Utility Week

UTILITY WEEK | 12TH - 18TH OCTOBER 2018 | 7 News These networks have to remain monopo- lies so they require ongoing regulation, he said: "There is a network monopoly at the heart of most of these privatised utilities. We need something to regulate that, otherwise they will rip you and me off as customers: we need something regulating that market. "For all the other bits and pieces, let com- petition reign and find ways of creating more competition in those industries. "Its job would be to get out of the way and let competition bloom in all those industries and make sure you and I have the choice, which we increasingly expect in every other avenue of our lives whether buying a tube of toothpaste or a coffee." The Somerset MP, who heavily criticised Ofgem during the backbench parliamen- tary campaign to introduce a cap on energy prices, said the existing regulators are "part of the problem", arguing that they are "hold- ing companies back and failing you and I as consumers". Penrose was backed up by another Tory, MP John Redwood, who was one of the architects of Margaret Thatcher's original privatisation drive in the mid-1980s when he headed the policy unit at Number 10. He said: "The best regulation is competi- tion and the main change we want to see is the regulator being told to drive more compe- tition and rely less on rules and price caps, which are not nearly as good as a competi- tive market to keep prices honest and keep people innovating and investing." Dr Tony Ballance, director of strategy and regulation at Severn Trent, said: "Our regu- lator in the water sector is doing a good job but I can see merits of having a look at this given that we are 30 years into privatisation. There have always been arguments for merg- ing utility regulators." Nationalisation The Conservatives' move to review utility regulation was triggered by Labour's push to renationalise the water industry and much of the energy sector. Labour had set the tone for this party con- ference season by pledging at its own confer- ence to make water the first industry lined up for privatisation, if and when it is elected into government. Labour has been criticised until now for providing insufficient detail about its rena- tionalisation plans. But a document, entitled Clear Water and published during Labour's conference, puts some flesh on the bones. It said the regional structure of the indus- try would be maintained, with ownership of the existing suppliers transferred to new Regional Water Authorities (RWAs) under an act of parliament. As well as nationalising the companies, this legislation would also contain provi- sions to safeguard the renationalised entities from being sold again. Ofwat would be scrapped under Labour's blueprint, with regulation of the industry transferred to a new National Water Agency within the Department for Environment, Food and Rural Affairs (Defra) , which would be responsible for policing economic and performance standards. Each RWA board would contain elected representatives of the respective region's local councils and one each from each of the industry's three biggest trade unions. In addition, the boards would each have an environmental and a consumer representa- tive, nominated by Citizens Advice and the Environment Agency respectively. The mem- bership would be completed by a community representative put forward by Water Obser- vatories, new bodies to be set up to promote public participation in the industry. The RWA boards would hold public meetings in different locations each month, broadcast live on the internet with all papers made public, as happens with local councils. McDonnell said the idea was to avoid the top down, central control that characterised the nationalised industries of the post-war period. Clean Water proposed that existing own- ers would have to exchange their shares for bonds, with deductions made for pension fund deficits, "asset stripping since priva- tisation", and any state subsidies the priva- tised water companies had received since privatisation. The companies themselves would be modelled on Transport for London. They would be self-financing from user charges and debt, except for occasional government grants awarded for specific public interest projects. Prime minister Theresa May attacked Labour's plans head-on in her keynote speech at the Conservative party conference. The Tory faithful heard that public own- ership would mean consumers paying twice over: "Once when they use the service, and again every month through their taxes." And she claimed that renationalisation would cost £1 trillion to deliver. Water minister Therese Coffey suggested there is little appetite for renationalisation of the industry, pointing towards figures show- ing that 85 per cent of its customers are satis- fied with the service they receive. The unions lapped up Labour's plans,but unsurprisingly the water industry took a "We need a big push on energy efficiency: it doesn't get you all the way there but it gets you part of the way." Richard Howard, head of research, Aurora Energy "The water industry demonstrates that shifting ownership is helpful but doesn't introduce the big advantages you get with competition." John Redwood, Conservative MP "It's high time we put a full competitive regime into water. Its job would be to get out of the way and let compe- tition bloom in all those industries." John Penrose, Conservative MP

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