Royal Mail is required to operate within the pricing framework defined in Condition 21 (previously Condition 19) of our Licence. The detail of the pricing framework is reviewed periodically.
Royal Mail's first price control was a two year price freeze that began on 23 March 2001, the day our first licence took effect.
Almost immediately, Postcomm began public consultations on our second price control. Links to our key responses to these consultations are provided at the end of this section. The details of our second price control were finalised in March 2003 and came into effect, for three years, on 1st April 2003.
Public consultations on our third price control began in March 2004 and continued until details of the control framework were finalised in May 2006. Our third price control is for a four year period, with effect from 3 April 2006. Links to our key responses to Postcomm's consultation documents are provided below; a link to our new Licence, which includes details of the new pricing framework in Condition 21, is provided on the "Regulation Framework" page of this web site.
Our response to the 2006 Final Proposals
Our response to the 2006 Final Proposals-main document
Annex 1P Oxera note on managing risks
Annex 5P RM response on FE's forecast volumes
Annex 7P RM response on LECG base year analysis
Our response to the 2006 Initial Proposals
Main document:
Our response to the 2006 initial proposals: Chapters 1 - 5
Our response to the initial proposals: Chapters 6 - 13
Annexes:
01 - Determining the scope of Royal Mails price control
02 - This document contains commercially sensitive information.
03 - This document contains commercially sensitive information.
04 - Access and Price Control in the Postal Sector
05 - Equi-proportional mark-ups - regulatory precedent
06 - Pricing and Welfare Implications of Alternative Approaches to Setting Price Controls in the Postal Sector
07 - Structure of the Control - Lessons from BT's price controls
08 - How could Royal Mail undertake class costing
09 - Royal Mail's costing system in the context of class costing
10 - Establishing Non-Uniform Access Prices in the UK
11 - The Valuation of Royal Mail
12 - This document contains commercially sensitive information.
13 - Estimates of the intangible value
14 - Estimating the Greenfield investment required to set up a universal postal service in the UK
15 - Regulatory precedents for setting service quality incentices - financial levers
Accent and RAND Europe undertook research, which examined customers' willingness to pay for different levels of quality of service for ten key Royal Mail products. The following document sets out the results of this research.
16 - Pricing quality of service
17 - Royal Mail Service Standards Penalty and Reward Regime
18 - Response to Frontier Economics' paper on volumes
19 - Joint response to Frontier Economics' forecasting methodology
In September 2004 Postcomm released their "Consultation on Principles" document for Royal Mail's 2006 Price and Service Quality Review. Postcomm were looking for stakeholders' views on the document. Our response was published in December 2004 and is available from the links below.
2006 Royal Mail Price and Service Quality Review - Royal Mail's Response
2003 Price Control Review
Our principal responses to Postcomm’s public consultations about our 2003 Price Control Review are provided below.
Application of Licence Condition 19 - Price Range - August 2003
Royal Mail's response to Postcomm's November 2001 consultation document - 15 February 2002
Price Control Review - Consultation Document
Response to Postcomm's Consultation Document "Review of Price and Service Quality Regulation - Proposal for a Price Control" - 2 October 2002
Response to Postcomm's Consultation Document "Review of Price and Service Quality Regulation - Proposal for a Price Control" - Appendices October 2002
Royal Mail's response to WS Atkins Efficiency Report
2003 Price Control Review: Supporting Papers
The following six papers were prepared in support of our original price control. They were submitted formally to Postcomm on 18 July 2002.
The Performance of the UK Inland Mails business
The Impact of Liberalisation on Efficiency: A Survey - A report prepared for Postcomm by Frontier, January 2002
Allowed Profit: Cost of Capital for the UK Inland Mails Business
Allowed Profit: Regulatory Asset Base - for the UK Inland Mails business
Forecast Errors - for the UK Mails Business
Volume Risk II: Cream-skimming Entry for the UK Inland Mails business
