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Revenue correction mechanism 2010-15 final reconciliation

Document Cited in Related
Vincent
Date08 December 2016
1
Revenue correction mechanism 2010-15 final
reconciliation
Introduction
This document sets out our decisions on the final reconciliation for the revenue
correction mechanism (RCM).
The RCM is a financial mechanism that we introduced at our 2009 price review
(PR09) to correct for differences between appointed monopoly companies’ expected
and actual price controlled revenue for the 2010-15 period.
The RCM is part of a suite of incentive mechanisms introduced at PR09 where we
are considering adjustments. This is because full information for the complete 2010-
15 period was not available to us when we made our 2014 price review (PR14) final
determinations in December 2014. Consequently, companies provided forecast data,
which we considered and adjusted as necessary, for inclusion in the PR14 final
determination.
Companies have now provided complete information and final audited spend and
performance data for the whole 2010-2015 period. We have used this to update our
analysis.
We are setting out our decisions for the RCM reconciliation now as this has the
potential to impact revenue limits for 2017-18 to allow companies sufficient time to
consider the appropriate charges for 2017-18.
We will set out our decisions on the final reconciliation for all other relevant PR09
incentive mechanisms in early 2017.
Background
We published Consultation on 2010-15 final reconciliation on 5 October 2016 setting
out our draft reconciliation for the RCM and a number of other incentive
mechanisms. Further details on the approach to the RCM reconciliation that we used
at PR14 and how and why our proposed adjustments differed from those made in

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