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RCV Indexation: real term price effects

WATER SERVICES REGULATION AUTHORITY

This public procurement record has 1 release in its history.

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18 Nov 2016 at 20:17

Award Notice
Summary of the contracting process

The Water Services Regulation Authority is seeking consultancy services for a project titled "RCV Indexation: real term price effects". This procurement aims to evaluate the potential shift from RPI to CPI for indexation in the water sector, exploring both benefits and challenges. The tender is classified under financial management consultancy services, with a contract value of £95,000. The deadline for tender submissions was 26 November 2015, while the contract period commenced on 7 December 2015 and is set to conclude on 31 March 2016. The project is located in England, specifically focusing on regions such as Birmingham and London.

This contracting opportunity presents significant potential for consultancy firms specialising in financial management and economic analysis, particularly those experienced in indexation methodologies within regulated industries. Small and medium-sized enterprises (SMEs) may find this tender particularly accessible, given its outlined suitability for such businesses. Firms capable of conducting in-depth cost-benefit analyses and transitioning frameworks for clients are well-positioned to engage in this tender, which could facilitate strategic growth in their service offerings to regulatory bodies and similar sectors.

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Notice Information

Notice Title

RCV Indexation: real term price effects

Notice Description

The objective of this work is to provide supporting evidence to assist our decision on whether to move away from RPI to an alternative form of indexation for the RCV and revenue controls for future price control periods. There are a number of potential arguments supporting a shift from RPI to CPI: * CPI is gaining legitimacy as an alternative indexation measure to RPI. In fact, while the 2015 Johnson review suggested that 'no taxes, benefits or regulated prices should be linked to the RPI' and that the ONS shall request regulators to justify why they continue to use RPI in price controls, a number of other regulators and public bodies have already moved to CPI indexation for at least part of their controls (CAA, Ofcom, DECC and WICS); * A move to CPI could lower the overall long-term risk placed on customers since CPI is less volatile; * CPI could be more closely correlated with movements in water companies underlying costs (excluding financing costs); * The (financeability) mismatch between a real cash inflow and mostly nominal outflows may be reduced if we were to move to CPI; and * There may also be additional drawbacks associated with a shift to CPI. One of the most important of these is likely to be the potential increase on customer bills from the increase in the real cost of capital, although we consider that this can be mitigated through the use of PAYG levers. However we consider that there are a number of other potential costs from moving to CPI indexation that should also be taken into account: o The lower availability and potentially higher costs associated with obtaining CPI rather than RPI linked debt; o Costs associated with a mismatch between existing RPI instruments and CPI indexation of RCV and revenues; o Potential increased scope for error in estimating the real risk-free rate. We consider that the work will need to address the following overarching questions: 1. What are the quantitative benefits and costs of moving from RPI to CPI indexation? 2. How might these benefits and cost change in the future? 3. What transition mechanisms could we use to maximise the benefits and minimise the costs of moving from RPI to CPI indexation? 4. How best should we transition the impact of a move to CPI in order to protect customer bills?

Notice Details

Publication & Lifecycle

Open Contracting ID
ocds-b5fd17-32a328df-adc9-11e6-9901-0019b9f3037b
Publication Source
Contracts Finder
Latest Notice
https://www.contractsfinder.service.gov.uk/Notice/0b738272-c964-4e94-b584-f62e23a7f7ed
Current Stage
Award
All Stages
Award

Procurement Classification

Notice Type
Award Notice
Procurement Type
Standard
Procurement Category
Services
Procurement Method
Not Specified
Procurement Method Details
Other -
Tender Suitability
SME
Awardee Scale
Large

Common Procurement Vocabulary (CPV)

CPV Divisions

79 - Business services: law, marketing, consulting, recruitment, printing and security

CPV Codes

79412000 - Financial management consultancy services

Notice Value(s)

Tender Value
£95,000 Under £100K
Lots Value
Not specified
Awards Value
£95,000 Under £100K
Contracts Value
Not specified

Notice Dates

Publication Date
18 Nov 20169 years ago
Submission Deadline
26 Nov 2015Expired
Future Notice Date
Not specified
Award Date
4 Dec 201510 years ago
Contract Period
7 Dec 2015 - 31 Mar 2016 1-6 months
Recurrence
Not specified

Notice Status

Tender Status
Complete
Lots Status
Not Specified
Awards Status
Active
Contracts Status
Not Specified

Buyer & Supplier

Contracting Authority (Buyer)

Main Buyer
WATER SERVICES REGULATION AUTHORITY
Contact Name
Available with D3 Tenders Premium →
Contact Email
Available with D3 Tenders Premium →
Contact Phone
Available with D3 Tenders Premium →

Buyer Location

Locality
BIRMINGHAM
Postcode
B5 4UA
Post Town
Birmingham
Country
England
Major Region (ITL 1)
TLG West Midlands (England)
Basic Region (ITL 2)
TLG3 West Midlands
Small Region (ITL 3)
TLG31 Birmingham
Delivery Location
TLG West Midlands (England), TLI London
Local Authority
Birmingham
Electoral Ward
Ladywood
Westminster Constituency
Birmingham Ladywood

Supplier Information

Number of Suppliers
1
Supplier Name

OXERA

Further Information

Open Contracting Data Standard (OCDS)

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The Open Contracting Data Standard (OCDS) is a framework designed to increase transparency and access to public procurement data in the public sector. It is widely used by governments and organisations worldwide to report on procurement processes and contracts. 

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