Chapter 1: Beyond regulation
Stephen Littlechild INTRODUCTION This is a welcome opportunity to revisit and then extend some of the themes that I explored in my Beesley lecture in October 2001.1 I start with competition and regulation but then I want to go beyond that, to look at some possible new ways of reducing regulation of the monopoly sectors of the utility industries. The ﬁrst part of this chapter looks brieﬂy at the evolution of what the previous lecture called ‘the standard model’ of electricity reform, and in particular the role of government. The second part looks at the development of competitive markets in the electricity sector, both wholesale and retail, and the role of regulation there. The third and ﬁnal part of the chapter looks at alternatives or complements to traditional regulation of electricity transmission and distribution networks. My title ‘Beyond regulation’ is not intended to suggest that in future there is no need for regulation, but rather to suggest that we should look beyond its presently accepted role. I shall illustrate the chapter with empirical material, initially from the UK but also from the US including California and Florida, the Nordic countries, Australia and Argentina. The arguments and illustrations are taken mainly from my own research over the last few years.2 Although the examples are limited to the electricity sector, there is scope for applying several of the suggested regulatory initiatives to the utility sector generally. P I: T E S M COMPETITION AND REGULATION The UK approach to regulating the...
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