Price Controls 150 · On-demand course
A recorded course from MCC Economics on how regulators forecast, benchmark and regulate operating expenditure (opex) in utilities, from the base-step-trend method to efficiency sharing schemes, with examples from the Australian Energy Regulator and Ofgem.
Price Controls 150 is delivered by practitioners who model costs and price controls for regulators, governments and utilities.
Course lead
Director, MCC Economics
PJ has worked on price controls from the regulator's side and for regulated companies, including RIIO-2 work with Ofgem and the Utility Regulator for Northern Ireland.
I heartily recommend PJ to anyone seeking input on the financial parameters that underpin different regulatory models.
Price Controls 150 is a recorded course on how regulators forecast and set operating cost allowances for utilities. It explains why opex is forecast, how the base-step-trend method works, how benchmarking and audits test whether forecasts are credible, and how incentives such as the Australian Energy Regulator's Efficiency Benefit Sharing Scheme reward savings.
You will be able to follow how an opex allowance is built and judge whether a forecast is credible. The course is built around three outcomes.
The lecture explains what opex means in regulation and why it is forecast, then works through the tools regulators use.
These are the terms the course uses most, in plain English. Ofgem is the Office of Gas and Electricity Markets.
| Term | Meaning |
|---|---|
| Operating expenditure (opex) | The day-to-day costs of running a network, such as staff, maintenance, repairs and computer systems. |
| Base-step-trend | A forecasting method that starts from an efficient base year, adds step changes and applies a trend. |
| Base year | A recent year of actual operating costs that the regulator judges to be efficient, used as the starting point. |
| Step change | An adjustment for a new or removed obligation, such as a new safety rule, that the base year does not reflect. |
| Trend | The expected yearly change in costs from input prices, growth in the network and productivity. |
| Efficiency benchmarking | Comparing a company's costs with those of similar companies, or with models of efficient cost, to set efficiency targets. |
| Efficiency Benefit Sharing Scheme | An Australian Energy Regulator incentive that lets a company keep the benefit of an efficiency saving for a set period, whichever year it is made, before it passes to customers. |
| RIIO-GD2 | Ofgem's price control for gas distribution networks in Great Britain, running from 2021 to 2026. |
It suits anyone who prepares, reviews or challenges operating cost forecasts for regulated networks.
Price Controls 150 follows the course on capital expenditure and leads into the course on incentive mechanisms.
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MCC Economics advises regulators, government bodies and utilities on price controls in the United Kingdom and the Gulf, and its research also covers Australian network regulation. The firm was founded in London in 2017. Its regulatory economics work covers energy, water, aviation and infrastructure. You can read the team's background on the people page.
MCC Economics has helped us better understand the most important issues for our stakeholders, including: charges, shareholder returns, debt payments and inflation impacts.
See the instructor profiles near the top of this page for the current teaching team and their experience.
No. Price Controls 150 is recorded course material only, so there is no meeting to attend. You get immediate access to the materials once you sign up.
A lecture video, annotated slides, a quiz to test your learning and a complete transcript.
A way of forecasting operating costs. It starts from actual spending in an efficient base year, adds step changes for new or removed obligations, and applies a trend for expected changes in input prices, output and productivity.
The Australian Energy Regulator, including its Efficiency Benefit Sharing Scheme, and Ofgem, including the RIIO-GD2 price control for gas distribution.
It is not required, but Price Controls 120: Building Blocks shows where operating costs fit within allowed revenue.
Contact MCC Economics through the consultation page to discuss access for a team or training tailored to your organisation.
Page last reviewed October 2026.
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