The Topic: CMA Investigations

Never has the Chinese curse “May you live in interesting times” been so manifestly felt by the utility industry. Even as the sector struggles to come to terms with massive upheavals in technology, the environmental agenda and social mega-trends, it is also in the unprecedented position of having Competition and Markets Authority (CMA) investigations on three fronts.

The energy market, the distribution networks’ regulatory regime (p13) and Ofwat’s AMP6 settlement for Bristol Water (p23) – and by association its methodology for all water company settlements – are all currently under scrutiny at the CMA. This creates a level of uncertainty and potential for change that cannot have been felt since each sector went through privatisation over a quarter of a century ago.

For business leaders, there is an urgent requirement, therefore, to understand how the findings and remedies emerging from these investigations may affect business continuity and strategy.

As Jillian Ambrose points out (facing page), the reality may be that the CMA’s rulings turn out to be of less importance than the bigger picture trends outlined above. Yet, as we explore on page 12, there are precedents for significant market intervention from the CMA, and certainly its early suggested remedies for problems in the energy market have shocked many by departing from pro-market orthodoxy. There may yet, therefore, be some profound implications for operations and for competition – especially with regards to the SME energy supply market, as discussed on p10.

Nor is it just business leaders who need to be forewarned and forearmed with knowledge about the CMA’s direction of travel. At the core of all three investigations is the role of utility regulators.

So, as summer fades and holidays – if you were lucky enough to have them – rapidly become distant memories, Utility Week sums up the key findings and implications so far of the CMA’s three-pronged advance into the world of utilities.

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