NIC The Future of Regulation: call for evidence

Published: 12 April 2019

Introduction

The UK Government has asked the National Infrastructure Commission to assess what changes might be necessary to the existing regulatory framework to facilitate future investment needs in infrastructure focusing on energy, telecoms and water, while promoting competition and innovation and meeting the needs of both current and future consumers.

Within those three sectors, consultation responses were sought around four main themes:

  • Future changes
  • Competition and innovation
  • Regulatory consistency
  • Policy and regulation

The Commission’s perspective is long term, covering the next 30 years.

Key points

Energy Systems Catapult response to this call for evidence by the National Infrastructure Commission on the Future of Regulation, includes:

  • Innovation, and creating the right circumstances for it to flourish, are key considerations for regulation of energy networks, given the scale of the low carbon transition.
  • Economic regulators should concentrate on ensuring that consumers interests are protected in areas where no natural competition exists such as in energy networks.
  • Energy Networks Price Controls should be as transparent and simple as possible and investor returns should be fair.
  • Whole System thinking is increasingly being recognised as delivering high performance at low cost.
  • Policy design and market frameworks should seek ideally to enable competitive markets to drive innovation but the role of government and regulators in supporting critical technologies should be recognised.
  • Policy and regulatory reforms should enable plausible transition and implementation pathways.
  • The low carbon transition raises a range of broader co-ordination issues, within and across network infrastructures which may not be capable of resolution through familiar market mechanisms.
  • A statutory duty on regulators to promote innovation could be desirable but we would expect regulators to encourage innovation (in protecting the interests of existing and future consumers) with or without such a specific duty.
  • Regulatory arrangements for data and smart energy inter-operability are growing in importance and value.
  • Regulators need to work with government and industry participants to address the scale-up challenge required to decarbonise the energy system to meet the 2050 climate change targets.