Economic regulation policy
This policy paper sets out the government’s vision for modernising the economic regulation of the utilities sectors.
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This paper is about the future of economic regulation of the water, energy, and telecoms sectors in the UK. It follows a commitment in the government’s National Infrastructure Strategy to produce an overarching policy paper in this area.
The government agreed with the National Infrastructure Commission’s recommendation that, though the UK’s regulatory framework has delivered significant benefits, it needs updating and strengthening as it is increasingly facing emerging and long-term challenges that it was not designed to address.
The paper covers the following areas:
- how the government intends to ensure that the regulators’ duties will allow them to meet these systemic challenges, conducting a review of duties in 2022
- how the government will provide strategic clarity on our long-term aims for these sectors, publishing a letter of strategic guidance to the CEOs of Ofwat, Ofgem and Ofcom
- how competition for strategic investment opportunities can be enhanced for the long-term benefit of consumers and investors
- how transparency and consistency in key processes can be improved, in particular seeking greater consistency, and working towards a common methodology, where appropriate, for the weighted average cost of capital when setting price controls
The paper is the first step to updating our model of economic regulation. In 2022 we will launch a consultation setting out more detail on a package of measures to ensure the UK model of economic regulation fits the needs of the modern age.
Related content
Open letter of strategic guidance to the utilities regulators