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Hammond announces utility regulation review

The Chancellor of the Exchequer, Philip Hammond, has tasked the National Infrastructure Commission (NIC) with carrying out a study into the telecoms, energy and water regulators, with a junior Treasury minister saying it is possible they could be combined into a single watchdog.

The Treasury said in a statement that Hammond had announced the independent study to ensure the telecoms, energy and water regulators are "fit to respond to the challenges of the future to remain cutting-edge", adding that the study "will ensure they have the ability to encourage investment, promote competition and innovation and meet the needs of consumers in the 21st century".

At a fringe meeting organised by Centrica at the Conservative party conference this week, Exchequer Secretary Robert Jenrick said the NIC had been asked to "work with us on how to improve regulation and what are the range of options across industries to make them more consumer-focused and inject more competition”.

Jenrick said utilities regulators needed to be "much more front-footed" in dealing with pressures on consumers and that one of the "radical options" that could be considered would be to create a single regulator across “all industries to ensure that all sectors work together and are more nimble and flexible”.

John Penrose, the Conservative MP who led the backbench parliamentary campaign to introduce the energy price cap, told Utility Week: “The question is whether the review will be big and brave enough.

“They need to be thinking big: we need as a party to be radical. This is one of the things that needs to be fixed urgently, otherwise the left will drag us back to the 1970s and you cannot allow them to be the only game in town.”

The NIC, meanwhile, said it expected the study to examine the following subjects:

  • What future changes will affect the regulated sectors: The National Infrastructure Assessment identified the UK’s infrastructure needs to 2050. The study will aim to set out the key drivers of change over the coming decades
  • 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
  • How Government and regulators work together: How Government can effectively deliver its objectives in these regulated sectors, while continuing to safeguard the independence of the regulators

The NIC added that the regulation study will consider the full range of potential implications of any changes, paying particular attention to the need to keep bills affordable and to ensure vulnerable customers are protected.

It will build upon initial work undertaken by the Commission in this area to inform and take forward the conclusions of the National Infrastructure Assessment.

Sir John Armitt, chairman of the National Infrastructure Commission, said: "Whether it’s turning on a light, taking a phone call or even making a cup of tea, we are dependent on our energy, telecoms and water industries to go about our daily lives.

“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.

“Our new study will examine how to strike the right balance and how companies and regulators alike can be ready to adapt to changes in future, while at the same time keeping bills affordable and protecting vulnerable customers.”

Author: Robin Hackett, editor, WWT
Topic: Policy & Regulation
Tags: conservative party , regulation , water , utilities , energy , Innovation , consumer

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