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Tuesday 12 July, 2005

Civil Aviation Auth.

Consultation Document

Civil Aviation Authority
12 July 2005



Further consultation on the regulatory treatment of preliminary expenditure on
new runway capacity: note of clarification


Shortly after the Civil Aviation Authority published its further consultation on
the regulatory treatment of preliminary expenditure on new runway capacity at
Stansted on 29 June 2005, the CAA was asked to provide further clarification as
to how it proposed that the return on preliminary expenditure incurred up to 31
March 2008 would be assessed.


In response to this request, and to avoid any risk that the CAA's proposed
policy is misinterpreted, the CAA has amended the consultation document in a
number of respects.  The principal amendments are to:


•  the fourth bullet point of paragraph 2.12 so as to set out the policy
   proposal in the CAA's earlier June 2004 consultation as therein described;


•  amend paragraph 3.36 and add a new paragraph 3.37 to describe the
   development of the policy in the light of up-to-date information on BAA's
   capital expenditure forecasts; and


•  paragraph 4.1 to set out more fully there the CAA's proposed approach.


In summary, the proposed approach upon which the CAA is seeking views is that an
additional return would be included in the Stansted Regulatory Asset Base from 1
April 2008 based on the excess of total outturn capex over and above the
projections made at the time of the last price control review, up to a maximum
additional return equal to the return on net preliminary expenditure.


The CAA is extending the deadline for comments by two weeks to Tuesday, 18
October 2005.  Details of where to send views are set out in chapter 1 of the
amended document.


The revised document (in both consolidated and track changes format) is
available through the following link:


http://www.caa.co.uk/default.aspx?categoryid=5&pagetype=90&pageid=629.


Civil Aviation Authority

Tuesday, 12 July 2005


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