28/02/11
Water UK has responded to the Department for Business Innovation and Skills (BIS) call for evidence on the Principles for Economic Regulation.
In themselves the principles make good sense; after all, it would be difficult not to support the idea that economic regulation should be Accountable, Predictable, Coherent, Adaptable and have Efficiency and Focus. However, two issues have yet to be fully addressed.
First, there are obvious internal tensions between some of the principles. An action considered "adaptable" by the regulator might also be considered "unpredictable" by those regulated. We think there is scope for BIS to more fully explain how such issues might be handled.
Second, we have yet to understand how regulators will be held accountable in fulfilling these principles. Although many regulators are required to "have regard" to the principles of better regulation, we believe it would be more appropriate for regulators to explicitly state how the principles have been embedded in their actions.
The lack of a mechanism to allow the water sector more extensive rights of appeal against Ofwat enforcement actions also looks anomalous compared to other regulated sectors, many of which have more efficient merits-based appeals systems than the slow and burdensome process of judicial review.
