---
title: "RCV Indexation: real term price effects"
ocid: "ocds-b5fd17-32a328df-adc9-11e6-9901-0019b9f3037b"
canonical_url: "https://d3tenders.com/contract/?ocid=ocds-b5fd17-32a328df-adc9-11e6-9901-0019b9f3037b"
markdown_url: "https://d3tenders.com/contract/ocds-b5fd17-32a328df-adc9-11e6-9901-0019b9f3037b.md"
json_url: "https://d3tenders.com/contract/ocds-b5fd17-32a328df-adc9-11e6-9901-0019b9f3037b.json"
source: "Contracts Finder"
current_stage: "Award"
buyer: "WATER SERVICES REGULATION AUTHORITY"
published: "2016-11-18"
---

# RCV Indexation: real term price effects

Buyer: WATER SERVICES REGULATION AUTHORITY  
Current stage: Award  
OCID: ocds-b5fd17-32a328df-adc9-11e6-9901-0019b9f3037b

[View canonical contract page](https://d3tenders.com/contract/?ocid=ocds-b5fd17-32a328df-adc9-11e6-9901-0019b9f3037b)  
[Download OCDS JSON](https://d3tenders.com/contract/ocds-b5fd17-32a328df-adc9-11e6-9901-0019b9f3037b.json)

## Summary

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.

## Notice

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?

## Key Details

| Field | Value |
| --- | --- |
| Publication source | Contracts Finder |
| Latest notice | https://www.contractsfinder.service.gov.uk/Notice/0b738272-c964-4e94-b584-f62e23a7f7ed |
| Notice type | Award Notice |
| Procurement type | Standard |
| Procurement category | Services |
| Procurement method | Not Specified |
| Procurement method details | Other - |
| Tender suitability | SME |
| Awardee scale | Large |
| All stages | Award |

## Dates

| Field | Value |
| --- | --- |
| Publication date | 18 Nov 2016 |
| Submission deadline | 26 Nov 2015 |
| Future notice date | Not specified |
| Award date | 4 Dec 2015 |
| Contract period | 7 Dec 2015 - 31 Mar 2016 |
| Recurrence | Not specified |

## Values

| Field | Value |
| --- | --- |
| Tender value | £95,000 |
| Lots value | Not specified |
| Awards value | £95,000 |
| Contracts value | Not specified |

## Status

| Field | Value |
| --- | --- |
| Tender status | Complete |
| Lots status | Not specified |
| Awards status | Active |
| Contracts status | Not specified |

## Buyer

| Field | Value |
| --- | --- |
| Main buyer | WATER SERVICES REGULATION AUTHORITY |
| Locality | BIRMINGHAM |
| Post town | Birmingham |
| Postcode | B5 4UA |
| Country | England |
| ITL 1 | TLG West Midlands (England) |
| ITL 2 | TLG3 West Midlands |
| ITL 3 | TLG31 Birmingham |
| Local authority | Birmingham |
| Electoral ward | Ladywood |
| Westminster constituency | Birmingham Ladywood |
| Delivery location | TLG West Midlands (England), TLI London |

## Supplier

| Field | Value |
| --- | --- |
| Number of suppliers | 1 |
| Supplier names | OXERA |

## CPV Codes

### Divisions

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

### Codes

- 79412000 - Financial management consultancy services

## Release History

- 18 Nov 2016 at 20:17 - Award - Award Notice - https://www.contractsfinder.service.gov.uk/Notice/0b738272-c964-4e94-b584-f62e23a7f7ed

## Documents

- https://www.contractsfinder.service.gov.uk/Notice/0b738272-c964-4e94-b584-f62e23a7f7ed
  16th January 2016 - Awarded contract notice on Contracts Finder
- https://www.contractsfinder.service.gov.uk/Notice/Attachment/dfb2bc6a-0ede-4f7b-aeb9-c97440d5b3e7
  Contract

## Notice URLs

- http://www.ofwat.gov.uk

## Provenance

This Markdown file is an alternate public rendering of the D3 Tenders contract record. The canonical page is https://d3tenders.com/contract/?ocid=ocds-b5fd17-32a328df-adc9-11e6-9901-0019b9f3037b. The underlying structured data is available as OCDS JSON at https://d3tenders.com/contract/ocds-b5fd17-32a328df-adc9-11e6-9901-0019b9f3037b.json.