Utility Regulation in Competitive Markets

Utility Regulation in Competitive Markets

Problems and Progress

Edited by Colin Robinson

This significant new volume contains incisive chapters on a number of prominent concerns, including changes in the British system of utility regulation, the spectrum allocation question, liberalisation of EU energy markets, security of supply issues, reform in the European postal sector, the future of rail regulation, the cost of capital and Ofcom’s strategic approach to regulation. Chapters on each topic are followed by comments from regulators, competition authority chairmen and other experts in the relevant fields. By confronting the most important international developments in utility regulation, the authors offer practical policy recommendations for an effective way forward.

Chapter 1: Beyond regulation

Stephen Littlechild

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


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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