Wreck-u-lation? No, normal regulatory practice – Postcomm press statement

Royal Mail’s price control is designed, against a reasonable range of assumptions, including on access, to ensure that the company has enough cash to cover its outgoings and implement its renewal plan.
The assumption that we have built into our final price control proposals is that access will be cash neutral – in other words it would not affect the overall level of profit made by Royal Mail.
It is nonsense to suggest that this is a “bombshell” to Royal Mail. Since October last year we have been discussing the pricing of access with Royal Mail. At our request they provided figures to enable us to develop our assumptions, and we tested them thoroughly as part of the process of coming up with a robust price control.
No price has yet been set for access. Postcomm expects to consult in March or April on arrangements for UK Mail to access Royal Mail’s network.
Notes to editors
Royal Mail today accused Postcomm of “wreck-u-lation” and slipping “a potentially fatal condition” into our final price control proposals because we included an assumption on the cost of access by competitors to Royal Mail’s delivery network.
In calculating a price control regulators always have to make assumptions – on the likely operating expenditure, the capital expenditure, the efficiency or otherwise of the business and other factors that may affect these. It would have been irresponsible of us not to consider the possible impact of access on Royal Mail’s finances in setting the price control.