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 7 years.

In practice it has gradually morphed into a detailed and permanent set of interventions for the core monopoly infrastructures. Regulation 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 8-year periods, whilst OFWAT sticks to 5. OFGEM has indexed the cost of debt, OFWAT has not. ORR has had to accommodate a much greater role for the state, whilst OFCOM has struggled with the emerging 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

notes 514998 1920

Policy by lists – the Green Paper and the new industrial strategy

March 17, 2017

Regulation Publication

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...

Publications

  • 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 ...
  • Publication Regulation Do we need any more periodic reviews?
    December 12, 2016

    As the regulators and the utilities gear themselves up for the next round of periodic reviews around 2020, one question which is rarely considered is: do we need any more periodic reviews? Most regulatory regimes around the world don’t have them, and...
  • Publication Regulation Water regulation - what's next?
    November 10, 2016

    As the next periodic review of the water industry (PR19) approaches, government and regulators are going through the usual “reform” process. The temptation to meddle is just too great to resist, and this time there are some good reasons for change...
  • Presentation Infrastructure Investing in Future Utility Infrastructure
    June 22, 2016

    Presentation for Infrastructure Investment Conference
  • Presentation Regulation Policy and Regulation for Utilities: Where do we go from here?
    March 15, 2016

    Presentation for Future of Utilities Conference
  • Publication Communications The new broadband utility and the openreach debate
    January 26, 2016

    The prime Minister has said that we should have, by right, access to fast broadband and it should be thought of like the services for electricity, water, transport and all the other utilities. He is absolutely right, but the implications of treating broad
  • Video Communications The new broadband utility and the openreach debate
    January 26, 2016

    The prime Minister has said that we should have, by right, access to fast broadband and it should be thought of like the services for electricity, water, transport and all the other utilities. He is absolutely right, but the implications of treating broad
  • Publication Communications Price setting in regulated utilities and the potential application to the BBC
    January 19, 2016

    The determination of the BBC’s licence fee is the outcome of an opaque and non-transparent process, which contrasts dramatically with that which applies in the case of the regulated utilities. 2. In all the main privatisations from 1984 onwards, the utili
  • Publication Transport What to do about the railways?
    September 22, 2015

    Despite the sharp rise in demand and therefore revenue, it is widely agreed that the railways are in a mess. A significant proportion of the electorate think that renationalisation is the answer, and indeed Network Rail itself has been renationalised. Alt
  • Publication Regulation Regulatory credibility and the irresistible urge to meddle
    April 16, 2015

    When the great utilities were being privatised, one of the key objectives was to establish a regulatory regime which would be credible to investors and fair to customers. The way it worked was that the companies would be given fixed contracts ex ante, and
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