NIC pledges long-expected review of utility regulators will boost innovation

October 7, 2018

The National Infrastructure Commission (NIC) has pledged that its recently announced, long-anticipated review of utility regulation will “allow companies to be innovative, without being penalised for it.”

 

The review  – flagged by THE WATER REPORT in spring – was unveiled recently when Chancellor, Philip Hammond, made public his instruction to the NIC to go ahead with its scrutiny of UK energy, telecoms and water regulation, “to ensure the necessary levels of investment and innovation whilst these critical services are kept affordable for everyone.”

 

NIC plans to assess the utility watchdogs came to light six months ago when chief executive, Phil Graham, told

THE WATER REPORT  that the NIC intends to report on whether regulatory structures are fit for purpose – taking advantage of its cross-sectoral perspective to review how regulation works across energy, communications and transport as well as water, and drawing out the common themes and differences between them.

 

"We’re looking at the extent to which the regulatory system is likely to drive the sort of social outcome that the government wants," he said, adding: "Do we need to change the directions to regulators or some of the frameworks in which they’re operating?" He said the commission planned to look at  "whether existing regulation is fit for the markets and models of the future. Further changes are foreseen in the nature of investment, the availability of information, technical innovation and potentially new models of ownership." (subscribers see issue 39, May 2018).

 

While the review was semaphored by NIC, the timing of the announcement has been linked with the escalation by the Opposition of its intensions to make energy and water into public ownership were it to win the next General Election. 

 

Meanwhile NIC chairman, Sir John Armitt, said: “The regulators are vital in ensuring we as consumers are treated fairly.  But if the UK is to be a world leader in the latest technologies, we need a system of regulation that allows companies to be innovative, without being penalised for it.

 

NIC said the review will include examinations of:

  • competition and innovation – whether the regulatory model encourages where appropriate, sufficient competition and innovation to support efficient delivery of infrastructure;

  • regulatory consistency – how regulators work together and collaborate on cross-cutting challenges and significant infrastructure projects; and

  • government and regulator cooperation –  how government can effectively deliver its objectives while continuing to safeguard the independence of the regulators.

It said the study will take in the “potential implications of any changes, paying particular attention to the need to keep bills affordable and to ensure vulnerable customers are protected.”

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