NIC seeks views on how to improve utility regulation

The National Infrastructure Commission (NIC) is seeking views on how the current utilities regulation system is working and whether it has “systematically failed or succeeded” in several key areas.

Chancellor Philip Hammond has asked the NIC to assess what changes might be necessary to the existing regulatory framework to facilitate future investment, promote competition and innovation and meet the needs of current and future consumers.

The review will focus on energy, water and telecoms and will form part of the NIC’s long term perspective covering the next 30 years.

The NIC has today (18 February) launched a call for evidence on what future changes may be required to ensure regulation supports investment and innovation while at the same time keeping costs down for consumers.

Sir John Armitt, chairman of the NIC said it wants to hear how the current system of regulation is working and how it could be improved “to deliver both good quality services and world-class infrastructure”.

The study is expected to examine what changes may affect the regulated sectors, whether there is regulatory consistency between the sectors and the relationship between regulators and the government.

Hammond said: “Our regulators play a key role in ensuring the framework underpinning our vital telecoms, energy and water services remains agile and innovative, delivering for consumers and giving the UK a competitive edge.

“Technological change is having a transformative effect across the economy and regulators must be able to respond to keep the UK at the forefront of these advances.

“That’s why I’ve asked the National Infrastructure Commission to look at how our regulators can prepare for and adapt to this change. Their findings will be key in helping ensure we rise to these challenges and remain fit for the future.”

The study will ask questions including:

• Whether fundamental change to the current model is required;
• Whether consumer interests could be better represented in the future and how;
• How regulators can act in future to win and maintain consumer trust in the sectors;
• What impact competition has had on investment in the sectors;
• Whether regulation has been slow to adapt to changing market circumstances, and if so, where; and
• Whether greater levels of transparency and accountability could be achieved and how

Armitt said: “From turning on a TV to turning on a tap, all of us rely on our energy, telecoms and water industries for basic everyday activities.

“Regulators are therefore a vital part of ensuring we are treated fairly by these essential service providers, and that vulnerable customers get the support they need.  But their work should also encourage investment and innovation which will benefit households and businesses alike for the long term.

“Whether it’s companies or regulators, consumers or investors, we want to hear how the current system of regulation is working, and what a future framework may look like to deliver both good quality services, and world-class infrastructure.”

An Ofgem spokesperson added: “We are committed to working with the National Infrastructure Commission and will be feeding into its call for evidence.

“We need to make sure that the future energy market can unlock the full potential for innovation and competition, as well as having stronger protections for consumers.”

A spokesperson for Ofwat said:“Our regulatory framework is aimed at protecting customers’ interests by delivering long-term resilience and investment in the water sector.

“We look forward to engaging actively with the National Infrastructure Commission as part of this call for evidence”.

Speaking at Utility Week’s Congress event in Birmingham in October 2018, Ofwat’s chief executive Rachel Fletcher said there is no “simple answer” to what successful regulation looks like.

The call for evidence will run for eight weeks and the deadline for responses is Tuesday 12 April.

Responses must be no longer than 20 pages and should be emailed to: regulation@nic.gov.uk