Projects
The energy and water industries
The Labour party manifesto of 1997 promised that: “In the utility industries we will promote competition wherever possible. Where competition is not an effective discipline, .... we will pursue tough, efficient regulation in the interests of customers.” It also recognised “the need for open and predictable regulation which is fair both to consumers and to shareholders.”
There was a perception that the framework of price control regulation which would be inherited from the previous government was inadequate on several counts: it failed to ensure that the needs of customers, as well as shareholders, were fully recognised; it did not fully acknowledge the significance of the utilities in promoting social and environmental objectives, and it was insufficiently open and accountable. This, combined with the need to respond to considerable changes since privatisation (including the development of multi-utilities and the emergence of competition in the energy sector), prompted the review of utility regulation launched in 1997. The end result is the Utilities Act which became law in July 2000 (addressing issues relating to energy) and a new draft Water Bill.
Although the Utilities Act made substantial changes to the regulatory environment, the essential character of the regime was retained – namely a predominant reliance of regulation plus competition as the mechanisms for change and improvement. The question that this project assessed is whether the institutions that govern the energy and water industries are by themselves sufficient to address the key issues of the future. It does so by identifying the issues and comparing the associated risks with the current methods for addressing them. By so doing, it provides an agenda for government action over the next ten years.
The work was undertaken in association with the Public Utility Reform Group (PURGe).
View/download an executive summary.
View/download the full report.
We have also undertaken a specific review of Anglia Water's plans for re-organising itself. View a summary.