Ministers have voiced frustration that regulators have not acted swiftly enough to tackle perceived abuses in the energy and water markets. Ofgem in particular has pushed back over the default tariff price cap, arguing it lacked statutory powers to crack down hard on the energy retailers – it was accordingly given extra bill-capping powers.
However, the call for evidence for the review of utility regulation contains some searching questions about the regulators’ futures. It questions the very role of economic regulation – the philosophy that has underpinned the regulators’ work since the privatisation of the 1980s and 1990s.
It asks for views on the boundary between independent regulation and the setting of policy and strategic direction by the government, questions whether regulators’ duties and functions need to change. It also asks if there is a lack of clarity on strategic direction, and what the regulators can do to bolster public confidence in the regulatory system.
The review is due to go to the Treasury by the autumn, in time for its conclusions to feed into chancellor of the exchequer Philip Hammond’s next Budget – if he is still in post by then.
With Jeremy Corbyn’s opposition committed to scrapping independent regulation of the water industry, utilities will be watching nervously to see if the Tories too decide they want to extend Whitehall’s remit.