Ofwat confirms inflation adjustment to 2024-5 retail price caps

Ofwat has informed retailers of the inflation adjustment it has permitted to Retail Exit Code price caps for the charging year starting in April 2024. This relates to the protections for the smallest customers in the business market (Group One customers), where inflation is relevant for two components of the price cap: allowed cost to serve and meter read cost allowance.

In a letter to retailers, Ofwat allowed an adjustment of 1.05, calculated according to the ratio of CPIH applying in October 2023 and October 2022 (see table 1).

Table 2 sets out the allowances that apply for 2024-5, reflecting the uplift.