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.







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.


  • Publication Transport Whither the Railways?
    May 21, 2001

    A Comment on "Phoenix from the Ashes" by Chris Green, for Institute of Economic Affairs. The failure to deliver the performance on the railways which its customers demand has led to a host of proposals for reform. These are often self-interested, and rang
  • Publication Transport A critique of rail regulation
    October 17, 2000

    Beesley Lecture, Institute of Economic Affairs, London, October 17th 2000. Very few privatisations have been free of teething problems, and all new regulatory bodies have faced criticisms, made mistakes, and had to improvise and adapt with experience. Per
  • Publication Regulation The Good Behaviour Clause Inquiry
    July 13, 2000

    Paper for the Competition Commission. The 'good behaviour' clause adds another substantive layer of sector regulation to the electricity industry, at a time when significant structural changes are taking place, when NETA is being introduced, and when the
  • Publication Communications A note on Economic and Content Regulation in Broadcasting and Communications
    July 11, 2000

    Paper for the DTI. In the debates surrounding the Communications White Paper and subsequent legislation, a key issue is whether the regulatory architecture should separate out or integrate economic and content regulation. This note argues that: the ec
  • Publication Regulation Comments on ' A Fair deal for consumer: Modernising the Framework for Utility regulation
    May 25, 2000

    Paper for the DTI. This brief paper focuses on the scope of the draft guidance and the impact on the cost of capital. It does not address the detailed components.
  • Publication Infrastructure Comments on "A fair deal for consumers: Modernising the Framework for utility regulation"
    May 25, 2000

    Paper for the DTI. This brief paper focuses on the scope of the draft guidance and the impact on the cost of capital. It does not address the detailed components.
  • Publication Regulation Regulatory Reform, Capture and the regulatory Burden. OXREP Vol. 22 No.2
    May 24, 2000

    It has become a conventional wisdom that regulation is at best a necessary evil and at worst an inhibition to productivity, employment, and economic growth. There are strident demands, predominantly from industrial interests, for the 'regulatory burden' t
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