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What are interim determinations?
All companies can ask us to reset their price limits between five-yearly price reviews. They can ask for this if specific changes in circumstance lead to a significant reduction in their revenue or an increase in their costs. This is known as an interim determination.
When we receive an application from a company we look at this against the list of criteria set out in their licence. This gives the details of the calculations for: - materiality – we test the application against a set level. If the changes in costs, receipts or revenues are big enough to change price limits by one per cent or more we say the application is material. A company can add together a number of changes.
- triviality – if the value of a change relating to one issue is less than one per cent of the company's turnover then we won't include this in the materiality test.
From these calculations we decide whether the company will have an interim determination. The Company's Licence Condition B also describes the relevant changes of circumstance and notified items.
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