• Time to invest: infrastructure, the credit crunch and the recession.

    18th December 2008

    After the denial comes the reality: this is no ordinary downturn. It is not even simply a particularly sharp boom and bust. Britain faces a credit crisis which is largely home-grown; an enormous overhang of leverage; an annual structural deficit of at least £70 billion; and the end of the North Sea oil and gas bonus...

  • Special administration, financing functions and utility regulation

    23rd October 2008

    Recent events have sharpened interest in the question of what happens when key businesses get into difficulty. In the banking sector, governments and regulators have had to make it up as they go along. The lack of preparation for failure has been painfully exposed. In the utility sector, it is a different story: essential services need to be protected, and how to cope in the unlikely event of failure has evolved as an integral part of the regulatory framework. The special administration regime...

  • Commentary: How to tackle fuel poverty

    25th July 2008

    Back in 2000, with impeccably bad timing, John Prescott committed the government to eliminate fuel poverty by 2010—just when the oil price had doubled. This ambition became statutory and was formalised as a target for the eradication of fuel poverty for vulnerable households by 2010 and for all households in England by 2016.

  • Rewewables: Time for a Rethink?

    16th June 2008

    To some, renewables are—with energy efficiency—the solution to climate change. That, in effect, is what the government believed when it set out its energy policy in the 2003 White Paper. To others, they are at best an irrelevance when set against the great global expansion of coal and the 50% increase in carbon emissions projected for 2030 by the IEA. Neither position turns out to be correct, but in the presence of so much lobbying and political positioning, good policy tends to get lost in...

  • Political opportunism and energy policy: windfall taxes, arm-twisting and their effects on investmen

    3rd March 2008

    The British government prides itself on creating a stable, competitive energy market, and advocates the same for Europe. Indeed, so convinced is it of the superiority of this model that it argues that even nuclear power developers can rely on its transparency, predictability and stability so that they can invest on a commercial basis. In particular, they can be secure in the knowledge that there will be independent regulation and a long-term price of carbon.

  • The EU Climate Change Package: even more radical than it looks

    28th January 2008

    The EU's climate change package is one of the most radical sets of proposals to come out of Brussels. It is on a par with monetary union, and it defines a new role for the EU in the coming decades in driving through the de-carbonisation of the European economy. The targets are demanding, both in aggregate emissions reductions and for renewables and energy efficiency. The third phase of the EU ETS from 2012 promises to be very tough.

  • Tradeable RABs and the Split Cost of Capital

    3rd January 2008

    Whilst regulators have resisted the concept of the split cost of capital, financial markets have been applying its logic with enthusiasm. The recent takeover of Norweb with a reported 45% premium to the regulated capital value (RCV) takes the application of the idea one stage further, since, in the Norweb case, the operational contract was kept with United Utilities, so that it was the core regulated asset base (RAB) that was purchased. In effect, this was yet one more example of large-scale...

  • How not to regulate airports: BAA, the Competition Commission and regulatory reform

    7th October 2007

    The Report by the Competition Commission (CC) into the economic regulation of BAA’s London airports has a significance far beyond the perimeter fences of Heathrow and Gatwick airports. It is the first full periodic review of a regulated utility that the CC has looked at for some considerable time. Core generic issues such as the cost of capital, the determination of capital expenditure and the penalties for poor customer service have been set on a sector by sector basis, and unsurprisingly...

  • Infrastructure, housing and the floods: some lessons

    27th July 2007

    The recent floods have tested electricity and water infrastructure to its limits, and they have also provided an insight into the preparedness and performance of the key public agencies - notably the Environment Agency (EA). And with an ironic twist, the announcements of the government housing and transport plans have coincided with the submergence of much of the upper Thames flood plain. Not surprisingly, the government quickly announced a review - but it remains to be seen whether the lessons...

  • A Browner shade of green: energy and the environment after Blair

    9th July 2007

    The handover from Blair to Brown has been a long drawn-out process, and now it has finally happened and a new Cabinet and ministers have been appointed, the policy questions return. How green is Brown? How will the recent White Papers on energy planning, and the draft Climate Change Bill be taken forward? Will shorttermism— and the next election strategy— take precedence over the longer-term challenges of climate change and investment in power stations and networks? What does the change in...