South Eastern ITT introduces FRM

摘要

Features of the invitation to tender for the replacement South Eastern franchise, issued on November 29, include implementation of DfT's Forecast Revenue Mechanism. As with the discontinued cap and collar regime, this is intended to reduce the franchisee's exposure to revenue risk. FRM transfers partial revenue risk to DfT and will be available from the year beginning on April 1 2020. If FRM revenue is less than 97% of target revenue, the franchisee is paid 80% of the difference. Similarly, if FRM revenue is more than 103% of target revenue, DfT receives 80% of the difference as revenue share.