Some notes about Regulation

The British regulatory model is an evolving one. It started out as a reaction against both the nationalised industry controls and the perceived failures of US rate of return regulation. In the mid-1980s, the zeitgeist was one of markets, liberalisation, competition and private ownership. RPI-X was invented as a deliberately simple and temporary way to mimic the market, but only for so long as it took for competition to do away with the need for regulation at all. This applied to BT in 1984; it was expected to wither away after seven years.

In practice regulation has gradually morphed into a detailed and permanent set of interventions for the core monopoly infrastructures. It now controls price and outputs, and it has developed techniques to address the asset bases, the cost of capital, the operating efficiency and capital expenditure.

Regulation, built in this piecemeal way, has become heterogeneous. Each regulator has followed a specific path. OFGEM pioneered RIIO, with eight-year periods, whilst OFWAT sticks to five-year ones. OFGEM has indexed the cost of debt. ORR has had to accommodate a much greater role for the state, whilst OFCOM has struggled with the emerging universal service obligation (USO) for broadband. Large infrastructure projects have attracted their own unique contractual frameworks. Hence the detail matters, as is explored in each part below.

 

Regulation

Regulation
Transport

Regulation
Communications

Regulation
Infrastructure

Regulation
Regulation

Latest Publication

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Luck is not an energy policy – the cost of energy, the price cap and what to do about it

December 6, 2021

Regulation Publication

With energy prices set to rise even further, a look at how the recommendations from the 2017 Cost of Energy Review, if implemented at the time, could have prevented the current crisis.

Publications

  • Video Transport Making it Real: What does the zero emission revolution mean for you?
    July 20, 2020

    Presentation for the Annual Conference of the Zemo Partnership (formerly the Low Carbon Vehicle Partnership)
  • Publication Regulation There is no money
    May 18, 2020

    As the full impacts of the lockdowns become painfully obvious, there is much talk of new stimuli and in particular green recovery plans.
  • Video Transport Decarbonising Transport
    March 3, 2020

    Presentation for Transport Knowledge Hub National Workshop
  • Publication Regulation Thirty years after water privatization—is the English model the envy of the world?
    November 11, 2019

    The paper considers whether water privatization 30 years ago has delivered the promised superior performance to nationalization, which remains the dominant model in Europe.
  • Publication Transport HS2: a conclusion in search of a rationale
    September 5, 2019

    What is the question or questions to which HS2 is supposed to be an answer? As with a number of big and long-term projects, as one rationale collapses another is grasped in the attempt to justify doing something, rather than work out whether it is a...
  • Publication Regulation The Systems Regulation Model
    February 12, 2019

    There is widespread dissatisfaction with many of the privatised utilities. In the rail sector, despite gaining from much higher revenues from a doubling of demand and significantly higher real prices, performance has been subject to repeated criticisms...
  • Publication Regulation The Dividend Puzzle: what should utilities pay out?
    December 4, 2018

    Why does Centrica yield 9.3% and SSE 8.4%, whilst DRAX yields 3.2%? Why do United Utilities, Severn Trent and Pennon yield respectively 5.0%, 4.8% and 4.4%, and National Grid 5.8%, whilst BT yields 6.0% (all at the end of November 2018)? Why are they...
  • Publication Regulation RIP RPI-X Regulation - OFWAT and OFGEM nail down the coffin
    April 17, 2018

    RPI-X regulation has had a good run. It was a deceptively simple idea: fix the prices and leave everything else to the companies and the markets to sort out how best to maximise profits by minimising costs. That simplicity was its great strength...
  • Publication Regulation Policy by lists – the Green Paper and the new industrial strategy
    March 17, 2017

    Regulation grows. It is never reaches a stable equilibrium. There are always more things that politicians, regulators and the multiple vested interests want to do. These include new duties and responsibilities, new incentives, and most of all new spend...
  • Publication Regulation Regulatory Reform and The System Operator Model
    January 10, 2017

    Regulation grows. It is never reaches a stable equilibrium. There are always more things that politicians, regulators and the multiple vested interests want to do. These include new duties and responsibilities, new incentives, and most of all new ...
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