal Mail paper 5 of 6
- Volume risk I: Forecast errors - for the UK inland mails business of Consignia (pdf, 296KB)
- 21 November 2002 - Price control issues Royal Mail paper 6 of 6
- Volume risk II: Cream-skimming entry - for the UK inland mails business of Consignia (pdf, 219KB)
- 18 November 2002 - Powerpoint review of Royal Mail Group plc's compensation scheme
- Review of Royal Mail Group plc price and service quality regulation. A compensation scheme (pdf, 79KB)
- 3 October 2002 - proposals document
- Review of Consignia plc's price and service quality regulation. October 2002. Proposal for a second price control (pdf, 1.6MB)
- 3 October 2002 - proposals document - technical annexes
- Review of Consignia plc's price and service quality regulation. October 2002. A proposals document - technical annexes (pdf, 1.2MB)
- 3 October 2002 - news release
- Postcomm consults on a price and performance package to benefit customers and Consignia
- 20 May 2002 - consultation responses
- Responses to the "Price control review for Consignia plc" consultation document (pdf, 208KB)
- 27 November 2001 - consultation document
- Price control review for Consignia plc. November 2001. A consultation document (pdf, 330KB)
- 27 November 2001 - news release
- Postcomm examines options for Consignia's price control.
