Various combinations and permutations on the two regulatory regimes described above are possible. But to be effective, clarity of intent and application must exist as in the other regulatory regimes previously described. { SHAPE \* MERGEFORMAT }
A survey of options and issues related to hybrid approaches shows that the alternatives include guarantees in incentive based regimes. The most common alternative utilized is price cap with pass through of costs not under the control of the PPP provider. This provides the opportunity to carve out unpredictable costs while introducing incentives.
A key issue is how much uncertainty is passed to users vs. retained by government (taxpayers) through guarantees or subsidies. In many ways uncertainty and who owns it is what a PPP negotiation is all about. In addition, the approach to inflation indexing is a crucial regulatory design point.