Letter from the Editor: Changing times ahead for regulation

Blink and you might have missed it, yet the potential creation of a new utility “super-regulator” was quietly unveiled last week. What felt like the Conservatives’ response to Labour’s call to renationalise utilities didn’t feature in chancellor Philip Hammond’s speech to party conference. It appeared instead amid a package of measures, featuring a root and branch review led by the National Infrastructure Commission (NIC) into the world of UK regulation and including the potential establishment of a single, multi-utility regulator.

Utility Week, however, was quick to seize on the news, amplified 24 hours later by a junior minister to delegates at a gathering tucked away on the fringes of the political media circus.

But while industry voices have not been short on reaction or theories, most noticeable is that no-one seems particularly surprised by any of it – despite the development potentially affecting utilities’ business models for years to come.

In fact quite the opposite. The feeling is that a review was inevitable – overdue even – given that little about regulation has changed for decades, but the energy, gas and water landscapes have shifted radically.

Certainly, during a debate on the future regulation of utilities at Utility Week Congress this week, those regulators present accepted that there were examples of a single regulator model working in other countries.

However, as Ofwat’s Rachel Fletcher pointed out, the key question was less about whether there were fewer or more regulators, and more about how to answer some of the huge future challenges ahead – such as how you get investment through efficiently, how you help the country become more productive, and how best to deal with vulnerability and affordability issues. Either way, tackling those factors together is something regulators are likely to be expecting to do much more of in the months ahead.

It remains to be seen whether a shake-up ever happens. Some industry voices speculate that the news is merely a cynical ploy to send a warning shot across regulators’ bows.
Whatever the findings of the NIC’s review, and whether they lead to a super-sized authority or not, there has been a fundamental shift in the way we are now thinking and talking about regulation in response to a new, far wider narrative.