Chancellor Calls on NIC to Investigate Utilities Sector Regulation

The government’s National Infrastructure Commission will conduct an independent investigation into regulation in the UK’s telecoms, energy, and water industries, Chancellor Philip Hammond announced Monday.

The review is focused on ensuring that regulators in the utilities market—Ofcom, Ofgem, and Ofwat—are encouraging investment, stimulating competition, and meeting the needs of modern consumers. The NIC hopes to find the right conditions to foster innovation to tackle the UK’s changing infrastructure needs.

The examination of utilities regulators is designed to build on the NIC’s National Infrastructure Assessment, published in July, which outlined in the UK’s infrastructure needs up to 2050. Among other things, the National Infrastructure Assessment called for universal access to full-fibre broadband by 2033. Currently just 4% of UK premises can access full-fibre internet, meaning the UK is lagging behind its European neighbours including Spain and France.

The government responded to the assessment with the Future Telecoms Infrastructure Review (FTIR) – a range of proposals, including regulatory reform, designed to deliver nationwide full-fibre coverage and 5G through a combination of private and public investment. Telecoms regulator Ofcom chased the proposals with their own plans, for the support of unrestricted access to Openreach’s network of telegraph poles and ducts and for regulatory changes to incentivise private investment.

The current NIC study will focus on how regulators can work to deliver these transformation and meet the needs of consumers. It will focus on how changes—including the rollout of full-fibre broadband and 5G—will impact regulated sectors and whether regulatory models are encouraging “appropriate, sufficient competition” to support the efficient delivery of this updated infrastructure. It will also study how how regulators collaborate on significant infrastructure projects and handle cross-cutting challenges, and how the government and regulators work together so the government is able to meet goals in these regulated sectors while safeguarding the independence of the regulators.

NIC will pay special attention to the impacts of these changes on consumers, emphasising the need to keep bills low and protect vulnerable customers, including the elderly, people with disabilities, and those on low incomes.

Chairman of the National Infrastructure Commission Sir John Armitt said: “Whether it’s turning on a light, taking a phone call or even making a cup of tea, we are dependent on our energy, telecoms and water industries to go about our daily lives.

“The regulators are vital in ensuring we as consumers are treated fairly. But if the UK is to be a world leader in the latest technologies, we need a system of regulation that allows companies to be innovative, without being penalised for it.

“Our new study will examine how to strike the right balance and how companies and regulators alike can be ready to adapt to changes in future, while at the same time keeping bills affordable and protecting vulnerable customers.”

The National Infrastructure Commission will publish the results of the study into regulation in the spring of 2019.

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