Governments, Competition and Utility Regulation

Governments, Competition and Utility Regulation

Edited by Colin Robinson

Governments, Competition and Utility Regulation continues the series of annual books, published in association with the Institute of Economic Affairs and the London Business School, which critically reviews the state of utility regulation and competition policy.

Chapter 8: Commitment and control in regulation: the future of regulation in water

Colin Mayer

Subjects: economics and finance, competition policy, public sector economics


* Colin Mayer 1. INTRODUCTION Water has been one of the most successful UK privatizations. We started the 1990s with a water system that was antiquated, leaking and thoroughly unhealthy. We have begun this decade with one that is modern, renovated, leaking less and a little bit healthier.1 Investment is up by more than 50 per cent and all of this has occurred in an industry which many said could never or must never be privatized. Access to water was a human right that should be made publicly available by public institutions. The public relations problem that the water companies now face is to persuade the affluent that taps are as chic as bottles. The government, the industry and not least the regulator should take credit for this. Since we are a nation of self-deprecators, we are reluctant to recognize success and much prefer to mock failure. But there has been success and, on the regulatory front, Ian Byatt and Philip Fletcher and their teams together with the Competition Commission should take credit for that. It could have all been very different if we had not had a regulatory system that established a sound regime for measuring the cost of capital, valuing assets and undertaking comparative efficiency exercises. It took sound economic judgement to create a regulatory system from almost nothing. Any subsequent analysis or criticism should therefore be considered in this context. As we will describe shortly, the way to characterize what has happened in water as in...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information