RPI-X

RPI-X is a pricing regulation mechanism used to control the prices of essential services like electricity, water, or transportation. RPI stands for Retail Price Index, which measures inflation or the general rise in prices over time. The “X” represents a percentage of efficiency savings or cost reductions that the service provider is expected to achieve. Essentially, the allowed price increase each year is based on inflation (RPI) minus these efficiency gains (X). This approach encourages companies to cut costs and improve efficiency while still allowing them to cover their costs and earn a reasonable return.