Utility Week

6 | 25TH - 31ST OCTOBER 2019 | UTILITY WEEK Utility of the future: Regulation Analysis P ressure had been mounting over the past year to scrap the existing network of sector watchdogs and replace them with a single "super regulator" covering all of the utilities. Utility Week reported that backbench MP John Penrose, who led the ultimately successful campaign to cap standard vari- able tari• s, was arguing the case for a sin- gle watchdog to oversee all utility network functions at last year's Conservative party conference. Then, former Tory MP Laura Sandys picked up on the idea in the report on energy data that she recently submitted to the Department for Business, Energy and Industrial Strategy (BEIS). But a new Treasury-commissioned report on the future of regulation stops short of rec- ommending that the existing system of regu- lating utilities, which has been in place since privatisation, should be scrapped. Retention recommendation The National Infrastructure Commission (NIC), which published the study Strategic Addressing the functioning of the retail market While much of the NIC regulation report focuses on infrastructure issues, it also addresses the functioning of the retail market. However, its recommendations to crack down on what it terms discriminatory pricing practices have struck many as wrongheaded. Echoing work going on elsewhere by the Financial Conduct Authority on insurance premiums, the report recommends that regula- tors should be able to prevent companies from engaging in price discrimination by requiring them to change their charging structures. To ease the process of cracking down on discriminatory pricing practices, the report recommends that regulators be able to take action by using administrative powers, hence avoiding the need to go through the courts. In a bid to shed more light on the issue, it says regulators should require companies to report annually on which groups of customers are paying more for the same service. But Complete Strategy's Cook doesn't understand why it is the role of an infrastruc- ture body to comment on the operation of the retail market. Intervention in pricing policies could contravene competition legislation, he says: "People being charged di„ erent amounts is part of the normal functioning of the competitive market. If you can't o„ er a new joiner something to tempt them away from a competitor, you won't have competition. "They are ill advised to comment on things they are not competent on." Utility watchdogs live to bare their teeth again A landmark report by the National Infrastructure Commission into the future of utilities regulation leaves Ofgem and Ofwat off the lead – for now. David Blackman reports. If the regulator's remit is changed to take into account the net zero transition, these decisions would come under more scrutiny." Jonathan Marshall, head of analysis at the Energy and Climate Intelligence Unit. "We have to speed it up and make really big decisions about things like gas networks and transport" Catherine Mitchell, professor of energy policy at Exeter University. "They [the NIC] make the case that things need to change, but it's never really clear to me what is broken that needs to be fi xed." Stuart Cook, co-owner, Complete Strategy and a former senior partner at Ofgem. "Regulators are not there to achieve everything, they have a very specifi c role. We have to decide what each regulator is going to achieve and what regulators are there todo. Dr David Reader, lecturer in competition law, Newcastle•University Infrastructure Commission into the future

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