Regulation - Dieter Helm

Luck is not an energy policy – the cost of energy, the price cap and what to do about it
With energy prices set to rise even further, a look at how the recommendations from the 20...

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.

Latest Publication

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

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.

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 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 ...

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 Regulation Policy and Regulation for Utilities: Where do we go from here?
March 15, 2016

Presentation for Future of Utilities Conference